Why do I have to pay my excess? Or multiple excesses?
This fact sheet is for information only. It is recommended that you get legal advice about your situation.
Josie’s car was parked on the street overnight. The next morning she woke up to find it had been ploughed into by another car. The police were in attendance. They told her that a stolen car had run into her and the thief fled. Josie contacted her insurer and made a claim. They asked her to pay an excess. Josie said that she wasn’t at fault but her insurer says she still needs to pay. Is that right?
WHY DO I HAVE TO PAY MY EXCESS?
An insurance excess is your contribution to a claim. The general rule is that an excess is always payable when you make a claim, whether you are at fault or not.
Sometimes insurers will insert terms into the Product Disclosure Statement (PDS) where they do not require you to pay your excess or refund the excess in some limited circumstances. This is common in some types of claims like a windscreen breakage. This is regularly associated with situations when we are “not at fault”.
However, insurers often place certain conditions, requirements, limitations or qualifications to when they will refund the excess or not require an excess to be paid. You should read your PDS – the contract of insurance between you and the insurer – carefully, to work out if you can meet the conditions of where the excess will not be payable. These can include the following scenarios:
- The insurer agrees you are in no way at fault
This can be a difficult condition to meet. Sometimes in accidents you may have contributed to the accident, so the other party is not 100% at fault. Equally it may be difficult to prove or establish definitively that you were not at fault.
- You can provide the name, registration number, phone number and/or address of the at fault party
This can be tricky where the at-fault party leaves the scene without providing you the details. It can be very stressful after an accident, and you may forget to ask for all their information. Equally, the other driver may be unwilling to supply it, or flee the scene. Even if the police can locate the at-fault driver, the police may not be able to provide you the details. The insurer may be able to make an application to the police to obtain the information, but this requires them to pay fees and devote resources to the case, which is part of the insurer’s cost of a claim.
- The insurer recovers their costs from the at fault party
If the other party is not insured, cannot be located or refuses to pay, this condition may not be met. Or it may not be met for a number of months or years. Or your insurer may decide it is not worth their time or cost to pursue the matter.
WHAT CAN YOU DO?
- Pay your excess and dispute it later
In order for your claim to be processed quickly (to, for example, get your
car fixed, or receive payment or to make sure your insurer deals with any demands from the other driver), you could consider paying your excess and then deciding whether you should dispute it and seek a refund of your excess.
When disputing it, have close regard to what your PDS says about when the insurer will not charge the excess. Make sure you have as much evidence as possible that you meet the requirements.
- Refuse to pay the excess and dispute it
If you refuse to pay the excess the insurer will not repair your property or they may automatically deduct it from any payout. If you have not paid your excess and the other driver (or their insurer) starts legal action against you, your own insurance company will likely refuse to cover you for the additional court and legal costs added on. This is because your insurer can reject or reduce your claim if they suffer any prejudice by your actions (such as by delaying the claim or not paying the excess until legal proceedings have started).
For further information on insurance disputes see our fact sheet: Insurance Dispute Resolution and our Raising a Dispute with Your Insurer Sample Letter Generator.
We have other fact sheets on hardship and a sample letter generator if you having difficulty paying your excess. Check out our I Can’t Pay My Excess Sample Letter Generator.
WHY IS THE INSURER ASKING ME TO PAY MORE THAN ONE EXCESS
There are 3 common reasons why an insurer will ask for more than one excess:
- You are claiming for two incidents. Most policies will state an excess is payable per incident. For instance, your car is involved in a minor accident involving only cosmetic damage. As you are driving to your repairer, another car rear-ends you that same day. These are 2 separate incidents so you would have to lodge a separate claim to cover each part of the damage. You could chose not to claim, or only claim for one of the incidents (but will only be covered for the damage from the claimed incident)
- You are claiming under 2 different policies.
Paul accidentally hits the accelerator instead of the brake and drives his car into the family home. He has comprehensive car insurance and home insurance. His car policy only covers his car – there is an exclusion for any damage he causes to his own property or any property belonging to his family. So he would need to lodge 2 claims and pay 2 excesses – one on the car policy to fix the car, and the second on the home policy to fix the house.
- You are claiming on a policy which calculates your total excess by using a basic excess and then adding on any additional excesses that may apply in specific situations – for example where the driver was not listed on the policy, or was under 21 years of age. Check your policy wording on how the excess is calculated.
Last updated: July 2019.
If you found this helpful and have further questions, why not try our Motor Vehicle Accident Problem Solver