An excess is a fixed amount you pay when making an insurance claim.
It is your contribution to the claim and helps keep the cost of premiums down for you and all customers by preventing low value claims being made.
An excess will generally always need to be paid to make an insurance claim. Read this guide to understand how an excess works.
An excess is a fixed amount you pay when making an insurance claim.
It is your contribution to the claim and helps keep the cost of premiums down for you and all customers by preventing low value claims being made.
The IFSO Scheme receives many enquiries from people who are unsure if they need to pay an excess. An excess will generally always need to be paid to make a claim. To avoid any surprises at claim time, it is important you understand when you need to pay an excess and the amount/s to be paid.
There are different types of excesses. It can be an unexpected cost if you do not know what excesses may apply to a claim.
Viv’s* dog damage
Viv’s carpet was damaged when her dog was sick. The damage occurred at different times of the day, in different rooms. Viv needed to pay 3 separate excesses, because each location of damage was a separate event.
Mia’s* car theft
Mia’s car was stolen. The offender was charged and Mia felt that she should not be required to pay an excess, because the theft was not her fault. While Mia was not at fault, she still needed to pay an excess to make the claim.
Lee’s* landslip claim
Lee’s rental property was damaged after a bad weather event. Lee felt the standard excess of $500 should apply, because rain was the cause of the damage. However, the insurer said the $10,000 landslip extension excess applied. The IFSO Scheme closely analysed the policy wording and found that Lee needed to pay the higher $10,000 excess for the landslip extension cover.
*Names have been changed
There are four main types of excesses:
Standard
The minimum excess set by the insurer. Different policies will have different standard excesses.
Example: A contents policy may have a standard excess of $300. This is the minimum excess that all insured customers will pay to make a claim.
Voluntary
You choose a higher excess than the standard excess, in return for a discount on the premiums paid.
Example: Eric chooses to pay a voluntary excess of $1,000 for his contents because he only wants to claim on his policy for significant damage or loss.
Imposed
Your insurer chooses to impose a higher than standard excess. This is because of an increased risk.
Example: John has made a high number of contents claims in the previous three years. His insurer imposes an excess of $1,000 for contents claims.
Graduated
This is a feature of car insurance where the excess will increase in certain circumstances – usually due to the age of the driver and/or their type of licence.
Example: Carly’s daughter had an accident in Carly’s car. A higher than standard excess applied because Carly is under 25 years old.
An excess will almost always need to be paid when you make a claim. There are some limited circumstances when an insurer may not require an excess. These exceptions will be set out in your policy document. For example, some car insurance policies may waive the excess for glass claims.
You can request a higher voluntary excess than the standard excess. Your insurer will confirm the voluntary excess amounts available for your policy.
Choosing a higher excess will lower your premiums. However, you won’t be able to make a claim for any damage or loss below the excess amount. You will need to cover the damage or loss below the excess amount yourself.
When you make a claim, your insurer will confirm how the excess will be paid. You may be asked to pay the excess to the repairer. If the insurer is paying you a settlement amount to your bank account, it will usually deduct the excess from the amount it pays to you.
There are 2 key situations when you will need to pay more than one excess:
In most cases, you have to pay the excess when you make a claim, even if you are not at fault. Your insurance policy will set out when you need to pay the excess. Sometimes, vehicle policies have a “no fault” provision and, if you meet all the requirements, the insurer may waive the excess. If you are unsure, ask your insurer.
If the person at fault has not made a claim on their insurance policy, you can make a claim on your own vehicle policy and pay your excess. Your insurer will assess your claim and, if accepted, it will arrange the repairs to your car. While the insurer may attempt to recover your excess from the person at fault, it is not required to do so.
Read your policy
Check your insurance policy and schedule for details of the excesses that apply.
Make changes if needed
Talk to your insurer if you would like to request changes to your excess, or if you have any questions.
Check your policy details each year at renewal
At each policy renewal, review your excesses to make sure they are still appropriate for your circumstances. Talk to your insurer if you are unsure.