A guide to car insurance excess

Car insurance excess is the amount you agree to contribute towards the cost of a claim before your insurer pays the remaining approved repair or replacement costs. Put simply, it's your share of the claim.

If you're involved in an accident and need to make a claim on your car insurance policy, you'll usually need to pay an excess before repairs can begin or before the claim is finalised. The excess amount is set out in your policy documents and may vary depending on your insurer, level of cover, and individual circumstances.

Think of excess as a way of sharing risk between you and your insurer. In exchange for providing cover for potentially significant repair costs, the insurer requires you to contribute a predetermined amount when a claim is made.

For example, if your vehicle suffers $5,000 worth of damage and your car insurance excess is $800, you would generally pay the $800 excess, and your insurer would cover the remaining approved repair costs under the terms of your policy.

A simple definition of car insurance excess

In simple terms, car insurance excess is your contribution towards the cost of an insurance claim. When you make a claim, you'll generally need to pay an excess before your insurer pays the remaining amount covered under your policy.

The excess amount can vary depending on your insurer, your level of cover, and the circumstances of the claim.

Why insurers charge an excess

Insurers charge an excess to help balance risk between the policyholder and the insurer. It serves several purposes:

• Keeps insurance premiums lower by ensuring drivers contribute to the cost of a claim.
• Reduces minor claims that may cost more to process than the damage itself.
• Encourages responsible claiming by helping drivers decide whether to file a claim.
• Helps insurers manage risk across different policyholders and types of cover.

Without an excess, insurance premiums would generally be higher because insurers would bear the full cost of every claim, regardless of size.

How excess affects your claim payout

When you make a claim, your excess reduces the amount your insurer pays towards the final cost.

For example:

• Approved claim amount: $6,000
• Car insurance excess: $1,000
• Amount paid by insurer: $5,000

The higher your excess amount, the more you'll contribute towards the claim. That's why it's important to choose an excess that fits your budget if you ever need to make an insurance claim.

Understanding what excess is is one thing, but knowing how it works when you need to make a claim is just as important. The way excess is applied can vary between insurance policies, but the general process is similar across most insurers.

From lodging a claim to paying the excess and determining whether it applies at all, here's what you can expect when making a claim under your car insurance policy.

One of the most common questions drivers ask is whether they'll need to pay an excess after an accident. The answer depends on who was at fault, the circumstances of the claim, and the terms of your insurance policy.

When is car insurance excess waived?

One benefit of some car insurance policies is that the excess may be waived in certain circumstances. However, excess waivers aren't automatic and depend on the details of the claim and the conditions of your policy.

When the other driver is identified and insured

You may not need to pay an excess if:

• The other driver was at fault.
• The driver can be identified.
• Their contact details have been provided.
• Your insurer can recover its costs from the other party.

If any of these requirements can't be met, you may still need to pay the excess while the claim is being investigated.

Excess waiver provisions in some policies

Some insurers include excess waiver benefits for specific situations, such as:

• Windscreen repair claims.
• Certain not-at-fault accidents.
• First-time claims under eligible policies.
• Promotional or optional policy benefits.

Because these provisions vary between insurance policies, it's worth checking exactly what your cover includes.

Why policy conditions matter

Whether an excess is waived often depends on meeting your insurer's requirements, including:

• Providing accurate accident details.
• Supplying evidence to support the claim.
• Identifying any other drivers involved.
• Following the claims process outlined in your policy.

Reviewing your Product Disclosure Statement can help you understand when an excess may apply and when it may be waived.

How do insurers determine who is at fault?

Determining fault is an important part of the claims process because it can affect whether you need to pay an excess and how your insurer handles the claim. While every situation is different, insurers assess the available evidence to establish who was responsible for the accident.

Common examples where another driver is at fault

Another driver may be considered at fault if they:

• Rear-end your vehicle.
• Failed to give way at an intersection.
• Change lanes without checking if it is safe.
• Reverse into a parked vehicle.
• Ignore traffic signs or signals.

In these situations, your insurer may be able to recover costs from the other party if fault is clearly established.

Situations where fault may be shared

Not every accident has a clear-cut outcome. In some cases, both drivers may have contributed to the incident.

Shared fault can occur when:

• Both drivers made an error leading up to the collision.
• There are conflicting accounts of what happened.
• The evidence doesn't clearly support one version of events.
• Multiple vehicles are involved in the accident.

When fault is shared, the handling of excess and claim costs will depend on the circumstances and your insurer's assessment.

What evidence helps determine fault?

Insurers rely on evidence to understand how an accident occurred. Useful information can include:

• Photos of the damage and accident scene.
• Dash cam footage.
• Witness statements.
• Police reports.
• Details exchanged between drivers.
• Vehicle repair assessments.

The more information you can provide, the easier it is for your insurer to assess the claim and determine fault.

What happens if both drivers are at fault?

Sometimes an accident isn't entirely the fault of one driver. When both parties contribute to the circumstances leading to a collision, insurers may determine that liability is shared. This can affect everything from excess payments to how a claim is settled.

Understanding shared liability

Shared liability occurs when both drivers are found to have contributed to an accident. Rather than assigning responsibility to a single party, insurers assess each driver's actions and determine the extent of their fault.

For example, one driver may have failed to give way while the other was travelling above the speed limit. In this situation, both actions may have contributed to the accident.

How shared fault affects excess payments

If fault is shared, you may still need to pay an excess when making a claim. Whether the excess is refunded later will depend on your insurer's assessment and their ability to recover costs from the other party.

Because every insurer handles shared-fault claims differently, it's important to check how excess payments are treated under your policy.

Impact on claim payouts and premiums

Shared liability can influence the outcome of a claim, including the amount your insurer ultimately recovers from another party. It may also affect your claims history, which insurers can consider when calculating future premiums.

The impact varies depending on the circumstances of the accident, the level of fault assigned to each driver, and the terms of your insurance policy.

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

Age excess is an additional excess that may apply when the driver involved in a claim is below a certain age, typically under 25. It is charged on top of the standard excess and reflects the higher level of risk insurers associate with younger drivers.

Why do younger drivers pay higher excesses

Insurers generally view younger drivers as a higher-risk group because they're statistically more likely to be involved in accidents and make claims. To help manage that risk, many insurance policies include an age excess for younger drivers.

When age excess applies

Age excess typically applies when the driver involved in the accident falls below the insurer's specified age limit. In some cases, the excess may still apply even if the younger driver wasn't at fault, depending on the policy terms and claim circumstances.

Can age excess be reduced?

The best way to understand or reduce age-related costs is to compare insurance policies and review the available excess options. Some insurers offer different excess structures, while others may adjust premiums and excess amounts based on driving history, experience, and policy selections.

How to choose the right excess

Choosing the right excess comes down to balancing your premium with what you could comfortably afford to pay if you needed to make a claim. While a lower excess can provide greater financial certainty after an accident, a higher excess may help reduce the ongoing cost of your insurance policy.

Low excess vs high excess

A low excess generally means you'll pay less out of pocket when making a claim, but your premium is likely to be higher. A high excess can reduce your premium, although you'll need to contribute more towards the cost of a claim if an accident occurs.

Should you increase your excess to lower your premium?

Many drivers choose a higher excess to reduce their insurance costs. This can be a sensible option if you have savings available and could comfortably pay the excess if you needed to make a claim. However, it's important not to choose an excess that's beyond your financial means.

What is a realistic excess amount?

There's no one-size-fits-all answer. For many drivers, an excess of $500 to $1,000 strikes a reasonable balance between affordable premiums and manageable claim costs. The right amount will depend on your budget, driving habits, and risk tolerance.

Questions to ask before choosing your excess

Before selecting an excess, consider:

1. Could I comfortably pay this amount if I had an accident tomorrow?
2. How much would my premium change if I increased or reduced the excess?
3. Do additional excesses apply under my policy?
4. How often am I likely to make a claim?
5. Would a higher excess create financial stress if my vehicle needed repairs?

Taking the time to compare your options can help you choose an excess that fits both your budget and your insurance needs.

Can you avoid paying car insurance excess?

While car insurance excess is typically required when making a claim, there are certain situations where you may not have to pay it in full or at all. The key is understanding the conditions of your policy and speaking with your insurer as early as possible in the claims process.

Situations where excess may not apply

You may not need to pay an excess if:

• Another driver was at fault and can be identified.
• Your insurer agrees to waive the excess under the terms of your policy.
• A specific excess-free benefit applies to your claim.

The exact requirements vary between insurers, so it's important to check your policy documents. A recent survey by Youi Insurance revealed that while 83% of Australians feel confident about their policy knowledge, only 25% have read their Product Disclosure Statement (PDS) in full—the document that outlines key policy terms, coverage limits, and exclusions.

Excess-free policy options

Some insurers offer policy features that reduce or remove excess payments for certain claim types. These benefits may apply to events such as windscreen damage or other nominated incidents, although eligibility and conditions differ between policies.

Keep in mind that policies with additional benefits or lower excess requirements may come with higher premiums.

Financial hardship and insurer discretion

If you're unable to pay the excess due to financial hardship, contact your insurer as soon as possible. Some insurers may offer payment arrangements, temporary assistance, or other support options depending on your circumstances.

If you've been involved in an accident and are unsure what to do next, it's often worth discussing your situation with both your insurer and repairer before making any decisions.

What is an excess waiver?

An excess waiver is a policy feature that allows you to avoid paying the excess in certain situations. While not all claims qualify, an excess waiver can reduce your out-of-pocket costs when specific conditions are met.

How excess waivers work

When an excess waiver applies, your insurer agrees not to charge the excess that would normally be payable on a claim. Instead of paying the excess upfront or deducting it from the claim amount, the insurer covers the claim without requiring the contribution.

When an excess waiver applies

The circumstances that trigger an excess waiver vary by insurer and policy. In many cases, waivers are linked to not-at-fault accidents where the other driver can be identified and held responsible for the damage.

Types of claims that may qualify

Depending on the policy, an excess waiver may be available for:

• Not-at-fault accidents.
• Windscreen or glass claims.
• Specific insured events covered by the policy.
• Optional policy benefits or add-ons.

Because eligibility differs between insurance policies, it's important to review your Product Disclosure Statement to understand what is and isn't covered.

Do I always have to pay excess if I make a claim?

Not always. Whether you need to pay an excess depends on the circumstances of the claim and the terms of your insurance policy. In some situations, such as certain not-at-fault accidents, your insurer may waive or refund the excess.

Do I pay excess if someone else hits my car?

You may not need to pay an excess if another driver was at fault and can be identified. However, some insurers require the excess to be paid initially and may refund it later once liability has been confirmed.

Can I choose my excess amount?

Many insurers allow you to choose between different excess levels when taking out or renewing a policy. Choosing a higher excess can reduce your premium, while a lower excess generally results in higher insurance costs.

What happens if I can't afford my excess?

If you're experiencing financial hardship, contact your insurer as soon as possible. Depending on your circumstances, they may offer payment arrangements, hardship assistance, or other support options.

Does paying a higher excess lower my premium?

In many cases, yes. A higher excess reduces the amount an insurer may need to pay when a claim is made, which can result in a lower premium. However, you'll need to pay more out of pocket if you make a claim.

Can excess be refunded?

Yes, in some situations. For example, if you pay the excess and your insurer later recovers costs from the at-fault party, they may refund the excess. Refund policies vary between insurers, so it's important to check your policy terms.