Car Insurance Excess Explained: Types & When You Pay

A car insurance excess is the amount you pay towards a claim before your insurer pays the rest. If your car needs repairs and your excess applies, you contribute that amount and the insurer covers the remainder, up to the policy’s limits.

That sounds simple, and for many claims it is. But most policies have more than one excess, they can stack on top of each other, and whether you pay at all on a not-at-fault claim depends on the wording of your policy. This guide explains each type, when it applies, and how to choose an excess that saves money without leaving you exposed.

How car insurance excess works

Your excesses are listed in your policy schedule, sometimes called the certificate of insurance. When you make a claim, the insurer works out which excesses apply based on what happened and who was driving, then either asks you to pay them or deducts them from what it pays out.

Two things follow from this:

• The excess is per incident. If you have two separate accidents, you pay two excesses, even if you claim for both at once. The Financial Rights Legal Centre gives the example of a minor bump followed by a second collision on the way to the repairer: two incidents, two claims, two excesses.
• The excess is per policy. If you drive into your own house, your car policy responds to the car damage and your home policy to the house, and each has its own excess.

The types of car insurance excess

Most Australian car insurance policies use some combination of the following. The names vary between insurers, but the structure is similar.

Excess	When it applies	Adds to the basic excess?
Basic or standard excess	Most claims, whoever is driving	This is the base
Voluntary excess	You chose a higher basic excess to reduce your premium	Replaces the standard basic excess
Age or young driver excess	The driver is under a set age (commonly 21 or 25)	Yes
Inexperienced driver excess	The driver has not held a full licence for long, often two years, whatever their age	Yes
Unlisted or undeclared driver excess	The driver is not named on the policy	Yes
Listed driver excess	A named driver with a poor claims or driving history	Yes
High-performance vehicle excess	Certain powerful cars carry a fixed extra excess	Yes
Windscreen or glass excess	A glass-only claim; some policies waive it once a year	Often separate

RACQ, for example, lists the basic excess, an age excess for young or inexperienced drivers, an inexperienced driver excess for drivers aged 25 or over who have not held a full Australian licence for the previous two years, a high-performance excess and a listed driver excess based on claims, traffic and criminal history. RACQ also notes that learner drivers are generally an exception, with no additional excess.

How excesses stack

The extra excesses are added to the basic excess, not substituted for it. Imagine a policy with a basic excess, an age excess for drivers under 25, and an unlisted driver excess. If a 20-year-old who is not named on the policy crashes the car, all three can apply to the one claim.

That is why the headline excess in an advertisement can be a poor guide to what a claim would cost you. Before you choose a policy, add up the excesses for each person who actually drives the car. If a young or unlisted driver uses it regularly, listing them usually costs less than the extra excess you would pay after a crash.

Do you pay the excess if the accident was not your fault?

This is the question that causes the most frustration, and the honest answer is that it depends on your policy.

• Moneysmart’s general rule is that you have to pay an excess when you claim whether you are at fault or not, though some policies waive it in limited circumstances.
• Many policies waive the excess if another driver was entirely at fault and you give the insurer their details, typically their name, address and registration number. RACQ, for example, says you generally will not need to pay an excess in that situation, even if the other driver is uninsured.
• If the other driver cannot be identified, for example after a hit-and-run, you usually pay the excess. Moneysmart gives the example of a driver hit by someone in a stolen car who drove off; her policy required the excess because the at-fault party could not be found.

At the scene of any accident, collect the other driver’s name, address, phone number, licence and registration details and their insurer, and photograph their number plate. Those details are often the difference between paying the excess and not.

If you pay the excess and your insurer later recovers the full cost from the at-fault driver, you may get it back. The Financial Rights Legal Centre notes that this can take months or years, and that insurers sometimes decide recovery is not worth pursuing.

Choosing your excess: high or low?

A higher voluntary excess lowers your premium. That trade makes sense only if you could pay the higher amount without difficulty on the day you need to.

A higher excess suits you if	A lower excess suits you if
You have savings that could cover it tomorrow	Paying it would mean borrowing or missing bills
You rarely claim and would pay small repairs yourself anyway	You drive a lot, park on the street or in a hail-prone area
You want the lowest ongoing premium	You want certainty about the cost of a claim

Moneysmart suggests weighing a higher premium with a lower excess against the opposite, and increasing your excess is one of the levers it lists for reducing your premium. Just remember that the saving is spread across the year, while the excess arrives all at once.

When not to claim

If the damage costs less than your excess, the insurer pays nothing, so there is no point claiming. Moneysmart’s example is a driver who scratches her car in the driveway: the repair is quoted at $400 and her excess is $650, so she pays for the repair herself.

Even when the repair costs somewhat more than the excess, an at-fault claim can reduce your no claim bonus and increase your premium for several years. For a small repair, compare the amount you would recover with the likely effect on future premiums before you lodge a claim. Our no claim bonus guide explains how ratings work.

If you cannot afford your excess

Tell your insurer as early as possible. Some insurers let you pay the excess in instalments or deduct it from a payout, and insurers have financial hardship processes. The Financial Rights Legal Centre notes that your insurer cannot reject your claim just because you cannot pay the excess, and that free financial counsellors can help.

Refusing to pay an excess you owe is risky: the insurer may not proceed with repairs, may deduct the amount from any payout, and may not cover legal costs if the other driver takes action. If you believe you should not have to pay, the usual approach is to pay it, tell the insurer in writing that you dispute it, and ask for a refund with evidence that you meet the policy’s conditions. If that fails, you can complain to the insurer’s internal dispute resolution team and then to the Australian Financial Complaints Authority (AFCA).

Excess checklist before you buy

• Find the basic excess and every additional excess in the policy schedule or PDS.
• Add up the total for each person who drives the car.
• Check the not-at-fault rules: when the excess is waived and what details you must provide.
• Check whether glass claims carry a separate excess or an excess-free option.
• Choose a voluntary excess you could pay tomorrow.

For the other decisions on a policy, see our guides to comprehensive car insurance, agreed value vs market value and car insurance for young drivers, or go back to compare car insurance.