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What is car insurance excess?

An excess in car insurance is your contribution toward a claim – a set amount of money you may need to pay your insurer for a claim you lodge as a result of an insured event, whether you have Third Party Property Damage, Third Party Property Fire and Theft or comprehensive insurance.

If your claim is successful, the amount of excess may be taken off the remaining costs to repair or replace your vehicle covered by your insurer. If it’s deemed that you’re not at fault for the accident, you may not be required to pay the excess.

These are some of the different types of excesses applicable in different claim scenarios:

  • Basic excess (standard excess). This is the amount of money you may have to contribute to a claim under the terms of your policy.
  • Age excess. This is applied to a claim for drivers under 25 years of age (or drivers who have held a licence for less than two years).
  • Undeclared young driver excess. This is applied to a claim for drivers under 25 years of age who aren’t listed on the policy.
  • Learner driver excess. Applied to drivers with a learner’s licence.
  • Inexperienced driver excess. Applied to drivers over the age of 25 who have held a licence valid in Australia for less than two years.
  • Fixed KM plan excess. Applied as an additional excess for an agreed distance plan if you go over your agreed amount as set out in your policy.

Some of these listed types of excesses may be referred to by different names by different insurers. These excesses may have to be paid in addition to your basic excess, and there may be other excesses applicable under your policy.

This is only general advice. It is always best to check your policy’s relevant Product Disclosure Statement (PDS) or your Certificate of Insurance for an accurate assessment of any applicable excesses and exclusions.

What is basic excess in car insurance?

The basic or standard excess is the amount of money you may have to contribute to a claim under the terms of your policy. If you do have to pay an excess, below is an example of how it may work during a claim.

If the cost of repairing your damaged car following a car accident is $1,500 and your excess amount is set at $500, you may be required to pay the $500 excess upfront, and your insurer will cover the remaining $1,000. Some insurers will deduct the excess from your settlement or ask you to pay the repairer before you collect your car.

Your basic excess is a set amount established at the start of your policy term. You can usually amend this amount to suit your needs as long as it’s done in accordance with the conditions of your policy. The amount you select as your voluntary excess could impact your car insurance premium.

As a general rule, the higher the excess you choose or nominate to pay, the lower your overall premium will be; conversely, if you lower your excess, a higher premium would apply.

Couple happy with excess on their car insurance

When do you pay excess on car insurance?

When lodging an insurance claim, your insurer will advise you if or when you need to pay an excess during the claiming process. Otherwise, you can usually find when you can expect to pay an excess in your policy’s PDS.

Do I pay excess if I damage another car?

As a general rule, yes you would pay an excess applicable for a claim if you (as the policyholder) are deemed to be at fault for the accident.

Depending on the circumstances of your claim, you may be liable to pay an excess even if you’re not the at-fault driver, if you or your insurer can’t identify the other party nor record any details. This may happen in a hit-and-run accident when the other driver flees the scene or refuses to hand over details.

Can I pay my car insurance excess in instalments?

Generally, car insurance excesses are paid as a lump sum to your insurance provider when settling your claim. There may be an option for alternate payment arrangements or assistance for those experiencing financial hardship.

Frequently asked questions

What is the average excess for car insurance?

For a basic excess, the default amounts can vary up to several thousand dollars, depending on your policy and provider. For other, specific excess types, the excess amounts are fixed and detailed in your policy’s PDS.

Should I increase my car insurance excess?

Your excess amount can often be amended to suit your situation. If you think it’s unlikely you’ll need to claim on your insurance, or you haven’t made a claim for some time, choosing a higher excess may be a way to get a lower premium.

What if my excess is more than the cost to repair my car?

Generally, if the damage to your car is relatively minor and the cost to have it repaired is less than the excess you’ll have to pay, it can be more cost effective and easier for you to pay to have the vehicle repaired yourself.

Get a quote for a lower excess car insurance

If you’re looking for car insurance with an excess that suits you, or simply after a better policy, try our easy-to-use comparison service for car insurance quotes. You can view policy features, premiums and excesses all side-by-side and for free.

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