When it’s time to sort out your car insurance, answering the questions required to start a quote is relatively straightforward: What type of car do you own? Where do you usually park it overnight? Who regularly drives it? Easy!
Then you reach the section on excess and are asked to select an amount from a range of options. That’s where things can get harder. What does a higher or lower excess mean in reality? When would you have to pay it? And what’s the purpose of a car excess in insurance anyway?
To help you understand how the world of car insurance excesses works, and how to pick the magic number that’s right for you, we’ve answered a few common questions below.
What is excess in car insurance?
While your premium is what you pay to insure your car, the excess is the amount you’re required to pay whenever you make a claim on your car insurance policy.1
For example, say you have an excess of $500. If you have an accident and the repair bill for your car is $3,000, if your claim’s accepted, you’ll be responsible for contributing $500 towards your car’s repair costs, with your insurance policy covering the remaining $2,500.2
There may be some circumstances in which your excess is waived; we’ll go into that below. There can also be different types of excesses that apply in different situations and for different types of drivers – and sometimes you may need to pay multiple excesses –3 more on that later too.
What is the excess in car insurance actually for?
Car insurance excesses allow insurers to pass on some of the cost of car insurance claims to drivers and car owners.
“This may help reduce the number of small claims, which can be costly for insurers to process,” explains Marni Jackson, Youi’s Head of Product – Vehicle and Lifestyle. “In turn, reducing those minor claims can help make it easier for insurers to keep the overall costs of car insurance premiums down for everyone.”
When do you pay excess on car insurance?
You’ll typically need to pay an excess whenever you make a claim on your car insurance, although sometimes it depends on the situation.4 Here’s what to expect in a few different scenarios.
Do you have to pay an excess if an accident wasn’t your fault?
It depends. At Youi, if it’s ultimately established that another driver was completely at fault for an accident, you won’t have to pay an excess, as long as you can provide the other driver’s full name and two of either their:5
- Phone number
- Address
- Driver’s licence number
- Registration number of the vehicle that was involved in the incident.5
“However, while you may feel confident you weren’t at fault in an accident, there are situations where responsibility isn’t as clear-cut,” explains Jackson. “Sometimes both drivers may have contributed to what happened, or the available evidence doesn’t clearly point to one party. In these cases — or when the at-fault driver can’t be identified — you’ll likely need to pay the excess.”
Do you have to pay an excess if your car is stolen?
Most likely. “While the person who’s stolen your car is technically at fault and legally responsible for the full cost of the damage or loss, if they can’t be identified or there’s no way for your insurer to recover the claim costs from them, then you may need to pay an excess.”
Do you have to pay an excess for severe weather damage?
Yes. Where damage to your car isn’t anyone’s fault – for example if it’s caused by a hail storm – you’ll still need to pay an excess when you make a car insurance claim.4
Do you have to pay an excess if you hit a kangaroo?
Yes. If your vehicle is damaged by a collision with a kangaroo or other wildlife, you will generally need to pay an excess, and it could potentially impact your premium at your next renewal.
Do you have to pay an excess if your windscreen is damaged?
“Most windscreen damage – such as from stones, debris or hail – doesn’t involve another at-fault party, which means you’d be responsible for paying the excess when you make a claim,” says Jackson.
How do you pay an excess?
If your insurance claim to have your car – or someone else’s – repaired is accepted, that’s when you’ll usually be asked to pay your excess so that the repair process can begin.
Alternatively, if your car is found to be beyond repair and is deemed a total loss, the excess may instead be deducted from your final claim payment.6
How much can a car insurance excess cost?
On average, as of May 2025, car insurance excesses in Australia range between $800 and $1,000.2
“However, how much you’ll pay will depend on the amount of excess you select,” says Jackson.
“Choosing a lower excess means that if you do need to make a claim, your out-of-pocket costs are reduced, but it also means that your premium may cost more.”
Conversely, the higher the excess, the less you might pay in premiums.2
How can you reduce your car insurance excess?
Most insurers provide flexibility around the cost of your basic excess.2
“With Youi, you can choose your basic excess amount from a range of set amounts when you’re getting a quote for a new car insurance policy or renewing an existing one,” explains Jackson.
“We may also offer you the option – for an additional cost – of being able to pay a reduced basic excess amount for claims that only involve damage to your windscreen.5
“With this option, the reduced excess is substantially lower than the standard basic excess, and there’s no limit on the number of windscreen-only claims you can make,” says Jackson.
“Plus, the reduced excess also applies to some other glass-only related claims, including those that solely involve your car’s window glass or its sunroof glass.”
Can you change your excess mid-policy?
Jackson says that more often than not, the answer is yes. “Keep in mind that you can change your policy as your lifestyle and needs change,” she adds.
“It makes sense to review your policy regularly and if you start to feel like your current excess no longer suits your needs, most insurers will allow you to change it at any time.”
Are there different types of car insurance excess?
Yes, there are a few different types of excesses to be aware of – although they won’t necessarily all apply to your car insurance policy.2 We’ve outlined three of the most common car insurance excesses below.
Basic excess
Sometimes called a standard excess,2 this type of car insurance excess typically applies to every claim you make, regardless of any other excesses that may apply – and it’s this excess that you can usually adjust up or down.5
If you’re also required to pay another type of excess when you make a claim, that will usually be paid in addition to your basic excess.5
Driver specific excess
Depending on who was driving your car when the incident you’re claiming for occurred, a driver specific excess may apply on top of the basic excess.5 For example, this excess could relate to an unlisted or young driver under the age of 25.
Details about the driver specific excess, including circumstances when you’d have to pay it and the cost, will be listed in your policy schedule – that’s the document you’re given outlining all the details about your cover, when you buy your insurance.5
Additional excess
In certain circumstances you may also be asked to pay an additional excess when you make a car insurance claim. If this applies to you, the exact situations when an additional excess are required will also be outlined in your policy schedule.5
When do multiple car insurance excesses apply?
It depends on your specific policy.2 For example, at Youi, you might have to pay a driver specific excess as well as your basic excess if someone who’s not listed on your policy has an accident while they’re driving your car and you need to make a claim.5
Similarly, young drivers might have to pay a driver specific excess in addition to the basic excess when they make a claim – even if they’re listed on the insurance policy as the car’s regular driver.5
Your policy’s schedule and the Product Disclosure Statement (PDS) will explain when you might have to pay more than one type of excess if you make a claim.2,5
However, it’s worth noting that if the same event affects more than one Youi policy in your household, say if a hailstorm damages both you and your partner’s cars, you won’t need to pay multiple excesses.5
“In other words, as long as the policies are held by the same person – or their spouse or de facto partner – and the damage happened at the same time and address, you’ll only pay one excess; and that will be the highest one listed across the relevant car policies,” explains Jackson.
Hopefully, now that you understand more about what car insurance excess is, when you’ll probably be required to pay it, and how different types of excesses work, you might feel more confident in choosing a basic excess amount that’s right for you, the next time you’re asked to decide.
And if you’re looking for car insurance that’s a bit more you-shaped, you might like to explore our range of options and, consider starting a quote online or giving us a call on 13 9684.
1 Source: Insurance Council of Australia – ABC’s of General Insurance
2 Source: Canstar – What is a car insurance excess and how does it work?, May 2025
3 Source: Financial Rights Legal Centre – Paying Insurance Excess
4 Source: Moneysmart – Claiming on your car insurance
5 Exclusions, limits and additional fees may apply. For full details, see the Car Insurance PDS.
6 Source: Financial Rights Legal Centre – Car Insurance Claim
