By Carol Cartwright, Senior Account Manager
You’re no doubt familiar with Private Motor Vehicle excess – the amount you (as the insured) need to pay prior to your insurer paying out a claim. But do you really know what it is and why you’re paying it?
Put simply, an insurance company charges an excess to minimize small claims, reduce the number of fraudulent claims and reduce administration charges. In most cases, insurance companies won’t require you to pay the excess if the accident was not your fault, and you are able to identify the at-fault driver.
It may not sound complex however, it’s important to note that there is no universal excess applicable for all drivers. Depending on your situation, a number of different excesses may be applicable for your insurance policy.
Understanding the different excesses
Standard/basic excess: This is the amount you are required to pay for any claims made, agreed upon when establishing your policy and can apply both by itself as well as with an additional type of excess.
- Sharon is a 45-year-old driver with her full Australian licence and no additional drivers noted on her policy. Therefore, a standard /basic excess will apply to Sharon.
Age excess: An age excess applies when you have a driver under the age of 25 noted on your policy.
- EXAMPLE: Sharon has a 22-year-old driver noted on her policy – a standard/basic excess + age excess will apply to Sharon’s 22 year old driver.
Inexperienced driver excess: This excess applies if the driver is over 25 but has held an Australian licence for less than two years.
- Nathan is 25 and has held an Australian licence for six months – a standard/basic excess + inexperienced driver excess will apply to Nathan.
Undisclosed/undeclared driver excess: This excess is payable in addition to the basic excess and age excess if you are not noted as a driver on the policy and you are under age 25.
- EXAMPLE: A 22-year-old driver was in an accident where they were at-fault. They were not noted on the policy of their parent’s vehicle they were driving. They would be charged a basic excess + an age excess + an undisclosed driver excess.
For learner drivers, the excess noted on their supervising driver’s policy is applicable for them – as they do not have a formal Australian driver’s licence.
How do these excesses affect you and your premium?
You may have noticed that a number of insurance companies are allowing you to increase your excess amount in order to reduce your premium. Although this may be beneficial to what you are paying now it’s wise to take into consideration the excess information above - how much will your excesses add up to and can you afford to pay this all in one lump sum in the event of an at fault claim?
Not sure what to do?
If you have any additional questions, or are unsure of what excess applies to you, get in touch with your insurer, or with Insurance House on 1300 305 834.