Car insurance excess explained (Australia)

The excess is one of the most misunderstood numbers on a car insurance policy — and one of the most expensive to get wrong. In simple terms, your excess is the amount you pay towards a claim before the insurer pays the rest. Choose the wrong excess and you either overpay every year or get an unpleasant surprise when you actually claim.

How an excess works

Say your car needs $4,000 of repairs after an at-fault accident and your excess is $800. You pay the $800; the insurer covers the remaining $3,200. If the repair only came to $600, you would generally pay the whole $600 yourself and the insurer pays nothing — because the cost is below your excess. That is why a very low-value claim is often not worth making.

The types of excess you might face

Most Australian comprehensive policies have several excesses, and more than one can apply to the same claim:

• Standard (basic) excess. The core excess set by the insurer that applies to most at-fault claims.
• Voluntary excess. An optional amount you add on top to lower your premium. You are trading a smaller bill now for a bigger one at claim time.
• Age excess. Applies when a driver under a certain age (often under 25) was driving at the time of the incident.
• Inexperienced-driver excess. Applies to drivers who hold a licence but have limited driving experience, regardless of age.
• Other excesses. Some policies add specific excesses for undeclared drivers, certain repairs, or windscreen claims.

When you might not pay an excess

You can often avoid or recover your excess when:

• You were not at fault and can identify the other driver (full name, contact details and registration).
• The claim is covered by a specific "no excess" benefit in your policy, such as some windscreen or no-fault provisions.

If you cannot identify the at-fault party — a hit-and-run, or a car park dent with no note — most insurers will still charge the excess even though the damage was not your fault. Check your PDS for the exact wording.

Choosing the right excess

A higher excess lowers your premium; a lower excess costs more each year but hurts less at claim time. The right choice depends on one honest question: could you comfortably pay this excess tomorrow if you had an accident? If the answer is no, a lower excess is worth the extra premium. If you have savings and rarely claim, a higher voluntary excess can be a sensible way to cut the annual cost.

Where your excess is written down

Your applicable excesses are listed on your certificate of insurance and explained in the Product Disclosure Statement (PDS). It is worth knowing these figures before you need them, not while you are standing next to a damaged car.