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Car insurance excess

A car insurance excess is something you need to pay when you make a claim — it can also impact your premiums.

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A car insurance excess is the amount you pay when you want to make a claim. Excesses mainly exist to deter people from claiming really small damages or claiming things too often. Unfortunately, all insurers have excesses in place. However, the amount can differ by thousands, so it pays to check what yours is.

What is car insurance excess?

The car insurance excess is the amount you will be required to pay when you make a claim on your policy. In other words, it’s the amount you agree to contribute towards the cost of a claim, with the insurer covering the remaining amount.

For example, if your policy has a $500 excess and you make a claim for $3,000 damage to your vehicle, you’ll cover the first $500 of the repair costs and the insurer will foot the bill for the remaining $2,500.

However, the amount of excess payable varies depending on a number of factors. Not only does the excess differ according to the policy you select, but you can also adjust your excess higher or lower to vary your premium amount. In addition, specific drivers such as those under 25 years of age, may be required to pay a higher excess amount.

Want to save more in the long run? Look for policies with low excesses

An excess is the amount you pay when you want to make a claim. Premiums are one thing, but if you have to fork out an extra $1,000 after you've had an accident, that can easily eat away at your bank account. Before you sign on the dotted line, have a careful look at what excesses you'd be paying if you want to claim.

Have a look at how some insurers treat excesses below:

UnderwriterDriver under age 21Driver aged 21-24Inexperienced driverUnlisted driver

Auto & General

$600

$500

$500

$600

Insurance Australia Group

$800

$450

$400

No excess

Suncorp logo new

Suncorp

$400

$400

$400

$1,400

Hollard

$1,200

$800

$800

$1,600- $2,000

Excesses too high? It might be time to review your policy

1 - 8 of 8
Name Product Roadside Assistance Accidental Damage Storm Choice of Repairer Agreed or Market Value
Budget Direct Comprehensive
Optional
Optional
Agreed or Market
Finder's summary: Awarded the 2021 Finder Award for Car Insurance - Value in QLD, SA, TAS, VIC, WA and Car Insurance - Features in NSW, VIC, WA, this policy offers solid coverage at a low cost. Budget Direct's claims service has received a 4.2/5 based on nearly 5,000 customer reviews.

⭐ Current offer: Get 15% discount on first year's premium when you take out a policy online. T&Cs apply.

Who it might be good for: People who want a comprehensive policy without breaking the bank.
Youi Comprehensive Car Insurance
Optional
Agreed or Market
Finder's summary: Youi Comprehensive Car Insurance is one of the few providers to include roadside assistance in its policy. You'll also get access to YouiRewards which gives you discounts on furniture, parking and more. Youi also has a live chat feature on its site to talk through any questions.

Who it might be good for: People over 25 who want comprehensive cover with a focus on customer service.
Coles Comprehensive
Optional
Agreed or Market
Finder's summary: With Coles comprehensive car insurance, you could earn double flybuys points at Coles supermarkets and you can get $10 off your Coles grocery bill every time you redeem 2,000 Flybuys points. If your car is damaged, you could benefit from a one-week turnaround on repairs.

⭐ Current offer: Get 10% off your first year's premium when you take out a policy online. T&Cs apply.

Who it might be good for: Coles customers and Flybuys collectors.
QBE Comprehensive
Green Company
QBE Comprehensive
Optional
Agreed or Market
Finder's summary: QBE is a sustainable insurance company and also Finder's Green Insurer of the Year 2021 award winner. This policy offers the highest level of protection available from QBE including three-year new car replacement.

⭐ Current offer: Save $75 when you purchase a new comprehensive policy online. T&Cs apply.

Who it might be good for: Those that are looking for a more environmentally friendly insurance choice.
Bendigo Bank Comprehensive
Agreed or Market
Finder's summary: Bendigo Bank’s comprehensive policy offers up to $30 million in liability insurance, cover for your personal items and the option of a replacement car if your vehicle is being repaired after an accident.

Who it might be good for: Those who seek the peace of mind that comes with high legal liability and a range of cover benefits.
ahm Comprehensive
Optional
Both
Finder’s summary: ahm comprehensive car insurance lets you choose higher excess to reduce your premiums. Its Fixed Kilometre Plan can save you up to 30% compared to its standard comprehensive cover.

⭐ Current offer: Get free roadside assistance* for 12 months when you sign up by 30 June. T&Cs apply.

Who it might be good for: People who drive less than 15,000 km per year.
Qantas Comprehensive
Optional
Optional
Agreed or Market
Finder's summary: You'll be able to choose how comprehensive you want your cover to be with optional extras like choice of repairer and the option of agreed or market value.

⭐ Current offer: Earn Qantas Points for joining and paying your premium. Sign up today and earn up to 20,000 Qantas Points (points awarded will be based on your premium). T&Cs and eligibility apply.

Who it might be good for: People who'd like to earn Qantas Points.
Woolworths Comprehensive
Optional
Agreed or Market
Finder's summary: Woolworths has some unique perks like a price-beat guarantee where it'll beat any current comparable comprehensive renewal notice if you're over 25. You can also get 10% off your grocery shop once a month and can add roadside assistance onto your policy for just $7.33 per month.

⭐ Current offer: Save up to 15% when you buy online. T&Cs apply.

Who it might be good for: Woolworths shoppers and those that want to take advantage of its price-beat guarantee.
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Why do insurers include an excess on their policies?

The purpose of car insurance excesses is to reduce the number of small claims insurers are required to pay out. If the excess didn’t exist, we’d all be able to lodge claims for every minor little bump, scratch and dent that our cars suffer.

While this may seem like a wonderful idea on the surface, in reality it would cause the cost of car insurance policies to skyrocket, and the premiums could leave a much bigger dent in your bank balance.

But by getting policyholders to agree to pay the first part of each claim themselves, insurers are able to prevent myriad claims for minor repairs and therefore keep car insurance premiums down. This in turn means that you can fall back on car insurance in those situations where you really need the financial protection it provides.

What types of car insurance excess are there?

It wasn’t all that long ago that there was only one type of car insurance excess. These days there are several excesses that may apply, and it’s worth remembering that you may need to pay more than one excess when you make a claim. Common excesses include:

  • Standard driver excess. This is the standard amount you will need to pay when you make a car insurance claim. When you fill out a quote, your excess will usually default at about the $650 mark, but you can make this higher or lower. If the claim is for an incident where you weren’t at fault, some insurers will waive the excess altogether while others will require you to pay it upfront and then refund the excess amount once the claim has been processed and your car repaired. However, keep in mind that there are some policies that will require you to pay an excess even if you were not at fault.
  • Voluntary excess. Most insurers allow you to pay an additional voluntary excess in return for a cheaper car insurance premium. Take a look at the ‘Can I reduce my excess?’ section further down the page for more information about how this works.
  • Age excess. This excess applies to drivers under the age of 25 and reflects the fact that young drivers are statistically more likely to be involved in an accident or drive recklessly. The amount of a young driver excess varies substantially depending on your age, and it’s not uncommon for drivers under 21 to be slugged with an excess of $1,000 or more. It must be paid on top of the basic excess when you claim for an incident that occurred with a young driver behind the wheel.
  • Inexperienced driver excess. Similar to the age excess, the inexperienced driver excess applies to people over the age of 25 who have only held their licence for a limited time, for example less than two consecutive years. If you’re an inexperienced driver and you’re involved in an incident that leads to a claim, you’ll need to pay this excess on top of the basic excess amount.
  • Non-nominated driver excess. This excess may apply if you make a claim for an incident that occurred when your car was being driven by someone not listed on the policy. However, this excess isn’t charged by all insurers.
  • Specific driver excess. Some insurers will impose an additional excess for claims that arise when your car is being driven by a specific person listed on your policy. This excess is applied if the insurer determines there to be a higher level of risk associated with providing cover for that particular person.
  • Glass/windscreen excess. Some insurers will impose a specific excess for windscreen and window glass claims. However, many also offer the option to reduce or even waive this excess – if you’re willing to pay an additional premium, of course.

All of the excesses listed above may not apply to your car insurance policy. Check the fine print in the PDS for full details of what you’ll be required to pay when you make a claim.

Can I avoid paying a car insurance excess?

While you will most likely have to contribute some amount towards the cost of a claim, it’s possible in some cases to avoid paying a car insurance excess. Instances where you can avoid paying an excess include:

  • If the insurer allows you to waive the policy excess altogether by paying substantially higher premiums than would normally apply
  • If you were not at fault and you can meet any conditions outlined in your policy, for example providing the name, address and registration number of the person who was at fault
  • If you’re experiencing genuine financial hardship and are unable to pay your excess

Whether or not you can avoid paying an excess will once again depend on the terms and conditions of your policy. Check the fine print closely to find out if you’ll have to dip into your own pocket every time you claim.

How do I pay an excess?

How you pay your excess depends on the insurer and the nature of your claim. When you lodge a claim, your insurance company will advise you whether the excess:

  • Will be deducted from any amount paid to you;
  • Must be paid to the insurer; or
  • Must be paid to the vehicle repairer when you collect your car

When do I not have to pay an excess?

The circumstances when you do not have to pay a car insurance excess generally depend on the insurer and your individual policy. If your insurer agrees to waive all excesses when you pay an additional premium, for example, then you won’t have to worry about contributing towards the cost of the claim. Just keep in mind that the additional premium you’ll be required to pay will probably be fairly substantial.

If you’ve fallen on hard times, you may also not be required to pay an excess. According to the Australian Financial Complaints Authority (AFCA), if you’re experiencing financial difficulty and unable to pay the policy excess, this shouldn’t mean that your claim cannot be lodged and processed. However, you would need to be able to demonstrate that you are experiencing financial hardship, and you may still be required to pay the insurance excess over time.

Do I need to pay a car insurance excess if I’m not at fault?

The other main situation where you may be able to avoid forking out to pay a car insurance excess is when you are not at fault for the incident being claimed. This is not always the case, as some policies require you to pay an excess regardless of who was at fault.

In other situations, you can avoid paying the excess if you were not at fault and you can meet the conditions outlined by the insurer. For example:

  • If the insurer agrees that you were not at fault in any way. It can be quite difficult to definitively prove that you did not contribute to an accident in some way, so establishing your innocence may not be as easy as you might think.
  • If you can provide the name, address and rego number of the at-fault driver. If this condition applies, problems may arise if the at-fault driver flees the scene of the accident, refuses to supply their details, or if you forget to gather their information in the stressful aftermath of an accident.
  • If the insurer recovers its costs from the at-fault driver. It could take months or years for this condition to be met, or it may never be met if the other driver is uninsured, can’t be found or refuses to pay the necessary amount.

So what can you do if you think you’re being unfairly asked to pay an excess? You could refuse to pay the excess and dispute it, but this means the insurer may not repair your car or may simply deduct the amount from any benefit you receive.

Another option is to pay the excess now, ensuring that your claim is processed quickly and you can get back on the road, and dispute the matter at a later date. However, it’s essential to seek independent legal advice before deciding on the best approach.

How much should I be paying?

The cost of your car insurance excess is determined when you take out cover. There’s a standard excess that applies to cover, but you can choose to adjust this to a higher level and receive lower premiums as a result. On the other hand, you may wish to lower the excess payable at claims time, which will of course lead to a higher premium.

The simplest way to find out the excess that applies to your policy is to check the certificate of insurance. You can also find a guide to the excesses imposed by your insurer in the PDS.

As a general guide, standard excesses tend to range from around $200 up to $700, but could be higher or lower depending on your circumstances.

Can I reduce my excess?

Yes, you can. When you apply for car insurance cover, many insurers will give you the option to choose your excess. You can:

  • Choose the standard excess amount quoted.
  • Increase your excess – doing so will lower your premium.
  • Reduce your excess – this will result in a higher premium.

Should I reduce my excess?

You’re the only person who can answer that question. It’s really up to you, your budget and which option you think will represent the best value for money.

For example, while lowering your excess will reduce the financial strain at claims time, it means you’ll need to pay more to purchase cover in the first place. On the other hand, increasing your excess makes cover more affordable but could put pressure on your budget if you ever need to make a claim.

Whether you decide to increase your excess, lower it or even keep it at the same level, make sure that you’ll be able to afford to pay premiums whenever they’re due, and that the excess payable when you need to claim won’t put you under significant financial strain.

Picture: Shutterstock


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2 Responses

  1. Default Gravatar
    SamSeptember 28, 2021

    My car was scratched by some one when it was parked i took it to repair body and they asked for $1500 to fix it
    It have comprehensive insurance ($900 excess)
    Should i go through insuranceor just do it out of my pocket?

    • Avatarfinder Customer Care
      JamesOctober 6, 2021Staff

      Hi Sam,

      I’m sorry to hear that. It’s really up to you to decide this. Some people choose not to file a claim against minor damages that cost under, the same or a bit more than the amount of their excess. Whichever option you decide is best for you, keep in mind that you may need to tell your insurer about the accident, to avoid invalidating your cover at a later date.

      Regards,
      James

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