Car insurance excess is the amount you pay out of pocket when you make a claim. Think of it as your share of the repair bill before your insurer covers the rest. Most Australian policies let you choose between a low excess with higher premiums or a high excess with cheaper monthly costs. That choice directly affects how much you spend each year and what you’ll fork out if something goes wrong.
This guide breaks down how to compare car insurance excess options across different policies. You’ll learn which excess levels suit your budget, how voluntary and compulsory excesses stack up, and why rental car excess coverage operates differently. We’ll show you the real costs behind each choice, explain when a higher excess saves money versus when it becomes a risk, and help you spot the balance between upfront savings and potential claim expenses. By the end, you’ll know exactly which excess option delivers the best value for your situation.
Why car insurance excess matters
Your excess choice shapes both your monthly budget and your financial exposure when accidents happen. Set it too low and you’ll pay inflated premiums year after year, potentially wasting hundreds of dollars on coverage you never use. Push it too high and a single claim could drain your savings account or force you to drive an unrepaired vehicle. Getting this balance right means understanding how excess works as a two-way cost lever in your policy.
The financial trade-off
Every dollar you add to your voluntary excess reduces your premium by a corresponding amount, typically saving you $50 to $150 annually for each $500 excess increase. That discount looks attractive until you need to claim. A $3,000 excess on a $4,500 repair leaves you covering most of the bill yourself, essentially making your comprehensive policy function like third-party coverage for smaller incidents. When you compare car insurance excess options, you’re really deciding whether to pay gradually through premiums or potentially pay a lump sum when something goes wrong.
The right excess level depends on how much cash you can access immediately if disaster strikes.
When excess becomes critical
Multiple excess types stack on top of each other during claims. Your $700 base excess might combine with a $600 age-based excess if your 23-year-old drives the car, suddenly making a claim cost $1,300 out of pocket. Families with younger drivers or multiple vehicles face these stacked excesses more often, turning what seemed like affordable coverage into expensive reality. Similarly, frequent short trips in congested areas increase your collision risk, making lower excesses worth the premium difference. Regional drivers on quiet roads face different odds and might safely choose higher excesses to cut costs.
How to compare car insurance excess
When you compare car insurance excess options across different policies, you need to look beyond the headline figure on the quote page. Most insurers display a base excess amount prominently, but that number rarely tells the full story of what you’ll actually pay when disaster strikes. Your real out-of-pocket cost depends on multiple excess types, your vehicle’s value, who was driving, and the specific circumstances of the claim. A proper comparison requires you to calculate scenarios based on your actual situation rather than accepting the advertised figure at face value.
Look beyond the base excess amount
Your policy documentation splits excess into compulsory and voluntary components that work together to determine your final cost. The compulsory excess comes fixed by the insurer based on factors like your postcode, vehicle age, and claims history, typically ranging from $400 to $800. You then choose a voluntary excess on top of this base, usually selecting between $0 and $2,000 in $250 increments. When you make a claim, these amounts add together before any additional excesses apply. A $600 compulsory excess plus a $1,000 voluntary excess means you’re starting at $1,600 before age or driver penalties enter the equation.
Calculate your total potential cost
Age-based excesses and unnamed driver fees stack on top of your combined base excess, potentially doubling or tripling your immediate claim cost. Policies commonly charge an extra $600 to $1,200 if the driver was under 25, and another $400 to $800 if they weren’t listed on your policy. These additions turn a seemingly manageable $800 excess into a $2,400 payment when your unlisted 23-year-old friend borrows your car and hits a pole. Run through realistic scenarios that match your household composition, calculating what you’d actually pay for minor damage, moderate accidents, and total write-offs.
The cheapest premium becomes expensive coverage when stacked excesses turn every claim into a financial burden.
Compare excess against your driving profile
Your annual driving patterns and risk exposure should directly influence which excess level makes financial sense for your budget. If you drive 40,000 kilometres yearly through Sydney traffic, your collision probability sits higher than someone doing 12,000 kilometres in rural Tasmania, making lower excesses worth the premium cost. Similarly, parking on busy streets rather than in secure garages increases your chance of claiming for vandalism or hit-and-run damage. Calculate the break-even point by dividing your annual premium savings by the excess difference. A $150 yearly saving from a $1,000 higher excess takes seven years to recoup if you claim once, and you lose money if you claim twice in that period.
Types of car insurance excess in Australia
Australian car insurance policies bundle several excess categories together rather than charging a single flat fee when you claim. Each type targets different risk factors, and you’ll often pay multiple excesses simultaneously depending on who was driving and what happened to your vehicle. Understanding these categories helps you compare car insurance excess structures across different insurers and predict your actual costs in various claim scenarios. Some excess types appear on every policy, while others only apply to specific situations or driver profiles.
Compulsory and voluntary excess
Your compulsory excess (also called base or standard excess) forms the foundation that your insurer sets based on your vehicle’s value, location, and claims history. This amount typically sits between $400 and $800, and you can’t negotiate it downward because it reflects the insurer’s assessment of your risk profile. The insurer calculates this figure using postcode data, vehicle age, and whether you park on the street or in a garage.
Voluntary excess lets you increase your total excess in exchange for lower premiums. Most insurers offer voluntary amounts in $250 increments from $0 up to $2,000, with each increase delivering premium savings. You choose this amount at purchase, and it stacks directly on top of your compulsory excess. A policy with a $600 compulsory excess and a $1,000 voluntary excess means you’ll pay $1,600 before your insurer contributes anything toward repairs.
Age-based and driver-related excess
Age excess penalizes claims when drivers under 21 or 25 (depending on the insurer) were behind the wheel, adding $600 to $1,200 to your bill. Policies vary on whether this applies to listed young drivers or only unlisted ones, so you need to check your Product Disclosure Statement before letting younger family members drive. This excess acknowledges that statistically, younger drivers cause more accidents and costlier claims.
Unlisted driver excess applies when someone not named on your policy drives your car and crashes, typically adding $400 to $800 on top of your other excesses. Some insurers waive this fee if the unlisted driver holds a full license and was borrowing the car temporarily. Driver history excess targets people whose licenses were suspended or cancelled in the previous three years, reflecting their higher-risk status with an additional $500 to $1,500 charge.
Specialized excess types
Windscreen excess operates separately from your main excess, often sitting between $100 and $300 for glass-only claims. Many policies let you claim windscreen repairs or replacements without affecting your no-claims bonus, though you’ll still pay this reduced excess. Some insurers waive windscreen excess entirely for repairs under $200 or if you use their preferred glass supplier.
Specialized excesses can catch you off guard if you haven’t read through your policy’s fine print before claiming.
Special excess covers unique circumstances like modified vehicles or high-risk drivers, with amounts set individually based on your situation. Insurers apply this category when standard excess calculations don’t adequately cover their increased exposure, typically charging an extra $1,000 to $3,000 for performance modifications or poor driving records.
How excess affects your premium and costs
Your excess choice operates as a financial lever that directly controls your annual premium, with higher excesses slashing your upfront costs while lower excesses provide peace of mind at a price. Insurers use excess levels to distribute risk between themselves and policyholders, rewarding those willing to shoulder more financial responsibility with cheaper monthly payments. This inverse relationship means every excess decision involves calculating whether you’d rather pay less now and risk paying more later, or pay more consistently to limit your exposure when accidents happen.
The premium-excess formula
Increasing your voluntary excess by $500 typically reduces your annual premium by $50 to $150, depending on your insurer, vehicle value, and driving history. A driver paying $1,200 yearly might drop to $1,050 by moving from a $500 to a $1,000 excess, pocketing $150 in savings each year. That discount compounds over time, delivering $750 in savings across five claim-free years, but vanishes instantly if you lodge even a single claim requiring you to pay that higher excess.
Insurers calculate these discounts because higher excesses discourage minor claims and reduce their administrative burden. When you’re liable for the first $2,000 of damage, you’ll pay for small repairs yourself rather than filing paperwork for a scratched bumper. This behaviour pattern lets insurers offer meaningful premium reductions to policyholders who choose substantial voluntary excesses, creating savings that feel attractive until you actually need to claim.
Real cost examples and break-even points
Consider two policies covering the same vehicle: Policy A charges $800 annually with a $1,500 total excess, while Policy B charges $950 annually with a $500 total excess. You save $150 each year with Policy A, but you’ll pay $1,000 more when claiming. If you claim once every seven years, Policy A delivers better value. Claim twice in that period and Policy B becomes the cheaper option overall, despite its higher premiums.
Your break-even calculation should factor in your actual driving patterns rather than optimistic assumptions about staying claim-free.
Geographic and demographic factors shift these calculations significantly. Sydney drivers navigating heavy traffic might claim every three to four years on average, making lower excesses worthwhile. Regional drivers covering fewer kilometres on quieter roads can safely choose higher excesses to maximize premium savings. When you compare car insurance excess options, run these numbers against your personal claims history and realistic accident probability.
Beyond the advertised excess
Your quoted excess doesn’t represent your complete claim cost in many situations. Insurers charge administrative fees of $60 to $110 per claim regardless of excess levels, adding to your immediate out-of-pocket expense. Making a claim also typically resets your no-claims bonus, potentially increasing your renewal premium by 20 to 40 percent for the following three years. A $1,200 claim with a $500 excess might ultimately cost you $2,000 when you factor in the excess, admin fee, and increased premiums across your next policy period.
Comparing car excess and rental hire excess
Rental car excess operates under completely different rules than your personal car insurance excess, catching many Australians off guard when they collect a hire vehicle at the airport. While your own policy lets you choose voluntary excess amounts and control your premium costs, rental companies set their excess levels based on vehicle value and location, giving you no negotiation room on the base figure. Understanding these differences helps you decide whether to buy excess reduction at the rental counter, purchase standalone coverage, or rely on existing credit card protection.
How rental car excess works differently
Rental companies in Australia charge excesses ranging from $3,300 for economy vehicles up to $8,800 for luxury cars, with an additional $550 to $1,100 if you’re under 25. These amounts represent your liability before the rental company’s insurance responds, similar in concept to your personal car excess but significantly higher in practice. The rental firm places a pre-authorization hold on your credit card for the full excess amount at pickup, tying up that spending capacity until you return the vehicle undamaged.
Unlike your personal policy where multiple excess types stack together, rental excess typically functions as a single flat amount covering collision damage and theft. You don’t face separate windscreen or unlisted driver penalties because you’ve already signed a rental agreement covering those scenarios. The rental company’s Collision Damage Waiver (also called Loss Damage Waiver) protects you above the excess threshold, though it commonly excludes overhead damage, undercarriage strikes, and single-vehicle accidents that your comprehensive car insurance would normally cover.
Costs and coverage options
Rental counter excess reduction costs $30 to $45 daily in Australian capital cities, potentially adding $210 to $315 to a week-long hire while still leaving you with a residual excess of $0 to $500. Compare car insurance excess reduction purchased at the desk against standalone policies bought online, which cost $5 to $12 daily and eliminate the excess completely. Annual rental excess insurance runs $120 to $180, breaking even after three hire periods and covering unlimited domestic rentals throughout the year.
Standalone rental excess policies require you to pay the rental company first, then claim reimbursement with supporting documentation.
Your personal comprehensive car insurance never covers rental vehicle excess because the policy only responds to damage involving your listed vehicle. Some premium credit cards include rental excess coverage up to $5,000, but only if you pay the full rental cost with that specific card and decline the rental company’s insurance products. These card benefits exclude luxury vehicles, motorhomes, and commercial use, limiting their practical application for many Australian rental scenarios.
Choosing the right excess for your situation
Your ideal excess level depends on three core factors: how much cash you can access immediately, your actual driving patterns and accident risk, and who regularly drives your vehicle. Rather than picking a random middle-ground figure or accepting the insurer’s default option, you need to calculate scenarios based on your household’s financial position and realistic claim probability. The right choice protects your budget both monthly and when accidents happen, avoiding the trap of paying for coverage you don’t need or facing bills you can’t afford.
Assess your emergency fund capacity
Start by checking your available cash reserves before you compare car insurance excess options across different policies. Financial advisors recommend maintaining three to six months of expenses in an emergency fund, and your excess should never exceed what you can access within 48 hours without hardship. If you struggle to find $1,000 for an unexpected repair, choosing a $2,000 voluntary excess to save $120 annually becomes a dangerous gamble that could force you into debt after a single claim.
Calculate your maximum comfortable excess by reviewing your savings account balance and subtracting essential reserves for other emergencies. A household with $8,000 in readily accessible savings might safely choose a $1,500 total excess, knowing they can cover that amount plus their living expenses if disaster strikes. Someone with $2,000 saved should stick to a $500 excess despite the higher premiums, because financial stress from a claim costs more than the premium savings over time.
Match excess to your driving risk profile
Your annual kilometres driven and typical road conditions directly predict your claim likelihood and should guide your excess choice. Drivers covering 35,000 kilometres yearly through Melbourne traffic face substantially higher collision probability than someone doing 10,000 kilometres in regional areas, making lower excesses worth the premium cost for high-mileage situations. Similarly, daily street parking in busy suburbs increases your exposure to hit-and-run damage and vandalism compared to secure garage storage.
Run a break-even analysis by dividing your annual premium savings by the excess difference to understand how many claim-free years you need to profit from higher excesses.
Factor in vehicle value and replacement costs
Older vehicles worth less than $5,000 warrant higher excess levels because comprehensive coverage becomes questionable value when the excess approaches the car’s market price. You’ll often find that a $3,000 excess on a $4,500 vehicle makes little financial sense, and switching to third-party coverage delivers better value. Newer vehicles worth $30,000 or more justify lower excesses because even minor repairs can easily exceed $2,000, and you need the full protection comprehensive insurance offers.
Review your household driver composition
Households with multiple drivers under 25 face stacked age excesses that dramatically increase claim costs, making it worth paying higher base premiums for lower excess options. If your 22-year-old drives regularly, calculate scenarios including both standard and age-based excesses to understand your true exposure. Single-driver households over 30 with clean records can safely choose higher excesses knowing they won’t trigger additional penalties when claiming.
Common questions about car insurance excess
Most Australians struggle with the same excess-related questions when purchasing cover or lodging claims. These practical queries about payment timing, not-at-fault scenarios, and affordability determine whether your policy actually protects you when accidents happen. Understanding these answers before you need to claim helps you avoid nasty surprises and choose the right coverage level for your situation.
Can you change your excess after purchase?
You can adjust your voluntary excess at renewal or by contacting your insurer mid-policy, though mid-term changes typically trigger a new policy start date and potential premium adjustments. Most insurers let you increase your excess immediately to lower premiums, but require waiting periods or underwriting reviews if you try to reduce it. Your compulsory excess stays fixed based on your risk profile and only changes when major factors like your address or vehicle value shift. Switching policies offers the cleanest way to compare car insurance excess options and select a better structure if your current arrangement doesn’t suit your needs.
Do you pay excess for not-at-fault accidents?
Your insurer typically waives your excess if you provide the other driver’s details and they accept liability for the crash. This process requires you to collect the at-fault driver’s name, license number, registration, and insurance information at the scene. If the other driver disputes fault or leaves before you can gather details, you’ll pay your excess upfront while insurers investigate and negotiate liability. Your insurer may reimburse your excess later if they successfully recover costs from the other party, though this process can take months.
Getting full driver details at the scene protects you from paying excess for accidents you didn’t cause.
What happens if you can’t afford to pay the excess?
Insurers require you to pay your excess before they authorize repairs or settle your claim, meaning you can’t access coverage without finding the money first. Financial hardship clauses exist in some policies, letting you arrange payment plans or delayed settlement if you prove genuine inability to pay. Your insurer might reduce or waive excess in extreme circumstances, though they’re under no obligation to do so. If you genuinely can’t pay, your claim stalls until you find the funds, leaving your vehicle unrepaired and potentially forcing you to arrange private financing.
Does excess apply to theft claims?
Theft claims attract your full combined excess just like collision damage, requiring you to pay upfront before your insurer settles the claim. Your vehicle’s agreed or market value determines the payout amount, minus your excess, so comprehensive policies with high excesses deliver limited benefit for older vehicles. Insurers typically take 30 to 60 days to settle theft claims while they verify the loss and check for fraud, meaning you’ll need replacement transport during this waiting period. Some policies include hire car coverage for theft situations, though this benefit usually caps at $50 to $75 daily.
Next steps
You now understand how to compare car insurance excess levels, calculate your total claim costs, and choose the option that balances monthly premiums against potential out-of-pocket expenses. Your next move involves reviewing your current policy excess structure and running break-even calculations based on your driving patterns and emergency fund capacity. Check whether age-based or driver-related excesses apply to your household, then calculate realistic scenarios for minor damage, moderate accidents, and total write-offs.
Start gathering quotes from multiple insurers to see how different excess combinations affect your annual costs. Look beyond the advertised base figures and factor in all potential excess types that could stack during a claim. When you’re ready to secure competitive cover that matches your budget and risk profile, get a quote from National Cover and compare the value you receive for every premium dollar you spend.
