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An insurance excess (also called a deductible) is the amount you are required to pay towards the cost of a claim before your insurer pays the remainder. Choosing a higher excess lowers your premium, but means you pay more out of pocket if a claim occurs.
If you have a $1,000 excess and make a claim for $8,000 in vehicle damage, you pay $1,000 and your insurer pays $7,000. If the damage is only $600 — less than your excess — the insurer pays nothing and the claim may still be recorded on your history. It is generally not worth claiming for amounts at or near your excess amount, as the premium impact of a claim can outweigh the benefit.
Common types include: basic excess (applies to every claim), voluntary excess (an additional amount you choose to add in exchange for a lower premium), age excess (applied when a young or inexperienced driver is involved in a car claim), and unlisted driver excess. In home insurance, separate excesses sometimes apply to specific events like storm or flood. Read your PDS carefully to understand all excesses that apply to your policy.
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