Simply put, your car insurance excess is the out-of-pocket amount you have to pay when making a claim with your Insurer.
For example, if your standard excess is $500 and your repair claim is $2000, that means you'll have to pay $500, while your insurance company pays the remaining $1500. In the event that your car is written off, your excess would usually be deducted from the final claim payment you receive.
Keep in mind that your excess applies when you or someone else covered by your insurance is driving your car and you or they cause an accident. It also applies if your car is damaged where no one is at fault, or the responsible party cannot be identified.
If another party causes damage to your car and is shown to be at fault, their insurance will cover the cost of your repairs and you won’t have to pay anything out of pocket.
The level of standard excess varies widely across providers. There are also different types of excesses applied depending on who is driving the car and the options you choose in your policy. These can include (but are not limited to):
• Standard excess.
• Age excess (for drivers under a certain age).
• Unlisted driver excess.
• Inexperienced driver excess.
• Windscreen excess.
• And possibly a special excess for certain conditions.*
These excesses can apply individually or in combination, depending on the circumstances.
As such, it's a good idea to compare different Insurers and to review your policy regularly to ensure your current standard excess level still meets your needs.
How much you pay for excess cover directly relates to the level of standard excess you choose. The higher the excess, the less you may pay in premiums, and vice versa.
Of course, a higher excess means you may end up paying more out-of-pocket if you need to make a claim. If you're a safe driver with a clean driving history, going with a higher excess could make sense for you. On the other hand, maybe you think it’s better to be safe than sorry.
Ultimately, it’s your decision. Just be sure to review all the facts from every angle before you decide.
Most Insurers allow you to reduce or increase your standard excess at any time. When reviewing quotes, you can try experimenting with different levels of excess until you find cover that suits your needs and budget.
Here at iSelect, we can provide the advice you need to make an informed decision on your car insurance cover.
*Sometimes an Insurer may have an excess payable upon special circumstances or due to vehicle reasons that are additional to the standard excess.