How your excess affects the cost of your car insurance

NRMA Members swap insurance details after an accident
people figuring out who has to pay for their insurance
When the time comes to get your car insurance sorted, it’s natural to want a great policy at a reasonable price. That price, known as your premium, can vary based not only on your level of coverage but also on how high or low your excess is.  

What’s an excess? 

When you make a claim, your excess is the dollar amount that comes out of your pocket when your vehicle needs repair. The rest is covered by your policy. For example: If your repair bill is $10,000 and your excess is $500, then you pay $500 and your insurer pays $9,500. 

Do I have to pay an excess? 

Most policies require that you pay an excess unless the cost of the excess can be recouped from the other driver who caused the accident. So basically if it wasn’t your fault and you got the driver who was at fault’s details. 

Other instances where you will need to pay the excess: 

  • If the accident wasn’t your fault, but you were unable to get the other driver’s details
  • You were the at-fault driver
  • Your car was damaged by an event, for example a hail storm

To double check if you need to pay the excess, you can start a claim online

What an excess will cost you?

Once you’ve decided on a car insurance policy you can raise or lower your excess depending on how much of a premium you want to pay upfront, but be aware of the shift in cost and risk this may cause.

For example if you want to lower your premium, you could agree to raise your excess, from say $500 to $1000. This can lower your up-front cost because some of the risk has now been transferred from your insurer back to you. You’ll save money in the short term, but if you can’t afford to pay the $1000 excess to have your car repaired when the time comes, you could be left without a ride.

Alternatively if you wanted to lower your excess, from say $500 to $250, this would save you money when the repair bill comes, but because this shifts more of the risk back to your insurer, you could be paying a higher premium in the short term.

Also, if you’re under 25, and you’re the at-fault driver, there’s an added ‘age excess’ you‘ll have to pay on top of that.

Repairs smaller than your excess?

If the damage to your vehicle is minor, and the cost of repairing it is less than your excess, lodging a claim is unnecessary.

You can still have a claims adjustor make an assessment of the damage so you have an accurate idea of the bill you’re facing, but without any obligation to file a claim.

A reward for not claiming

One of the benefits of not making a claim when you’re cost of repairs is less than your excess, is that you get to keep your No Claim Bonus.

A No Claims Bonus is a discount you receive on your insurance premium for being claim free. Not every claim will alter your No Claims Bonus, but some can. It’s good to check your insurance policy before you go through with a claim.

This article was contributed by NRMA Insurance, which is part of the Insurance Australia Group. The NRMA (National Roads and Motorists’ Association Limited) is a separate and independent company from NRMA Insurance. Read more articles on protecting things you love at The Hub.

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