The Excess misconception – When an excess applies and how to avoid it
G’day folks, Recently, it has become apparent that there are a number of misconceptions about when your insurance excess applies, so today I’m going to clear that up. The great news is that this information …
Recently, it has become apparent that there are a number of misconceptions about when your insurance excess applies, so today I’m going to clear that up. The great news is that this information generally applies to all insurance, unless your insurer tells you otherwise.
What is an excess?
Most of us will be familiar with an excess. In essence, it is an amount that you agree to pay in the event you need to make a claim, in addition to paying your premium. Most insurers will give you a choice of different excesses, and as you choose a higher excess, you’ll likely reduce your premium payable. The downside of this is that if you need to make a claim, you’ll end up paying a higher excess.
What type of excesses are there?
There are a range of excesses that are payable on an insurance policy, and it can differ by insurer. The most common excess is known as your Basic excess, and this is the amount payable if you make a claim. In addition to the Basic excess, there can be a number of additional excesses which may be payable in certain circumstances, either instead of a basic excess, or in addition to it, depending on the situation. Some of the common ones are outlined below:
- Unlisted Driver excess – some insurers charge an additional excess if you haven’t listed a driver.
- Inexperienced and/or learner driver excesses – these are additional excess applicable if an inexperienced or learner driver is driving the vehicle at the time of an accident.
- Special excess – this is a special excess applied to the policy on certain conditions and will be listed on your Certificate of Insurance.
The Product Disclosure Statement of your policy will clarify the exact definitions and conditions here, so it is important you read it to understand how they apply to your policy.
When is an Excess payable?
There is the misconception that an excess only applies if you are at fault when you make a claim. Unfortunately this is not actually true. The reality is that an excess is payable any time that you make a claim, although there are certain conditions where your insurer may waive the requirement to pay the excess.
Generally, the only time that an excess will be waived by an insurer is when the insurer determines that you were not at fault, and you have provided the details of the person who was at fault.
An insurer will generally need all of the following information in relation to the person at fault for the excess to be waived:
- Their Name
- Their Address
- Their Phone Number
- The Registration number of the vehicle if a vehicle is involved.
To clarify this position and how it will likely impact on different claims situations, I’ll mention a number of scenarios below, and then confirm whether or not an excess would be payable. Please note that this is general information, and you’ll need to clarify with your own insurer to be 100% certain on how they’d handle each situation.
At fault accident
In this scenario, where your insurer deems you at fault, you’ll be liable for all applicable excesses. However, the key is that the insurer makes that determination on who is at fault, so best not to admit liability upfront.
Not at fault accident – at fault party’s details collected
In this scenario, lets assume you’ve collected the other party’s details as listed above. As long as the insurer determines that you were not at fault (and they make this determination, not you) the excess will be waived.
If you have dashcam footage, and perhaps a rego number, this is not enough for your insurer, but there are ways to try to get the additional details. Further detail provided below.
Not at fault accident – no details collected
In the above scenario, say someone runs up the back of you, and then drives off and you don’t have their details, then an excess will apply. This is because the insurer has no-one else to recover from.
In the case of malicious damage to your vehicle (say someone keys your car in a carpark, or slashes your tires) then you would generally pay an excess. If you have CCTV footage of this, and can positively identify the person responsible and provide their full details, then it is likely the excess would be waived. However, just being able to prove it was someone else without being able to provide details of the person responsible means you’ll still pay the excess.
Damaged whilst parked
This is a common one, and there are a few scenarios here. Most of the time these days, people won’t leave a note if they hit someone in a carpark, and sometimes in busy carparks people will leave a note with false details. Unfortunately in both of these cases, you’d be liable for an excess. If you get the full details of the person responsible, then the excess would be waived.
Where this gets tricky is if there is CCTV footage of the crash. Even if the registration number of the vehicle is visible on the footage, that won’t automatically waive the excess if you don’t have all the other details. Unless the details of the owner can be provided, an excess will still apply. Again, more on this below.
In the case of a theft, an excess will generally apply unless the offender is caught and charged, when the excess will be waived.
In this case, an excess would apply as your insurer can’t recover from a Kangaroo.
What if I’ve got Dashcam Footage and a Rego number?
The key to an insurer waiving the excess in a not at fault situation is being able to provide the full details of the person responsible. And a Rego number isn’t quite enough, but that doesn’t mean it isn’t useful.
In this situation, you’ll need to firstly call the Police and advise them of the accident, and the fact that you have a registration number and the person didn’t stop. If you’ve got Dashcam footage even better.
Once that is done, you can ask the Police to share details of the registered owner. If they are not willing to do so, or refuse, you can then use the Police Report to make an application to your state transport authority for the release of the details of the registered owner.
If the insurer can contact the owner and then recover from them you’d get your excess waived or refunded, but you may still be charged upfront the excess.
If there is another person involved in an accident, make sure you get their details!
A Dashcam can be great for proving what happened, and also capturing the registration number of another party involved if they drive off, or don’t leave a note if they hit you while parked, but you may need to be prepared to chase the Police or local transport authority for details to avoid an excess being payable.
I hope this clarifies things and helps you better understand when an excess applies, and what information you need to help prevent an excess being charged if you are not at fault and have to make a claim.