Excess explained

INSURANCE | March 2019

Excess – it’s one of those tricky insurancey things that can cause confusion and frustration. So, we thought it was about time to answer your questions around this topic.

What is an excess?

An excess is the amount that you contribute to a claim. If you make a claim and it’s accepted, your insurer will pay the repair or replacement costs that are over your excess amount.

There are a few different types of excesses which can make things a bit confusing. You might hear some people talk about a basic or standard excess, a voluntary excess or an imposed excess. Let’s break down each:

  1. Basic or standard excess - this excess is just like it sounds, a standard excess that would apply to any claim. Different policies have different standard excesses, for example, many car policies will have a standard excess of $400 along with age related additional amounts for the driver (see below). Most contents policies will have a standard excess of $250, and many home policies will have a standard excess of $400. That’s why it’s important to review your policy documents and check what your excess is.
  2. Voluntary excess - a voluntary excess is where you can choose a higher excess for a lower premium. Most home and contents policies allow you to choose a voluntary excess. For example, on a contents policy you could choose to have an excess of $750, $1,000 or $1,500. On a home policy you could choose to have an excess of $550, $750, $1,000, $1,500, $2,500, $3,000, $4,000 or $5,000. This is a great option if you don’t claim much and are prepared to pay more towards any claim.
  3. Imposed excess - an imposed excess is one that we set. This usually occurs when there is a higher risk, for example if your home is going to be unoccupied for a long period of time (60 days or more), we may impose a higher excess while the home is vacant, or if your vehicle type is popular among thieves we may impose a higher excess.
  4. Age and licence related excess - If you, or one of the drivers of your car is under 25, an additional age-related excess will apply if they are involved in an accident while driving the car. This age-related excess is in addition to the basic/standard excess. The amount ranges, depending on their age at the time of the accident and whether they are named as a driver on the policy or not. In addition to age, your licence type may have an impact on your excess. If you hold a learner, restricted or overseas licence, you may have an additional excess applied on top of your basic/standard excess and any applicable age excess. These additional excesses will be noted on your policy schedule.

Why do I have an excess?

The excess helps keep the cost of handling and meeting insurance claims down and so the premiums everyone pays are cheaper.

When do I need to pay my excess?

Whenever you make a claim, an excess will be required to be paid, unless it’s specifically stated otherwise in the policy wording. There are some instances where no excess will apply, for example, on our Car Comprehensive policy if you’ve selected the optional ‘Windscreen and windows’ cover then no excess will apply if your claim is just for a broken or chipped windscreen (page 8 of the Car Insurance policy wording).

Who do I pay my excess to?

This depends on the type of claim and item you’re claiming on. Most of the time your excess will be paid directly to the supplier or repairer (such as the panel beater or appliance store). If you have a total loss (where the item isn’t being repaired but we pay you a settlement instead), then we will deduct the amount of your excess from your settlement amount. When you lodge a claim, we will let you know who your excess needs to be paid to.

Can my excess be waived?

No - it’s the amount that applies irrespective of whether you, someone else or mother nature caused the damage. An excess applies to all claims, unless it’s stated otherwise in the policy wording.

If you have a claim under both your State home and State contents policies for the same incident at your home, you will only have to pay one excess which will be the highest excess of the two policies (the policy with the lowest excess will have its excess waived).

But I’m not at fault, do I still need to pay an excess?

If you have Car Comprehensive cover with State, you have Excess Protection cover. This means that if you’re involved in an accident with another vehicle and the other driver caused the accident, we might be able to waive or refund your excess. For us to be able to consider doing this, we need to have enough information to identify the driver of the other vehicle that caused the accident (i.e. their cars registration number, their name, address and contact information, along with their insurance information, if they have any); and we need to have enough information that confirms they were involved, were completely to blame for the accident and they accept liability. Once we have waived or refunded your excess we might also need your help with recovering the costs of the damage.

In other situations (e.g. someone crashes into your home’s front fence) where we recover the costs of your claim from the responsible person or their insurer, we will be able to reimburse your excess.

Where can I find out what my excess is?

Your excess will be noted on your policy schedule and some can be in the policy wording. The policy schedule is a document that we will send you when you first insure your home, car or contents, as well as at each renewal. If you have an online account already, simply login and download a copy of the latest documents we sent you. If you don’t already have an online account, register here with your policy number.

You can also find excess information in the policy wording as some claim types have a different excess (from what’s on your policy schedule), for example, if you make a claim for a broken window in the house that you live in, the excess is noted as $250 in the policy wording.

So, check out your policy schedule and policy wordings to find out the excess amount(s) so there’s no surprises if you need to claim.

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