When it comes to car insurance, Aussies certainly recognise the value of having a good policy. But the policy's details and ins and outs can often feel a little confusing.
Car insurance excess is a good example of this. Excess is the amount you will be required to pay when you make a claim on your car insurance policy. There may be different types of excesses that apply in different situations, and for different types of drivers. But how do you know what level of excess to choose? How much will it cost? The details may seem complicated, but it's essential to understand how it works.
How Does Excess Work?
For each and every claim you make under your policy, you are required to pay an excess. Say you have a standard excess of $500. If, following an accident, the total repair bill on your car is $3,000 as an example. You'll be responsible for paying the first $500, with your insurance policy covering the remaining $2500.
The excess may also apply if no one is at fault, or in the case of a hit-and-run. If your car is ultimately found to be beyond repair, the excess is typically deducted once your final claim payment comes through.
How Much Can Excess Cost?
How much you pay for excess cover depends on the amount of standard excess you choose. Choosing a lower standard excess ensures that if an accident does occur, your out-of-pocket costs are reduced, but it also means your premium will cost more. Conversely, the higher the excess, the less you'll pay in premiums.
Many Aussies choose a lower excess (and pay more for their premiums) not because they think they’re bad drivers, but because they understand accidents can happen, and when they do, it’s sometimes hard to determine who's at fault.
In those cases, if it’s ultimately established that another driver completely caused the accident and you were not at fault in the incident, then you won’t have to pay any excess. You just need to provide the other driver’s full name and two of either their phone number, address, driver’s licence number, or the registration number of their vehicle that was involved in the incident. Instead, the other driver (usually via their insurer) will be liable to pay.
Unfortunately, even in accidents where you are not at fault, it can sometimes be hard for claims investigators to establish that the other side was completely at fault. That’s why having a policy where you pay more for your premium, but less for your excess can be ideal, even if you have a perfect driving record. Many safe drivers with clean driving histories choose a lower excess simply for peace of mind.
How Can I Reduce My Excess?
There is flexibility around your standard excess. You can opt to pay more excess, and you'll have a lower premium however, if you make a claim you will need to pay a higher excess.
It is also important to keep in mind that you can change your policy as your lifestyle and needs change. It’s always prudent 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.
The bottom line is, only you can decide whether a higher or lower excess is best for you. Reach out to us anytime – we're always here to provide you with the information you need to make the best decision for you.