Most Australians feel confident about their car insurance knowledge. A recent survey found that 83% of us say we understand our policies. Yet only one in four has actually read the Product Disclosure Statement from start to finish. That gap between confidence and the fine print is where unexpected costs hide — especially when it comes to car insurance excess. For a driver with a $1,000 standard excess who also triggers an age excess and an unlisted driver excess, the out-of-pocket cost on a single claim can top $3,000. That is real money that most people never saw coming.
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This article is general information only and does not constitute professional advice. For your specific situation, consult a qualified professional.
Car insurance premiums have climbed sharply. The Insurance Council of Australia reports the average comprehensive motor policy has risen 42.4% since 2019, and ASIC found premiums climbed about 8% in the 12 months to July 2025 alone. In that environment, choosing a higher excess to lower your premium looks tempting. But the trade-off only works if you understand which excesses can stack on a single claim and whether you could actually cover that total amount at short notice. A lot of people set their excess once and never revisit it, even as their circumstances change. Here’s what you actually need to know.
What car insurance excess actually means for your wallet
An excess is the portion of a claim you pay before your insurer covers the rest. If repairs cost $5,000 and your total excess is $1,000, you pay $1,000 and the insurer pays $4,000. It is not part of your premium — it is only triggered when you make a claim.
What I tend to notice is that people focus on the premium number and treat the excess as an afterthought. That is backwards. The excess determines your maximum out-of-pocket exposure on any single incident, and with stacking, that number can be much larger than the standard figure on your policy schedule. Understanding which excesses apply to your situation is the first step to choosing the right cover level without nasty surprises later.
Excess types, typical amounts, and how they stack
Every policy has a standard excess — sometimes called a compulsory or basic excess — that applies to most at-fault claims. On top of that, insurers can add extra excesses depending on who was driving, their age, their experience, and whether they are named on the policy. These additional excesses stack on top of each other and on top of the standard excess.
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| Excess type | Typical amount | When it applies |
|---|---|---|
| Standard (compulsory) | ~$800 | Every at-fault claim; set by insurer, cannot be removed |
| Voluntary | You choose ($0–$2,000+) | Added on top of standard to lower premium |
| Age excess | $500–$900 | Driver under 25 at time of incident |
| Inexperienced driver | $400–$800 | Driver 25+ but less than ~2 years on full licence |
| Unlisted driver | $500–$2,000+ | Driver not named on the policy |
| Windscreen/glass | $0–$200 (often waivable) | Glass-only claims; some policies offer $0 with optional cover |
Consider a real scenario. A 22-year-old borrows a parent’s car and has an at-fault accident. The policy has a $750 standard excess. The insurer adds a $600 age excess because the driver is under 25, and a $700 unlisted driver excess because the 22-year-old is not named on the policy. The total excess on that single claim is $2,050. The parent chose a $1,000 voluntary excess to save on premiums, so the total jumps to $3,050. That is the number they have to find before repairs can start.
The Insurance Council of Australia data shows premiums have risen sharply, and ASIC warned in August 2026 that customers are being left in the dark about how their premiums and excesses are set. When you compare policies, the headline premium matters less than the total excess you could actually face. A policy with a low premium and a high stacking risk can cost you more in the long run than a slightly more expensive policy with fewer additional excesses.
Three common excess mistakes that cost real money
Setting a high voluntary excess without a savings buffer
Raising your voluntary excess to $2,000 might cut your premium by a couple of hundred dollars a year. But if you have less than that in easy-access savings and you need to claim, you are stuck. Some insurers offer instalment plans or hardship arrangements — RACQ, for example, allows excess payment in instalments — but not all do, and the timing is never guaranteed. What I would do is set your total potential excess at a level you could pay tomorrow without borrowing. If you cannot, a lower excess is worth the higher premium.
Overlooking the young or inexperienced driver excess
If anyone under 25 or with less than two years on a full licence drives your car regularly, their excess applies every time they are behind the wheel during an incident. That is true even if they are listed on the policy — listing them avoids the unlisted driver excess but does not remove the age or inexperienced driver excess. Some policies stack both. If you have a learner or P-plater in the house, factor those extra excesses into your choice rather than hoping they never need to claim. Young drivers face higher costs across the board, and excess is a big part of that.
Assuming no-fault means no excess payment
Most insurers require you to pay the excess upfront even when you were not at fault. If the at-fault driver is identified and their insurer accepts liability, your insurer recovers the costs and may refund your excess — but that can take weeks or months. If the at-fault driver cannot be identified, you are usually stuck with the excess. The exception is when your policy includes a no-fault waiver, which some insurers offer if you can provide the other driver’s full name, address, and registration at the time of the claim. Check your PDS rather than assuming.
How to choose and manage your excess in practice
Match your excess to your actual financial buffer
Start with your savings. Look at what you could comfortably pay out of pocket within a few days if your car was damaged or stolen. That number is your ceiling for total excess. Then check which excess types apply to your household — if you have a young driver or an unlisted driver who occasionally uses the car, add those amounts to the standard excess. Choose a voluntary excess that keeps the total within your ceiling. A higher excess makes sense if you have a solid buffer and a clean driving history. If your savings are tight, a lower excess is the safer bet even if the premium is higher.
Review your excess at every renewal
Your circumstances change. A new driver in the house, a different commute, a move to a storm-prone area — each of these can shift which excesses apply and how much risk you are carrying. The research shows that many drivers set their excess once and never revisit it. At each renewal, ask your insurer for a quote at two or three different excess levels and compare the total cost including all potential stacked excesses. If you are unsure about a policy term, ask the insurer to explain it in writing and keep a copy of the response.
Know when you can avoid paying excess
You generally do not pay excess if you were not at fault and can provide the at-fault driver’s full name, address, and registration. Some policies also waive the excess for windscreen or glass-only claims, especially if you have added optional glass cover. A few insurers reduce the excess if you use their approved repairer network. These conditions are spelled out in the PDS, but only 25% of Australians have read theirs. Taking the time to read yours — or at least the excess section — is the single most effective way to avoid bill shock.
For smaller repairs, consider whether claiming is worth it at all. If the repair cost is close to or below your total excess, you pay the full amount yourself and receive nothing from the insurer. On top of that, making a claim can push your premium up at renewal. Sometimes the cheapest option is to pay for minor damage out of pocket and keep your no-claim history intact.
What is changing in 2026 and beyond
ASIC has publicly warned insurers that customers need clearer disclosure about how premiums and excesses are set. That pressure may lead to more standardised excess structures and better upfront information. Some insurers are already offering digital claims with online excess payment to speed up the process. For weather-related events, many home and car policies now impose higher event-specific excesses for flood, storm, or bushfire damage — and those can override your voluntary excess choice. If you live in an area prone to severe weather, check whether your policy has a separate event excess and factor that into your total exposure.
Frequently asked questions
Do I pay excess if the accident was not my fault? ▾
Can I change my excess after buying a policy? ▾
What happens if the repair cost is lower than my excess? ▾
Does age excess apply to learner drivers? ▾
Can I pay my excess in instalments? ▾
Is a higher excess always cheaper in the long run? ▾
Your excess is a lever — but only if you understand what it controls
The single most useful thing you can do is read the excess section of your Product Disclosure Statement. It tells you every type of excess that could apply, how they stack, and when they can be waived. That 15-minute read is worth more than any comparison quote because it shows you the actual cost of claiming, not just the premium. With premiums rising and regulators pushing for clearer disclosure, the insurers that give you straight answers on excess are probably the ones worth staying with.
Remember: this article is general information only. For advice on your specific situation, speak to a qualified professional.
If this was useful, you might also want to read decoding car insurance exclusions in Australia.
Sources and Further Reading
Understanding no-excess car insurance in Australia — Explores policies that reduce or eliminate excess and whether they suit your driving profile.
Protecting your investment with the right car insurance — Covers total loss scenarios and how excess affects write-off payouts.
Mozo (2026). Car insurance excess explained. 🔗
Insurance Council of Australia (2025). Motor Insurance Policy Paper. 🔗
ASIC (2026). Consumers left in the dark about rising car insurance premiums (26-189MR). 🔗
Youi Insurance. Getting under the hood of Australians’ understanding of car insurance and claims. 🔗
