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 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.

Malicious Damage

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. 

Theft

In the case of a theft, an excess will generally apply unless the offender is caught and charged, when the excess will be waived.

Kangaroo strike

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.

Summary

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.

Aiden

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Comments 7

  1. I understand Excess but I don’t agree with it fully.
    In my case no accident yet.. touch wood.
    I’ve insured my vehicle for 7yrs at $95 a mth.
    The amount that I have paid is now worth more than the value of the Vehicle.
    I believe excess should be paid for the first 5yrs, after that ot should be dropped.

    1. Post
      Author

      Interesting concept Mark. Loyalty rewards like that are definitely something we are looking into. Appreciate the comment. Aiden

  2. Nobody can force the other party to give their details, nor can you hold the party captive – legally unless they are member of one of the police agencies or a limited number of other Federal agencies. Laws provide penalties for not providing details, however the individual needs to be identified (in which the whole issue is mute) before the authorities will consider doing their job.

    Some policies presumes that it is legal to do so, but no insurer (incl Club4x4) can state the Act that permits such in any state of Australia , and actively promote that in an attempt to penalise the victim to enhance their own interests. In the extremely unlikely hood some thing has changed in this area in some place in Australia please enlighten us with the reference, as it will also assist your own recovery activities.

    Its also a breach of the various privacy polices to provide personally identifiable data to a third party without consent.

    Its clear the whole insurance industry is biased to penalise the victim, as the modern way of addressing things seems to be these days.

    Livestock owners are responsible for their animals – irrespective of their type – particularly when they fail to control them. These people / organisations are usually well capable of resolving the issue but blatantly use their financial position to bully the victim.

    Due to first hand experience on each of the above I doubt that you (or your associated insurers) will have anything constructive to add in how you will reduce the risk, and resulting damages. Remember reducing the risk is also in your own interests, rather than penalise the victim.

    Im I’m wrong in way please provide the evidence.

    1. Post
      Author

      Hi Bruce,
      Thanks for taking the time to share your thoughts here. I got my information on legality from Lawaccess NSW. Under the law in NSW, as you rightly point out, it is a requirement that someone share details after an accident, and information specified to be shared is listed at https://www.lawaccess.nsw.gov.au/Pages/representing/lawassist_car_accident/what_to_do_after_an_accident/exchange_details.aspx

      You are right in that you can’t hold the other party captive, but there are things that can help identify the driver. Capturing photos / dashcam footage can help, as can recording the registration number of the car. Making a police report is the first thing you should do, and then you can ask for them to identify the other driver. If they don’t, you can go to the transport authority and ask for details.

      I can’t comment on the privacy aspect, other than to say you have a legitimate need for those details and the law supports access to them. Passing them to an insurer would not be considered a breach of that as they are acting on your behalf.

      As far as excesses go, an excess is payable by the insured in most circumstances. This isn’t to penalise the owner, more part of the contract they agree to. If there was no such thing as an excess payable, premiums would be much higher, which is not really ideal because everybody would pay more for insurance.

      One thing that hopefully will help managing risk in vehicles is technology. If you have a Dashcam, chances are that you might get a rego number, and then have proof that the vehicle was involved, which then will help getting further details. The other thing that may make an impact is the autonomous emergency braking, lane changing alert and other tech which will potentially help reduce claims rates. The other side to this coin though is the cost of this technology – in an accident this adds significant cost to repairs because the whole system sometimes needs to be replaced.

      My advice is run a dashcam, if there is an incident, grab photos of the vehicle involved, write down the rego number if you can, and chase the additional details. There are costs to getting this information, but if someone hasn’t provided their details like they should have, you should be able to seek financial compensation for any costs incurred by you in getting that information.

      Some great questions raised, and I’ll look to reach out to someone who is a legal expert in this area to grab further clarity on this situation.

      Kind Regards,

      Aiden

  3. Hi I have tried 3 times to get a quotation for insurance of my Isuzu mux and 3 times your system fell over I won’t try again. But go to some one who is more reliable
    Regards Allan

    1. Post
      Author

      Hi Allan, sorry the system has let you down. Can you email me at aiden@club4x4.com.au and I’ll have someone call to complete the quote today? I’d also appreciate further information on what device and browser you were using so we can investigate. Thanks, Aiden

  4. I am fortunate my 4×4 is not a daley driver . When i questioned Club 4×4 about this, and wanting to reduce my premium the only way todo this was was to increase the excess , which by the way is more than the premium every year , so excess is used to add vale to your policy by the insurer. Most of us have not been able to use our 4×4 ‘s for their intended purpose, this year, working from home for those that do drive them regulatory has reduce the amount of km’s they are doing, especially us here in Victoria, no mention of a discount from Club 4×4 even though the risk and im tipping the amount of claims would have reduce significantly during 2020. Other insurance company’s have done this why not club 4×4 ?

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