When Do You Need to Pay Excess on Car Insurance?
Excess might be one of the most misunderstood parts of car insurance. While it’s often assumed that you must pay an excess to make a claim, this isn’t always the case. Depending on who was at fault, the type of claim and how your policy is structured, you may not need to pay anything at all!
What Is Car Insurance Excess?
Car insurance excess is the amount you agree to pay toward a claim before your insurer covers the remaining cost of repairs or losses. There are two main types of car insurance excess:
- Compulsory excess is set by the insurer and cannot be removed. It’s based on factors such as your age, driving experience, location and the type of vehicle you drive. Every policyholder must pay this amount if a claim is approved.
- Voluntary excess is an additional amount you choose to pay on top of the compulsory excess. Drivers may select a higher voluntary excess to reduce their insurance premium, as agreeing to pay more upfront in the event of a claim lowers the insurer’s risk. This extra excess is paid in addition to your compulsory excess.
When Do You Have to Pay Excess?
You typically pay an excess when making a claim, as your insurance policy requires you to contribute to the cost. However, excess does not apply to all claims.
For accidental damage claims, excess is payable when you’re at fault (or partly at fault) or you can’t identify the other driver. If you’re not at fault and you provide the other driver’s full name, address and vehicle registration, then your insurer will typically waive the excess.
In the case of weather (hail, storm, flood, bushfire) & theft and vandalism claims, excess still applies, even though these events are outside your control.
Some policies include special features that allow certain claims to be excess-free. For example, many policies offer excess-free windscreen or glass claims, meaning you can repair or replace a chipped or cracked windscreen without paying excess, provided the damage is limited to glass only.
How Much Is the Excess?
Typical excess amounts often range from a few hundred to over a thousand dollars, depending on the level of cover and risk factors associated with the driver and vehicle. Several factors can increase the excess you’re required to pay:
- Young or inexperienced drivers have higher excesses due to increased risk.
- If an accident involves a driver who isn’t named on your policy, many insurers apply an additional excess on top of the standard amount.
- The type of vehicle you insure can also affect excess levels. High-performance cars, luxury vehicles or modified cars may attract higher excesses because they are more expensive to repair or replace.
- Choosing a voluntary excess allows you to increase the amount you pay if you make a claim in exchange for a lower insurance premium.
Is It Worth Choosing a Higher Excess?
Choosing a higher excess can be a good way to reduce your car insurance premium, especially for experienced drivers with a strong claims-free history or for those who use their car less than the average person.
However, it’s not always the right option for everyone since you’ll be required to pay more out of pocket if you make a claim. A lower excess may be a better choice if you drive frequently, live in a high-traffic area or would otherwise struggle to pay a large excess at short notice for urgent repairs.
What Happens If You Can’t Afford the Excess?
If you can’t afford to pay the excess, it can complicate the claims process. In many cases, repairs won’t begin until the excess is paid, which could leave you without a vehicle for longer than expected. Some insurers or repairers may allow payment plans for excess, however this depends on the insurer.
If paying the excess isn’t possible, you may choose not to make a claim at all. For minor damage, covering the repair costs yourself can sometimes be cheaper than paying the excess and potentially losing a no-claims discount or facing higher premiums in the future.
After an accident, choosing the right repairer matters. With Kate Presnell Bodyworks, you can trust that our team delivers expert panel beating, high-quality paintwork and reliable insurance repairs. Contact us today to book a repair or talk to our friendly team about repairing your vehicle.