Auto Insurers: Excess Charges Explained

Auto insurance companies charge insured individuals for excess expenses, which are outlined in the insurance contract and defined in the policy schedule. Excess expenses are the insured individual's contribution to an insurance claim, and they vary depending on the insurance provider and the specific details of the incident. Excess expenses can be influenced by factors such as the insured individual's age, driving experience, and the make and model of their vehicle. It is important to carefully consider excess expenses when purchasing or renewing an auto insurance policy.

Compulsory and voluntary excess

Car insurance excess is the amount you have to pay towards a claim you make on your insurance. The total excess is usually made up of a compulsory and a voluntary excess.

The compulsory excess is set by your insurance provider and can't be changed. It is a fixed amount that you must pay towards the cost of a car insurance claim. Your insurance company will look at the information you've provided and decide what risk you pose, taking into account your age, experience, and even the car you drive. If you're a young or inexperienced driver, your compulsory excess may be higher than that of a more experienced driver.

The voluntary excess is an amount you choose to pay on top of the compulsory excess. You can decide how much voluntary excess you want to pay, and a higher excess may lower your monthly premium. The main reason you might opt for a voluntary excess is that it could reduce the cost of your car insurance. However, it is important to set an amount you are confident you would be able to pay, as you might have to pay both the voluntary and compulsory excess when making a claim.

Other Types of Excess

In addition to the compulsory and voluntary excess, there are other types of excess that may apply depending on your circumstances. These include:

• Inexperienced driver excess: This applies if the driver is over 25 but has held their licence for less than two years, or if they are a learner driver.
• Driver history excess: This applies if a listed driver has had their licence cancelled, suspended, disqualified, or restricted within the three years prior to the start of the insurance period.
• Windscreen/glass excess: Most car insurance policies include this type of excess. If you claim for a damaged windscreen, you may have to pay a small excess if it needs replacing. However, if it can be repaired, the excess is usually waived.
• Additional excess for young drivers: If you are a driver under 25, you may have to pay an additional young driver excess because insurance providers consider you a higher risk.
• Additional excess for luxury or high-performance cars: You might have to pay an additional excess if you drive a luxury or high-performance car.

When to Pay Excess

You will usually have to pay your compulsory and voluntary car insurance excess when you make a claim for an accident that was your fault. If you are injured or your car is damaged due to another driver, you typically won't need to pay the excess. However, there may be exceptions, so it's important to check the terms and conditions of your policy.

Excess Insurance

Excess insurance is a separate type of insurance policy that covers the cost of your excess if you need to make a claim. It can be useful if you are unable to afford the excess, but it is an additional expense that you will need to consider carefully.

When to pay excess

Excess is paid on your car insurance when you make a claim for an accident that was your fault. If another driver damages your car or injures you, you won't usually need to pay the excess. However, there is still a chance you may have to pay, so keep this in mind when agreeing on the excess amount.

Insurers all work differently. You could be asked to pay upfront as soon as you start the claims process, or the bill might land when the claim is being paid. Insurers usually ask you to pay the excess at the outset when starting a claim. The investigation process to review what happened and who was at fault follows. Alternatively, the excess could be deducted from the total repair bill, so you might pay it at the end of the claims process.

You pay the excess in the event of any claim made on your insurance policy, regardless of who is to blame. However, if it's proved the accident was the other person's fault and the full cost is recovered from their insurer, you may be able to recover the excess amount.

If the other driver is unknown or is found to be uninsured, you may end up having to pay the excess, regardless of who was at fault.

If you can't afford to pay the excess, your insurer may refuse your claim or it might deduct the amount from what it pays towards the repairs, leaving you with a bill directly from the garage. Check the policy to find out how this would be handled. Insurers cannot reject your claim just because you cannot pay your excess. If you cannot pay your excess, you should tell your insurer and ask them to agree to a payment plan to pay the excess over a reasonable amount of time.

Excess and insurance claims

There are different types of excess, including compulsory and voluntary excess. Compulsory excess is set by the insurance provider and cannot be changed, while voluntary excess is an amount chosen by the policyholder to pay on top of the compulsory excess. Higher voluntary excess can lead to lower regular premium payments. However, it is important to ensure that the excess amount is affordable, as it must be paid when making a claim.

In some cases, additional excesses may apply. For example, young or inexperienced drivers may be subject to higher excess charges due to the increased risk associated with their age or driving experience. Similarly, driving certain types of vehicles, such as luxury or high-performance cars, can also result in additional excess charges.

Excess charges are typically required when the policyholder is at fault in an accident. If the policyholder is not at fault, the insurance provider will usually reclaim the excess amount from the other driver's insurance provider and refund it to the policyholder. However, this process can take time, and there is no guarantee that the other driver will be identified or have valid insurance. Therefore, it is essential for policyholders to understand their excess obligations and be prepared to pay the excess if needed.

Excess insurance is a separate type of insurance policy that can be purchased to cover the cost of excess payments on other insurance policies. It can provide financial protection for policyholders who may struggle to pay the excess in the event of a claim. Excess insurance policies have limits and conditions, and it is important to read the fine print to understand what is covered and what is not.

Excess insurance

You will need to agree on an upper limit with your insurance provider before taking out the policy, typically ranging from £250 to £2,000. It is advisable to set the upper limit at the same amount as your car insurance excess to avoid paying a higher premium for a limit that you will never reach.

The number of times you can claim excess insurance depends on the chosen policy. Some insurance providers limit the number of claims, while others impose an overall limit on the claimable amount.

There are two main types of excess insurance policies:

• Excess insurance for a single policy: This type of excess insurance covers the excess for a specific insurance policy, such as your car insurance.
• Lifestyle excess insurance: This type of excess insurance covers the excesses for multiple insurance policies you may have.

It is important to carefully review the terms and conditions of your excess insurance policy, as different providers and policies may have varying coverage and exclusions. For instance, there may be a deferral period before you can make a claim or a cap on the claimable amount. Understanding the specifics of your policy will help you make an informed decision about the level of coverage you require and ensure you are adequately protected in the event of a claim.

While excess insurance can provide financial relief, it is an additional expense that may not be necessary for everyone. Before purchasing excess insurance, consider your financial situation and comfort level with the commitment. Remember that excess insurance is typically paid on a monthly basis, whereas the excess itself is only paid when making a claim.

Disputing excess

The excess is your contribution to an insurance claim, and it is defined in your policy schedule. Whether you need to pay an excess depends on your insurance contract. Sometimes, it is best to pay the excess and then dispute it later. If you don't think you should pay the excess, there are a few options available to you.

Firstly, you can pay the excess and dispute it later. You can let the insurer know that you don't agree with the charge and will be disputing it at a later date. When you dispute the excess and ask for a refund, you will need to provide solid evidence that you meet the conditions in the Product Disclosure Document (PDS) about not paying the excess.

Secondly, you can refuse to pay the excess. If you choose this option, the insurer will not repair your property or the other driver/owner's property. They may also deduct the excess amount from any payout to you or the other driver/owner, who may then pursue you for this amount directly. If you have not paid your excess and the other driver/owner (or their insurer) starts legal action, your insurer may not cover the additional legal and court costs, or the claim itself. Your insurer can reject or reduce your claim if they suffer because you delay the claim by not paying your excess.

If you are unable to pay your excess, you can ask for a repayment arrangement to pay it off over time. Insurers cannot reject your claim just because you cannot pay your excess. If you cannot pay your excess, you should tell your insurer and ask them to agree to a payment plan to pay the excess over a reasonable amount of time. They can also cash settle your claim by keeping the amount of your excess before paying the rest to you, or they may reduce the amount owing or waive the excess completely. It is up to the insurer whether they agree to this, and it is more common for people in long-term or severe financial hardship. The insurer may ask for relevant evidence of your hardship, such as medical evidence or Centrelink statements. You should get a response to your hardship request within 21 days.

Frequently asked questions