Insurance Excess – Monzi Explains

Find out how much you’re liable to pay based on your insurance excess. Whether it’s car, private health, home or rental car insurance, an excess will usually be included in your policy. But what does insurance excess mean? Monzi’s here to help. We’ll define, explain and examine all the key information you need to know. Let’s go.

Please note, certain ideas and products presented in this article may not be offered by Monzi nor the lenders we work with. This article presents only general information. Consider seeking professional financial, taxation, legal or other advice to check how the information and ideas presented on this website relate to your unique circumstances.

What is insurance excess?

So, you’ve been researching different insurance policies. Whether its private health care, car, or home insurance, you’ve probably come across the term “excess.” With this, the question that you are probably asking is “what is excess in insurance?”

Luckily, it’s actually quite simple. Most insurance policies include an excess to allow you to assume a portion of the risk yourself. In short, if you make a claim on your insurance policy then the excess is the amount you will have to pay out of pocket.

To put this into an example, let’s say you get into a car accident and repair costs are $3000. If your car insurance excess is $800, then you will be required to pay that figure while your insurer will cover the rest. Simple, right?

Now that we’ve covered the basics, we can dig a little deeper. Through our guide, we’ll explore the different kinds of insurance and the associated excess. Moreover, we’ll examine all the tips, tricks and considerations you might need to know. Let’s go.

Is excess the same for all insurance policies?

No. Every policy will vary in the type and level of excess included. As a result, it will be up to you to select the policy that works best for you.

For instance, when it comes to your car, you may opt for a lower insurance excess given that costs are often considerable and claims are not uncommon. On the other hand, you may select a higher excess private health insurance entitlement.

At the end of the day though, it’s up to you to determine the level of excess that you are comfortable with. From there, you can select the policy that works for your circumstances.

Finally, one thing to keep in mind is that excess is not always constant. For some claims, excess may not apply (i.e. you will not be required to pay anything out of pocket). Moreover, excess may vary depending on the nature of your claim.

What is excess in car insurance?

Car excess insurance is no different to any excess that we’ve already described. In short, it’s simply the difference that you must pay between your total repair costs and what the insurer pays. Realistically, it’s as straightforward as excess gets.

In saying this, it’s worth noting that some car insurance policies will include a number of excesses. For example, inexperienced drivers may need to pay relevant additional excesses (e.g. an age excess) on top of the standard amount.

Car rental excess insurance

So, you’re hiring a car. Whether you’re going on holidays or just need to travel for work, car rental excess insurance is available. In short, this insurance covers the excess charged by hire car companies in the event that your rental car is stolen or damaged.

If you get into a major accident, one of these insurance policies can potentially save you thousands. This is due to the fact that most hire car companies can charge excesses of over $3,000 if significant damage occurs and you are uninsured.

In saying this, while standalone insurance policies are an option, most hire car organisations will offer their own policies too. As a result, you will need to weigh the costs, risks and coverage of each policy to decide which is right for you.

Car rental excess insurance comparison

Comparing insurance policies is a must. Luckily, it’s quite simple. As a guide, ensure that you have taken the following steps:

  • Seek quotes from a range of different insurers.
  • Compare the level of coverage offered (e.g. the excess)
  • Read the terms and conditions: what can be claimed and what cannot?
  • Check the lenders reviews to ensure they’re trustworthy
  • What are your premiums?

Based on this, as well as consideration of your personal circumstances, you can determine what policy suits your needs.

What is excess in health insurance?

While Australia has a public health system in place, you can access private health care too. In short, private health care allows you to be treated in the private health system. With this, benefits can include reduced waiting times, private hospital rooms and even additional care.

When it comes to private health care, you’ll need to purchase a private health insurance policy. This essentially mirrors a car insurance policy, however, rather than claiming for expenses related to car repairs, you’ll be claiming the costs of medical care (e.g. surgeries). While you could rely on medical loans if something goes wrong, a private health insurance policy is often a better choice given the additional benefits.

Like with all insurance policies though, there will be an excess. As we’ve already explained, this is simply the portion of costs that you’ll be liable to pay.

To put this into an example, let’s say you require medical care that costs $2000 and you’ve got a $500 excess. With this, you must pay the $500 first before the insurer covers the rest.

Excess private health insurance premium reduction or refund

In Australia, the government contributes to the cost of your private health insurance premiums via the private health insurance rebate. However, this rebate is income-tested. In other words, the amount and availability of this rebate depends on your income.

As a guide, the higher your income, the smaller size of the rebate you will be entitled to. If your income exceeds a certain threshold then you may not be eligible for any rebate at all.

When you lodge your tax return each year, your correct rebate entitlement will be calculated. Depending on the findings, you may be eligible for a refund (if overcharged) or you may owe money (if you’ve received more of the rebate then you were entitled to).

For further details, visit the Australian Taxation Office website. There you will find a more comprehensive explanation.

How does excess affect my insurance premiums?

One of the key considerations when it comes time to select your excess amount will be your insurance premiums.

As we’ve already discussed, rental car excess insurance and other such excess types are a way of assuming some of the risk yourself. With this, your excess level will influence your premiums.

As a general rule, the higher your excess amount, the lower your premiums will be. This is simply due to the fact that you are taking on more of the risk. As a result, there’s less risk for your insurer and your premiums can be lowered.

Obviously, the inverse will be true too. A lower excess means you are accepting less risk. With this, you will be required to pay higher premiums.

Insurance Excess Comparison

Travel insurance excess

Whether you’re kicking back on the beaches of Bali or exploring the popular tourist destinations of Europe, there’s really nothing better than an overseas getaway.

Unfortunately, things can go wrong. If you suffer an injury or fall ill, the medical bills can quickly add up. Similarly, if your flights get cancelled you can find yourself stuck in a foreign land without the cash needed to get you home. In short, you can find yourself trying to find travel loans to cover these unforeseen costs.

That’s why travel insurance is a must. In the event that something does go wrong, you’re covered. However, as with all insurance policies there will usually be an excess. While your insurer may be able to account for many of your unforeseen costs, you will typically be liable to pay for some of it too.

So, before you head off, do your research to find a travel insurance policy that provides the cover you need.

Do I pay excess if I’m not at fault?

In most cases, if you are involved in a car accident and you are not at fault, you will not be required to pay any excess. This is because your insurer will typically be able to recover their costs from the at-fault driver or their insurer.

However, for this to be possible, you will need to be able to prove that you were not at fault. In addition to this, you must provide the name and address of the person who was.

While that covers typical car insurance, car hire excess insurance can be a little different. Often, there will be a stipulation in your rental agreement that states that you must pay an excess regardless of fault. However, consult your contract to determine if this is the case.

In any case, many hire car companies will be willing to waive this cost if you are not at fault.

What is a standard excess?

In short, there really is no standard excess amount. Policies vary in the amount of excess that you can select depending on the type of insurance you’re looking at. In other words, rental vehicle excess insurance amounts can vary significantly from private health excess amounts.

Given this, there’s no reason to try and find the standard excess amount. Instead, aim to find the level of coverage that suits you. Moreover, ensure you are mindful of the relationship between your excess and insurance premiums too.

You will be required to assume a portion of the risk, so do your research and consider what level of risk you are comfortable with. That will determine what your excess should be.

What if repair costs are less than excess?

If you’re involved in a car accident which results in minor damage that does not exceed your excess then it’s usually wise to not make an insurance claim. Simply pay for the damage out of pocket. This is due to two reasons.

Firstly, if your costs don’t exceed your excess then your insurer will not make a payout anyway. This is because the costs are less than what they are responsible for.

The second reason relates to your insurance premiums. In most cases, if you file an insurance claim following an accident, your lender will increase your premiums by a fixed percentage.

While that covers accidents involving your personal vehicle, keep in mind that with car rental excess insurance Australia you will typically need to make a claim regardless of the level of damage.

Is it better to have a $500 or $1000 excess?

In short, it’s up to you.

If you get into an accident then having a $500 excess will mean that you are required to pay less out of pocket for the associated repairs. However, the trade-off with this is that you must pay higher insurance premiums. The opposite will be true with a $1,000 excess.

Given this, evaluate your options to determine which level of cover works best for your circumstances.

Insurance excess and personal loans

Depending on the size of your claim and extent of your coverage, you can potentially find yourself needing to cover insurance excess payments from just a few hundred dollars all the way into the thousands.

In short, this can present a financial headache. If you do find yourself unable to make the payment then one potential option could be to apply for a personal loan.

Through a series of online lenders, these cash loans may be available for amounts ranging from $300 to $10,000. Best of all, your costs are divided evenly over the long-term with repayment terms offered from 12 to 24 months.

If you think this is the right choice for you, consider applying with Monzi’s lender-finder service. In short, we might be able to make it easy to find lenders online. Apply today and our system will aim to pair you with a trusted, available lender in just 60 minutes. From there, you can potentially access the cash loans you need.

Am I eligible to apply with Monzi?

If you’re looking for a simple and convenient way to access online finance then Monzi’s lender-finder service is one potential option. In short, we’re here to help everyday Aussies just like you.

In saying this, before you apply, we do ask that you meet our four eligibility criteria. Check them out:

  • At least 18 years of age.
  • Australian citizen or permanent resident.
  • Have a current email address and mobile phone number.
  • Possess an online bank account with at least three months of transaction history.

How do I apply?

Once you’re eligible, it’s time to move onto your application. At Monzi, our application is super simple, all you need to do is:

  1. Select your loan amount and repayment period (where applicable).
  2. Enter the required personal information and financial details. Hit submit.
  3. Our automated system will then search our network to try and find an available lender willing to assess your application.
  4. You’ll receive a text with an outcome. If a lender is found then they will be in touch to complete an assessment.

Let’s go

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Loan Amount of $1,000 over 6 months repayable weekly (25 weekly repayments). $1,000 (Principal Amount) + $200 (20% Establishment Fee) + $240 (fees based on 4% per month over 25 weeks) = $1,440 total repayable in 25 weekly installments of $57.60.

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