What is an excess, and why do I have one?
Under your insurance policy, an excess is the amount of money you need to pay first toward any loss. The insurer then ‘tops up’ your contribution, up to your policy limit. Excesses are designed to help keep insurance affordable, by ensuring that people aren’t claiming for things they could cover themselves.
Insurance policies include a ‘standard’ excess, which you may be able to adjust up or down by selecting alternative options. Generally, a higher excess means the premium usually is lower so this can be an option if you wish to look at reducing your insurance premium.
Excesses are usually cumulative, with many policies also including imposed and/or additional excesses for things that are riskier. Young drivers, rented houses, and natural disasters are all common areas where you may have an imposed and/or additional excess. You can find full details in our policy wordings or on your policy schedule.
An example of additional and cumulative excesses is, you might have a car insurance policy with a $500 standard excess and with an additional $1,000 excess for drivers under 21 years. Therefore, if an 18-year-old was driving and crashed your car the total excess, and the amount you would be required to pay, would be $1,500.
If the loss isn’t my fault do I still have an excess?
If someone else has caused your loss, the insurer might be able to recover the cost of the claim from them or their insurer. If that happens, they recover the total value of the loss, including your excess, so they will reimburse the excess you paid.
Recovery and repayment of your excess depends on a few things, including whether you can identify the other party, whether they admit fault, whether there are witnesses, and whether they have insurance or the ability to pay, so it doesn’t always happen.
If you have any questions relating to the excesses that apply to your policy, please contact our team today.