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What is excess in car insurance?

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

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.

Car insurance excess explained

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.

Policies with low excesses

There are many policies that offer low excesses, however, bear in mind this may lead to higher costing premiums. Have a look at how some insurers treat excesses below:

1 - 3 of 13
Name Product Standard Excess Driver Under Age 21 Driver Aged 21-24 Inexperienced Driver Excess Unlisted Driver Excess
Budget Direct Comprehensive
$700 to $1,900
$600
$500
$500
$600
Bingle Comprehensive
$750 to $2,300
$600
$600
N/A
$1,950
Qantas Comprehensive
$700 to $1,900
$600
$500
$500
$600
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Prices in this table are approximate and should be used as a guide only.

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?

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 2 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 product disclosure statement (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 a substantially higher premium 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
  • 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 registration 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 a lower premium as a result. On the other hand, you may wish to lower the excess payable at claim 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. 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 when it comes to making a claim, 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 your premium when it's due, and that the excess payable when you need to claim won’t put you under significant financial strain.


If you think your excess is too high, it might be time to review your policy

1 - 20 of 25
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: The 2024 winner of our Best Value Car Insurance award. It's cheaper than most, plus you can lower costs by adding age restrictions.

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

Who it might be good for: Anyone who wants a good value policy.
Youi Comprehensive
Optional
Agreed or Market
Finder's summary: The 2023 winner of our Best Features Car Insurance award. Plus, it's one of the only insurers to automatically include roadside assistance.

Who it might be good for: Those who want good customer service with lots of inclusions.
Australia Post Comprehensive
Optional
Agreed or Market
Finder's summary: Covers a little more than other insurers. You don’t need to pay an excess for windscreen repairs and cover applies to anyone who uses your car.

⭐ Current offer: Get $75 off your first year's comprehensive car insurance premium when you buy online. T&Cs apply.

Who it might be good for: Multiple people using one car.
ROLLiN' Comprehensive
Agreed
Finder's summary: One of the most cost-effective insurers for under 25s, according to Finder research, with no aged-based excess.

Who it might be good for: Young drivers looking to keep costs down and anyone who’d like to get more flexibility from their car insurance.
QBE Comprehensive
Green Company
QBE Comprehensive
Optional
Agreed or Market
Finder's summary: Our best-rated Car Insurer for Customer Satisfaction in 2021/2022 and Green Insurer for the last 3 years.

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

Who it might be good for: Those who want a trustworthy insurer and more cover than other brands, such as 3-year new car replacement (e.g. they'll give you money for a new car for up to 3 years if yours is written off).
Bingle Comprehensive
Market
Finder's summary: Our data shows it’s the cheapest comprehensive policy. It just covers the basics such as damage to your car, theft and storms – it doesn’t go in for add-ons and extras.

Who it might be good for: Those wanting a low-cost, no-frills policy.
Kogan Comprehensive
Optional
Agreed or Market
Finder's summary: Kogan comes with all the perks that most comprehensive car insurance policies include, but you'll also be entitled to some benefits from its online store. This usually comes in the form of a gift voucher or discount if you buy online.

⭐ Current offer: Get $75 off first year premiums when you purchase Kogan Comprehensive Car Insurance online + $10 monthly kogan.com credit. T&Cs apply.

Who it might be good for: Kogan shoppers and those after a good range of policy options.
Qantas Comprehensive
Optional
Optional
Agreed or Market
Finder's summary: You need car insurance so why not get one that lets you earn Qantas Points? It's good value too (it's underwritten by the same insurer as Budget Direct).

⭐ Current offer: Earn up to 20,000 Qantas Points with every Qantas Car Insurance policy you take out by 22 April. T&Cs apply.

Who it might be good for: People who want more bang for their buck with Qantas Points.
ahm Comprehensive
Optional
Agreed or Market
Finder's summary: Its "pay as you drive" cover can save you up to 30% compared to its standard comprehensive cover. There's also no excess to pay if you hit a Kanga or other animal.

⭐ Current offer: Get 12 months of roadside assistance included when you take out a new comprehensive car insurance policy. T&Cs apply.

Who it might be good for: Rural drivers and those who drive less than 15,000 km a year.
Club Comprehensive 4x4 Insurance
Optional
Agreed or Market
Finder's summary: With Club 4X4, you can take advantage of Australia-wide cover for your 4WDs or 4x4. Importantly, insurance extends to modifications and accessories. Also, get peace of mind with personal effects cover of up to $2,000, plus, up to $1500 towards the cost of recovering your off-road vehicle if you get in trouble.

Who it might be good for: Drivers of 4WDs or 4x4s looking for wide-ranging protection ahead of their next driving adventure.
Coles Comprehensive
Optional
Agreed or Market
Finder’s summary: Mid-range cover and price but very good for perks. Double Flybuys points and $10 off at Coles every time you redeem 2,000 points, plus 1-week turnaround on repairs.

⭐ Current offer: 15% off your first year’s premium when you take out a policy online. T&Cs apply.

Who it might be good for: Those who want a wide-ranging policy with added bonuses that allow savings on everyday bills.
Bendigo Bank Comprehensive
Agreed or Market
Finder's summary: On top of the essentials, cover includes a nationwide repair network, 3-year new car replacement and up to $30m in liability insurance.

Who it might be good for: Those wanting peace of mind with lots of benefits.
Bupa Ultimate
Agreed or Market
KOBA Pay per KM
Agreed
Finder's summary: KOBA uses a pay-per-km system – ideal if you drive less. Its app is easy to use and costs can be as cheap as 3¢ per kilometre.

Who it might be good for: Those who don't drive long distances, such as city drivers.
Huddle Black Comprehensive
Agreed or Market
Finder's summary: This goes further than most insurers. You get up to 2k for stolen keys, roadside assistance and rental car excess cover (for car rentals in Australia).

Who it might be good for: Those who want top cover for their car.
Huddle Comprehensive
Optional
Agreed or Market
Finder's summary: Huddle's comprehensive policy will cover you if your vehicle is damaged or lost as a result of a collision, a natural event, a malicious act, theft or fire. It also includes up to $500 for essential repairs.

Who it might be good for: Someone who drives less than 15,000 km a year can opt for Pay As You Drive cover.
Virgin Comprehensive
Optional
Optional
Agreed or Market
Finder's summary: Finalists for the 2021 Finder Awards for Best Car Insurance - Value in VIC, QLD, SA, WA and TAS, Virgin Comprehensive provides a good level of cover for a decent price.

⭐ Current offer: Get 15% off on your first year’s premium when you purchase a new eligible comprehensive car insurance online. T&Cs apply.

Who it might be good for: People who'd like to manage their policy online 24/7.
Poncho Comprehensive
Poncho Comprehensive
Agreed
Finder's summary: Poncho works like a monthly subscription – you pay monthly and can cancel and leave at any time. You can also list multiple cars and drivers under one policy, making it ideal for families and groups living together under one household.

Who it might be good for: People who want their car insurance month to month.
Stella Comprehensive
Optional
Agreed
Finder's summary: Stella is a 2021 Finder Innovation award finalist in the Best Insurance Innovation award category. It comes with competitive pricing, rewards for being a safer driver and some unique inclusions like cover if your car is damaged as a result of domestic violence. It also offers higher cover for baby gear than most, with up to $2,000 cover for prams, strollers and child seats.

⭐ Current offer: Save 17% when you pay your premium annually. T&Cs apply.

Who it might be good for: Someone who wants a women-focused car insurance policy (it will cover men too).
PD Comprehensive
Optional
Agreed or Market
Finder's summary: PD comprehensive car insurance policy lets you buy, manage, and start your claims process online. It includes cover for emergency repairs up to $500 and free windscreen chip repair. Ability to customise your extras cover.

Who it might be good for: Those with low claims history and the only driver.
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2 Responses

    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
      JamesOctober 6, 2021Finder

      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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