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Advisers must warn about excess dangers

In this age of austerity, it’s not surprising that home owners look to save money on everything possible, and buildings and contents insurance is probably high on the list.

One way to get cheap cover is to raise the amount that needs to be self-funded should there be a claim.

It was interesting to see research from AXA Personal Lines on the rising number of motorists unable to authorise repairs to their vehicles because they could not afford to pay the excess – up by 61% in 2011 to 29%.

It’s clear the short-term price reduction that increasing an excess can offer should be balanced by affordability if a claim were made.

For home owners and mortgage clients, the impact of compulsory excesses on cheap home insurance should not be underestimated.

There is an obligation on owners to keep their property in good repair and many looking to move up the housing ladder will want to ensure when selling that prospective buyers will not see evidence of cheap repairs and unresolved claims.

But customers still look to reduce premiums by either reducing cover or raising excesses on the most important purchase of their lives just to save a few pence.

That’s where advisers come in. They have an advantage over price comparison websites as they can explain why premiums differ and what the implications are if clients elect to fund part of the claim themselves.

By reviewing clients’ income and expenditure, it will easy to see if they have the money to pay for the claim and manage excesses.

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