Step 1. I am not at fault, I'm insured but can't afford my excess
The excess is your contribution to a claim, and is generally the amount you have agreed to pay in the event of a claim. Your insurer is asking you to contribute an amount to the costs of the claim so that you share some of the risk. This is to reduce claims and premiums (the cost of insurance). An excess may well be payable even if you don’t believe you were at fault: see our Do I have to pay my excess or multiple excesses? fact sheet on our website. You can also click on the “I want to know if I have to pay my excess?” button below for more information. If you are in financial difficulty it can be difficult to pay your insurer the cost upfront. If this is the case you can ask to:
- pay the excess in instalments to your insurer; or
- ask them to deduct it from your claim. If your insurer is going to cash settle you (for example, pay your total loss pay out or cost to repair your car), you can ask them to deduct it from your payout. If you only have 3rd party property insurance (or you are not claiming in relation to damage to your own property), you can ask your insurer to deduct your excess from the payout to the other party. What this means is:
- The insurer may pay the other party’s insurer the amount they are demanding less your excess.
- The payment on your behalf by your insurer will be an admission of liability (fault) i.e. you will no longer be in a position to argue that you are not at fault.
- You may then be contacted by the other party or their insurer demanding payment of the balance i.e. the excess amount. You can then negotiate to repay it in instalments with the other party.
Your insurer should either agree to an instalment arrangement or to deduct the excess. Deducting your excess will only be practical if the claim is paid out. If the insurer won’t be reasonable you should get legal advice. You can email or call the Insurance Law Service on 1300 663 464. For more information see:
- your own insurer has paid the amount claimed by the other party less your excess, and
- the other party (or their insurer) is chasing you to pay the deducted amount, and
- you can’t afford to pay that amount.