All about Excess
‘Excess’ is a term you may hear quite a bit in reference to car insurance. Generally if there were a claim on the policy, you would have to pay this amount before the insurers will provide compensation on your insurance. Younger drivers generally find that the excess is obligatory. Some drivers may be given the option to pay a higher premium to lower the excess, or to avoid it altogether. Alternatively, some insurers may allow you to pay a higher excess in the event of a claim, in return for a lower premium amount on your insurance. This would mean that you are willing to cover more of the financial load should you file a claim in the future.
Different types of excesses apply for the different forms of car insurance. The most familiar types are Standard driver excess, and an excess based upon the age of the driver. One other commonly used excess refers to a driver not nominated on your policy being involved in an accident.
Excess Types
Standard Driver Excess – Most car insurances have a standard excess amount which you have to pay when you file a claim. Factors that determine this amount include who was operating the vehicle, and what state you live in. Some insurers will not charge the excess if you were not at fault in the claim. However, you may have to pay up front, and be reimbursed once the claim procedure and repairs to your car have been completed.
$200 to $700 is the general range of an excess at the time this article was written. Higher excesses are often found in Eastern Seaboard states with larger populations. Usually, car insurances purchased in Tasmania, Western Australia, and South Australia have lower standard driver excesses.
Age Excess – Car insurances for younger, less practiced drivers will usually include this type of excess. If a driver is under the age of 24, the excesses will generally differ widely between different insurance policies. The same may also apply for a 25-year-old driver who has driven for less than two years.
Non-nominated driver – This excess usually applies where a driver involved in an accident is not mentioned in your policy. Double check the fine print in your policy, as not all insurers charge this excess.
Factors such as the type and age of the car, as well as the age of the driver are used to determine the amount of the excess you may have to pay. If you choose to pay a higher amount of excess, your premiums may be lowered. The insurer may also lower the amount of premium if you choose to pay a higher voluntary excess because the financial risk to the insurer is lessened in the case of an accident.
If you are a younger, less experienced driver or your car is more expensive to fix, excesses charged by the insurance company might be higher, and you may not have the option to change them.
This article contains general advice about car insurance. The author has not taken into account your financial situation or needs and you should consider whether the advice provided is appropriate for your own circumstances before relying on it.
Filed Under: Insurance Comparison
