Car insurance excess explained

Sheen Panel Service on 16 October 2019

If you hold an insurance policy or made a claim against an insurance policy, you will have encountered car insurance excess. Excess is a standard part of car insurance products, but what exactly is it, and do you always have to pay it? We want to explore what car insurance excess is and go through some of the key questions around this topic. 

What is a car insurance excess?

A car insurance excess is an amount payable on top of your insurance premium that is paid when you make a claim against your insurance.

For example, if you have an accident and make a claim for $4,000 in damage. Your insurance policy has an excess of $800 so you pay the $800 and your insurance provider covers the remaining $3,200 for the repairs.

  • Insurance providers charge excess to keep premiums low due to the administrative cost of processing a car accident claim.
  • Car insurance excess acts as a deterrent to stop people from making claims for small accidents, and from claiming too often.

It is worth noting that even though all insurers charge an excess, but the amounts can vary between companies so it is well worth shopping around to get the lowest possible excess.

How do I know who is at fault in an accident?

At fault

If you are not at fault—that is, you did not cause the accident—you will likely not have to pay an insurance excess. So how do you identify who was at fault?

Some accidents are clearly the fault of one driver. These are examples of the other driver being at fault:

  • You are sitting at the lights and another driver hits you from the rear.
  • You are driving along a road with right of way and another driver disobeys a sign and does not give way to you, hitting your vehicle.

In other instances it is not as clear-cut, for example:

  • You are driving along the highway and merge into another lane, hitting another driver who was merging at the same time. 
  • You are reversing out of a car space while another driver is also reversing, and you collide with each other. 

If there is any question as to who caused the car accident it is best to not admit liability until the police or an insurance provider assesses your accident and identifies who is liable.

What are the different types of car insurance excess? 

Car insurance excess is a way of the insurance provider avoiding risk by passing on some of the costs of repairs to the driver. Due to the different nature of risks there are a number of different excesses which are payable, depending on how 'risky' you are as a driver.

1. Standard insurance excess 

This is the amount that all drivers will be required to pay in the event of an at-fault accident claim. note that some insurers will require you to pay excess even if the accident was not your fault, but will then refund your excess once a claim has been processed. 

2. Voluntary excess

Insurance providers allow customers to pay a voluntary amount of excess to keep the costs related to your premium down. 

3. Age excess 

If you are under the age of 25 you will likely have a higher excess. This is because younger drivers are more likely to be involved in an accident. Your excess may be upwards of $1,000, so it is worth looking around between insurers to find the best possible rate here. 

4. Inexperienced driver excess

This applies to drivers over the age of 25 who have held their licence for a short period of time, usually a period of less than two years. You will be charged an excess on top of your standard excess. 

5. Glass and windscreen excess

Some insurance providers impose an excess on claims made for window and glass repairs.

6. Unlisted driver excess

Sometimes insurers provide cover for only certain persons as listed on your policy. If someone else is driving your car and has an accident then an unlisted driver excess will apply.

Can I avoid paying car insurance excess?

car insurance excess2

Insurance excess is something that most of us would like to avoid. While you will most likely have to pay some amount of excess you can avoid paying a large sum in some cases. You may be able to avoid paying excess by:

  • Paying a much higher premium.
  • Not being at fault and providing the at-fault driver's name, address and registration number (so that they are responsible for the costs of repairs and the accident).
  • Proving you are in genuine financial hardship - although you will need to speak directly to your insurer and provide evidence of your financial situation. 

We hope this has been an illuminating look at what car insurance excess is, the various types of excess, and why car insurance excess exists.

At Sheen we are committed to making sure that getting your car fixed after an accident is a simple process. We can even speak to your insurer on your behalf. To find out about car repairs in your area find us in store.