What is a home insurance excess in Australia?

A home insurance excess is the amount you pay when you make a claim. Your insurer covers the rest of the approved costs above that amount. Depending on your policy, you may have a standard excess plus additional voluntary, event-specific or compulsory excesses that apply in certain situations.

Is it better to have a higher or lower home insurance excess?

It depends on your budget and risk tolerance. A higher excess usually lowers your premium, which can be helpful if you want cheaper ongoing costs and rarely claim. But it also means paying more upfront if something goes wrong. A lower excess costs more in premiums but reduces your out-of-pocket cost during a claim. The best way to determine which excess suits your budget is to have a think about what you'd be comfortable paying if you ever had to make a claim.

Do I pay my home insurance excess on every claim?

Yes, you are generally expected to pay your home insurance excess on every claim you make. In some cases, you may be asked to pay more than one excess. Always check your product disclosure statement (PDS) to see which claims require an excess and whether any exemptions apply.

Do I still pay an excess if I am not at fault?

Regarding your home insurance, yes. Events or circumstances where there is no third party involved, such an earthquake or storm, you will be required to pay an excess.

Can I change my home insurance excess after I buy a policy?

Often you can, but it depends on your insurer's rules. Many insurers allow you to adjust your excess at renewal or sometimes mid-policy. Increasing your excess can reduce your premium, while lowering it usually increases your premium. Any changes may take effect immediately or at your next renewal, so it's important to check the timing and conditions before making adjustments.

Can I have a different excess for building and contents?

Yes. Many insurers let you choose separate excesses for building and contents, particularly if these are insured under the same policy. This lets you tailor your cover, such as having a higher excess for building to reduce premiums, while keeping a lower excess for contents you expect might be claimed more often. However, check your insurer's PDS, as not all policies allow different excess settings.

What happens if I cannot afford to pay my excess?

If you can't afford your excess, contact your insurer and inform them of your financial situation. In some cases, they may reduce or waive the excess entirely if you can provide evidence of your hardship. Other alternatives including opting for a payment plan or the insurer keeps the amount of your excess before issuing the remaining amount to you.

Does a higher excess always mean a cheaper premium?

Not always, but usually. Increasing your excess reduces the insurer's risk, which often leads to lower premiums. However, the discount varies and may only reduce your premium up to a certain point. That's why it's worth taking the time to compare home insurance quotes from at least 3 different insurers to find the most cost-effective option.