How to explain car insurance excess to customers

Do your customers understand car insurance excesses? Our handy guide will help you explain it the next time a customer asks.

A dealer speaking to a man and a woman at a dealership, all smiling

It can be challenging to respond to your customer’s questions about car insurance excess. What is it? Is it payable when they’re not at fault? And to what extent can it be varied?

No need to worry. We’ve got you covered with our quick overview of how car insurance excesses work, and how customers can adapt to suit their needs.

What is a car insurance excess?

Car insurance excess is the payment the insured customer must make if they make a claim on their car insurance. The customer pays the excess amount, with the vehicle insurance provider covering the rest of the vehicle repair or replacement costs.

The amount of excess that the customer needs to pay is determined when they take out a new policy – or when that policy is renewed.

When is excess payable?

Excess is payable when the policy holder or someone covered by the insurance policy causes damage while driving the vehicle covered by the policy. It’s also payable in cases where no one is at fault.

Allianz customers won’t have to pay any excess if:

their claim relates to damage, that was caused by someone else, i.e. other than the driver of their car at the time of the incident, and
they can provide us with the name and contact details of the other person or any other information that would reasonably allow us to identify the person at fault; and
we can recover the claimable loss.

What is the purpose of an excess?

Excess help keep insurance premiums affordable because it contributes to the cost of repairing and replacing an insured vehicle. It also motivates drivers to be more responsible and prevents them from making low-value claims.

What factors contribute to vehicle excess amounts?

Age.

An additional excess may be applied if the driver of the vehicle was under the age of 25 at the time of an incident.

Basic.

This is the standard amount a customer may need to pay as a contribution to each claim. It’s determined by where the customer lives, the type of car they drive, the type of policy taken out and the policy owner’s claim history.

The amount of the Basic excess may comprise a Basic excess and an Imposed excess which reflects our risk and underwriting criteria. If an Imposed excess has been applied, it will appear separately on the policy schedule.

Driver history.

If the customer has a poor driving record – perhaps they had their licence suspended or cancelled at some point – this excess may apply if they were driving at the time of the incident.

Undeclared young driver.

Suppose a customer made a claim for an incident when their vehicle was being driven by a driver under the age of 25 and who was not listed in the policy schedule. In that case, this excess may be paid in addition to the Basic excess and Age excess.

Inexperienced driver.

If the customer had their licence for less than two years at the time of an incident, they might need to pay an additional excess.

Voluntary.

Customers can opt to pay a higher basic excess, which allows them to reduce their insurance premiums. This option does, of course, mean a higher excess payment in the event that they make a claim.

Removal of basic excess for windscreen claims

Allianz customers have the option to remove excess payable on windscreen damage only claims. When the customer selects this option, they won’t have to pay the excess for one claim for an entire windscreen, window glass or sunroof replacement, and two claims for repairs within each period of insurance.

Can customers reduce their car insurance premiums?

Customers may be able to reduce their premium amounts by choosing to have a higher excess on their insurance policy. This carries some risk as they will have to pay a higher amount if they make a claim.

Some customers may feel this is the right decision for them. If they rarely use their car and it’s generally stored securely, their level of risk may be low, and they may choose to make a saving on their premiums.

With Allianz car insurance policies, customers can choose their own excess amount, but there are limitations on how much they can vary it. Customers will have the choice of changing the Basic excess within a range that we will determine, but they cannot vary or remove any Imposed excess.

Customers will most likely want to strike a balance between paying affordable car insurance premiums and an excess that won’t cost them too much if they need to make a claim.

The information contained in this article is of a general nature only. Changes may occur which could affect the accuracy or completeness of the information. While Allianz has taken all reasonable care in producing this article, it accepts no responsibility for any loss incurred from using or relying on it.

Disclaimer

This article has been prepared by Allianz Australia Insurance Limited ABN 15 000 122 850 AFSL234708 (“Allianz”). In some cases, information has been provided to us by third parties and while that information is believed to be accurate and reliable, its accuracy is not guaranteed in any way.

Any opinions expressed constitute our views at the time of issue and are subject to change. Neither Allianz, nor its employees or directors give any warranty of accuracy or accept responsibility for any loss or liability incurred by you in respect of any error, omission or misrepresentation in this article.

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Any advice here does not take into account your individual objectives, financial situation or needs. Terms, conditions, limits, and exclusions apply. Before making a decision about this insurance, consider the relevant Product Disclosure Statement (PDS)/Policy Wording and Supplementary PDS (if applicable). Where applicable, the PDS/Policy Wording, Supplementary PDS and Target Market Determination (TMD) for this insurance are available on this website. We do not provide any form of advice if you call us to enquire about or purchase a product.

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