How does car insurance excess work?

Learn what excess is, when to pay it, and how to reduce it

Car insurance premiums are rising fast — up 42% since 2019, in fact. That’s not just a footnote from your insurer’s latest email; it’s a sign that understanding how your policy works is more important than ever. The Insurance Council of Australia says higher repair costs, pricier car parts, and more frequent claims are all to blame.

But here's the good news: knowing how car insurance excess works can help you make smarter decisions, avoid unnecessary costs, and feel more in control when something goes wrong.

In this guide, we’ll cover:

• What excess is and how it works
• When you’ll need to pay it (and when you won’t)
• Different types of excess, including age and waiver options
• How to choose the right excess for your situation
• What to do if an accident catches you off guard and you’re short on cash

At Sheen, we’ve helped thousands of drivers across Melbourne navigate insurance claims with confidence. We work with all major car insurers and can help translate your policy into plain English, with no jargon and no runaround. Just expert support when you need it.

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What is car insurance excess?

Understanding excess is key if you want to make car insurance work for you. It’s one of the most misunderstood parts of buying this insurance, and we’re here to clear it up.

Car insurance excess is the amount you agree to pay out of pocket when making a claim. Think of it as your share of the repair bill: the bit you chip in before your insurer picks up the rest. This is known as your standard excess, and it's the most common type listed on car insurance policies. A different or higher excess may apply depending on the circumstances of the claim. The excess is an amount you agree to pay toward the total cost of a repair claim, and the rest is picked up by your insurer. The amount is usually shown on your insurance certificate.

If you’re in an accident and need to make an insurance claim, you’ll usually need to pay the excess before repairs begin, unless the accident wasn’t your fault and you’ve ticked all the right boxes for the insurer to waive it.

Your excess amount will be listed in your Product Disclosure Statement, and it may include additional excess amounts depending on your age, driving experience, or if the driver at the time wasn’t listed on your policy. A certificate of insurance will often also show your current excess amounts.

When do you need to pay an excess on car insurance?

Usually, you’ll pay your excess when your claim is accepted, either directly to your insurer or to your repairer, depending on the setup. It’s your green light for the process to move forward. The excess will apply even if the driver of your car causes an accident under certain conditions.

When is excess waived?

If the insurer agrees you weren’t at fault, and the other driver is both insured and identified, you might get off the hook. But if the at-fault driver vanishes faster than your hopes of a cheap premium, you’ll likely still be required to pay an excess.

Not sure what applies to your situation? Our team at Sheen can help decode your policy and let you know what to expect.

How much is excess for car insurance?

That depends. Not the most satisfying answer, we know, but it’s the truth. The amount you pay can vary widely based on the type of policy and your risk profile. Most basic excesses range from a few hundred dollars to over $1,000, especially for younger or higher-risk drivers. You might even find a different excess applies depending on the type of claim you make. For example, a higher amount if an unlisted driver is involved.

What affects how much you pay?

Things like your age, driving history, and insurer all play a role. You can often increase your excess to reduce your premium. Just be sure it’s not so high that you’d struggle to pay it when it matters. The excess you choose should match your financial comfort level in case you have to pay it suddenly. As a general rule, the higher the excess, the lower your premium, but that only helps if you don’t need to claim.

How to choose the right excess

Choosing your excess is a bit like picking your battles. A high excess means cheaper premiums now, but a bigger hit if you need to claim. A lower excess is safer, but you’ll pay a higher premium.

Should you raise your excess to lower your premium?

It’s a solid move if you have the funds ready in case of a claim. This approach suits confident drivers who rarely need to make claims (and have a touch of luck on their side). A voluntary excess is one you agree to pay in addition to any compulsory amounts.

What’s a realistic excess amount?

For many drivers, somewhere between $600 and $800 strikes the right balance. If you’re under 25 or don’t have much in savings, a lower excess might offer more peace of mind. You can often compare the level of excess across different types of car insurance policies to decide what works for you. The amount of excess and what it covers can differ significantly between providers, and whether you’ve opted for a comprehensive car insurance policy or basic third-party coverage.

What is age excess on car insurance?

An age excess is an extra cost applied to young drivers, usually under 25. Even if you’re not at fault, you may have to pay this excess if you’re in an accident.

It’s based on risk. Statistically, younger drivers are more likely to make claims, so insurers protect themselves with this added charge. Combine it with other extras (like being on a P-plate, having an inexperienced driver excess, or not being listed on the policy), and it adds up quickly.

Some insurers also include a driver history excess if the person driving your car has recent claims or offences. If the accident involves someone not listed or with limited driving experience, additional excess may apply in addition to your standard terms.

What is excess waiver car insurance?

Some policies come with an excess waiver: a little safety net that means you won’t have to pay excess in certain situations. Sounds good? It can be, but it’s not a free-for-all.

When does an excess waiver apply?

Waivers usually apply when you’re clearly not at fault, and the other driver is both insured and identified. Some insurers also offer waivers for specific claims, like windscreen damage or first-time accidents. A waiver may not apply to motorcycle insurance or specialty cover.

Check your Policy Disclosure Statement closely, or ask us to walk you through it.

What to do if you can’t afford your excess

If an accident blindsides you and you don’t have the cash on hand, don’t panic — you’ve got options. Many drivers worry they’ll be stuck with the bill, but most insurance cover providers understand life happens. Your insurance company or general insurance company limited may offer hardship support or flexibility to help you manage your costs. Many offer hardship programs or short-term payment extensions.

In some cases, repairers like Sheen can hold off on starting the work until your excess is sorted. We’ve even helped clients pay an additional excess through instalments so repairs can go ahead.

For example, one Sheen customer involved in a minor collision couldn’t pay the $950 excess immediately. We arranged to assess the damage, delay non-urgent repairs by two weeks, and provided written support for their hardship request to the insurer. They were approved for instalments, and the job went ahead as soon as payment was cleared.

Can you pay excess in instalments?

Some insurers allow it, especially if you explain your situation early. At Sheen, we’ve seen firsthand how a bit of flexibility makes all the difference, and we’re happy to help coordinate. If the car is damaged but still driveable, that flexibility might buy you the time you need.

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Need help? Sheen can explain car insurance policies to you!

Had an accident? Feeling overwhelmed? That’s where we come in. At Sheen, we make the claims process simple and we don’t leave you to figure it out alone.

We’ll provide a clear, fast quote for your car’s smash repairs, help you understand which excesses apply, and speak to your insurer on your behalf.

Whether your car is written off or simply scratched, we’ll walk you through the steps to make a claim on your car insurance and help manage your excess cost without unnecessary delays. We'll also clarify how your excess is determined and when it applies. Our team can:

• Explain your policy inclusions and exclusions
• Clarify which excesses apply and whether they can be waived
• Handle paperwork and communication with your insurer on your behalf

For many of our clients, this takes a huge weight off during an already stressful time.

We also offer:

• 24/7 towing and accident response
• A wide range of accident replacement vehicles
• A lifetime guarantee on repairs

Upload your smash now and let us take care of the rest. Whether your car causes an accident, or you’re not at fault, we can help you understand what’s covered by your policy, what’s excluded, and whether you’ll need to deduct the excess or if it will be waived.

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