Car insurance excess explained: basic, age, unlisted driver and how much to choose

The excess is the part of a claim you pay yourself. On Australian car insurance it is usually made up of a basic excess you choose, plus extra excesses that apply automatically in some situations, such as a young or inexperienced driver, an unlisted driver, or sometimes a theft or windscreen claim. Choose a basic excess you could pay tomorrow without borrowing, then check whether the premium saving from a higher excess is worth the extra you would pay in a claim. Many insurers waive the excess for claims where you were not at fault and can identify the other driver.

This guide is part of the renewal checklist. To compare quotes with different excesses, use the quote comparison tool.

The types of excess

Excess	When it applies	Can you change it?
Basic excess	Most claims	Yes, usually from a set list
Age excess	Driver under a set age (often 21 or 25) was driving	No, but you can choose a driver age restriction
Inexperienced driver excess	Driver licensed in Australia for less than a set period was driving	No
Unlisted or undeclared driver excess	Someone not listed on the policy was driving, where the policy lists drivers	No; list regular drivers
Special or imposed excess	Set for your policy because of your claims or driving history	Sometimes, by shopping around
Theft excess	Some policies, for theft claims or certain parking situations	No
Windscreen excess	Glass-only claims, on some policies	Some insurers offer a windscreen excess waiver option

The PDS sets the exact ages, licence periods and amounts. Excesses usually add together: a 20-year-old unlisted driver could trigger the basic, age and unlisted driver excesses in the same claim.

How excesses stack: an example (illustrative)

Policy: basic excess $800, age excess (under 25) $1,200, inexperienced driver excess $800, unlisted driver excess $1,500.

Claim: $6,000 repair after an at-fault crash.

Who was driving	Excesses that apply	Total excess	Insurer pays
Listed driver, 45	Basic	$800	$5,200
Listed driver, 22, licensed 4 years	Basic + age	$2,000	$4,000
Listed driver, 19, licensed 1 year	Basic + age + inexperienced	$2,800	$3,200
Unlisted driver, 19, licensed 1 year	Basic + age + inexperienced + unlisted	$4,300	$1,700

Some policies cap total excess or define them differently, and some refuse claims entirely when an excluded driver was driving. Check the PDS.

Choosing your basic excess: the break-even test

A higher basic excess lowers the premium because you take on more of each claim. The question is whether the premium saving outweighs the extra excess, given how often you expect to claim.

Worked example (illustrative)

Basic excess	Annual premium
$600	$1,290
$1,000	$1,195
$1,600	$1,105

Moving from $600 to $1,000 saves $95 a year and adds $400 to each claim. Break-even: $400 / $95 = 4.2 years. If you make an at-fault claim less often than once every four years or so, the higher excess comes out ahead on average.

Moving from $1,000 to $1,600 saves $90 a year and adds $600 to each claim. Break-even: $600 / $90 = 6.7 years. The extra saving is smaller per dollar of risk.

Two more considerations:

Cash on hand. If $1,600 would be hard to find after a crash, the lower excess buys peace of mind.
Small claims. With a high excess you are less likely to claim for small damage, which can protect your no claim bonus. See no claim bonus explained.

When the excess is waived or recovered

Many comprehensive policies waive the excess, or refund it later, when:

you were not at fault, and
you can give the other driver's name, address and registration, and
the insurer accepts the other driver was at fault.

If the excess is charged first, the insurer may refund it once it recovers the costs from the other party. Policies also commonly waive the excess for a window glass claim if you have the relevant option, or for one claim per year. The details differ, so check before you claim.

Excess and young drivers

Adding a young driver to the policy usually raises the premium and means the age excess applies when they drive. Not adding them, if they drive regularly, means the unlisted driver excess applies, or the claim may be refused. Compare both scenarios with young driver car insurance.

Checklist before you set your excess

Can I pay this amount within a week without borrowing?
Which extra excesses apply to the people who drive this car?
What is the premium saving per year for each step up?
How many years would it take for the saving to cover the extra excess?
Does the policy waive the excess for not-at-fault claims with an identified driver?
Is there a separate windscreen or theft excess?

To test the full picture against your renewal, see the renewal vs new quotes example.

Frequently asked questions

Do I pay the excess if the accident was not my fault?

Often not, if you can identify the at-fault driver and the insurer accepts liability, but this depends on the policy. Otherwise you may pay it and have it refunded if the insurer recovers its costs.

Is a voluntary excess the same as the basic excess?

Some insurers call the part of the excess you choose above the minimum a voluntary excess. In Australia most simply let you choose the basic excess from a list.

Do I pay the excess to the insurer or the repairer?

It depends on the claim. You may pay the repairer directly, or the insurer may deduct it from a payout. The insurer will tell you during the claim.

Can an insurer impose a higher excess because of my history?

Yes. Insurers may apply a special excess based on claims or driving history. It should appear in your schedule.

Sources

Moneysmart — understanding car insurance excesses
ASIC — PDS disclosure of excesses
Australian Financial Complaints Authority — disputes about excess and liability