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Car Insurance | How Does Excess Work On Car Insurance ?
​Learn how car insurance excess works, when you need to pay it, and how choosing a higher or lower excess can impact your premium.
Car Insurance Excess Explained (NZ Guide)
What Is Car Insurance Excess?
• The excess is the portion of a claim you pay yourself
• It applies each time you make a claim
• The insurer pays the remaining repair or replacement costs
• Higher excess usually lowers premiums
Example scenario:
Repair cost: $3,000
Excess: $500
Insurance pays: $2,500
Car insurance excess is the amount you must pay toward a claim before your insurer covers the remaining repair or replacement costs. It is set when you take out your policy and applies each time you make a claim.
How Excess Works (Example)
Example Claim
• Accident repair cost: $4,000
• Policy excess: $750
You pay: $750
Insurance pays: $3,250
The excess is usually deducted from your claim payout or paid directly to the repairer before the insurer covers the remaining cost.
How Excess Affects Your Insurance Premium
Example comparison:
​
Monthly Premium:
$400
Higher Premium
$750
$1000
Medium Premium
Lower Premium
• Increasing excess reduces insurer risk
• Lower risk = lower premiums
• Too high an excess can make claiming difficult
When You May Not Pay an Excess
You might not pay excess if:
​
• Another driver is fully at fault
• The responsible driver is identified
• Your insurer recovers costs from the other driver
• Your policy includes no-excess windscreen cover
You may not need to pay an excess in certain situations, such as when another driver is clearly at fault and has been identified.
In these cases, your insurer may recover the costs from the other driver or their insurer. Some policies may also include no-excess windscreen cover for windscreen repairs or replacements.
Can You Change Your Excess?
Most insurers allow you to:
​• Increase excess to lower premiums
• Decrease excess (may increase premium)
• Change excess when renewing a policy
Car Insurance Excess Calculator
Example:
Use our Car Insurance Calculator to estimate monthly repyaments.
Other Related Pages ( Car Insurance )
Yes, in most car insurance policies in New Zealand, you can adjust your excess to better suit your budget and risk tolerance. Choosing a higher excess usually lowers your premium, while a lower excess increases your upfront cost but reduces what you pay if you make a claim.
It’s important to balance affordability with protection especially for accidents or unexpected repairs.
For a quick way to see how changing your excess affects your premium, try our Free Car Insurance Calculator, where you can test different excess amounts and coverage levels in real time.
Average Car Insurance Excess in New Zealand
Typical excess amounts:
​
• $400 – $750 common standard excess
• $750 – $1,500 higher excess policies
• $1,500+ for very low premium plans
Many insurers allow customers to choose a higher excess when setting up their policy. A higher excess reduces the insurer’s risk, which can help lower the overall insurance premium.
Average Car Insurance Excess in New Zealand
Typical excess amounts:
​
• $400 – $750 common standard excess
• $750 – $1,500 higher excess policies
• $1,500+ for very low premium plans
Many insurers allow customers to choose a higher excess when setting up their policy. A higher excess reduces the insurer’s risk, which can help lower the overall insurance premium.
Choosing the Right Excess
Factors to consider:
• Your savings and ability to pay excess quickly
• Vehicle value
• Premium savings vs claim cost
• Your driving risk
Example:
Higher excess
• Lower monthly premium
• Higher cost when claiming
Lower excess
• Higher premium
• Less out-of-pocket during claims
Understanding how car insurance works and the types of car insurance available in New Zealand can also help you decide which excess level makes the most sense for your situation.
Types of Car Insurance Excess in NZ
Standard Excess
The base excess on your policy that applies to most claims.
Young Driver Excess
Extra excess if the driver is under a certain age (often under 25).
Inexperienced Driver Excess
Applies if the driver has held a licence for a short time.
Named Driver Excess
May apply if someone not listed on the policy drives the car.
Windscreen Excess
Some policies have a reduced or zero excess for windscreen repairs.
Car insurance policies can include different types of excess depending on the driver and the type of claim.
The most common is a standard excess, but additional excesses may apply for young or inexperienced drivers, unnamed drivers, or certain claims like windscreen damage.
Excess on Car Insurance: Summary
​
Your car insurance excess is the amount you agree to pay toward a claim before your insurer covers the rest of the cost. It plays a major role in how much you pay for your insurance policy and how much you would need to contribute if your car is damaged, stolen, or involved in an accident.
In most policies in New Zealand, you can choose your excess when setting up your cover.
A higher excess generally reduces your premium because you are taking on more of the financial risk. A lower excess increases the premium but means you will pay less if you need to make a claim. Because of this trade-off, the best excess is usually one that you could comfortably afford in an unexpected situation.
Drivers should also understand that some claims may involve additional excesses depending on the situation. For example, insurers sometimes apply extra excesses for young drivers, high-performance vehicles, or certain types of claims. This means the total amount payable during a claim can vary depending on the circumstances and the policy details.
Before choosing an excess, it helps to understand how claims work, what events are covered, and how different levels of cover affect your financial risk. Learning more about how car insurance works and the different types of car insurance in New Zealand can help you make a more informed decision when selecting the right policy and excess level.
(Q&A) Car Insurance Frequent Inquires:
Q: What does excess mean in car insurance?
A: It is the amount you must pay toward a claim before the insurer pays the remaining repair or replacement costs.
Q: Do you always pay excess when claiming?
A: Usually yes, unless another driver is fully at fault and their insurer covers the costs.
Q: Is a higher excess better?
A: Higher excess can reduce premiums but increases what you pay when making a claim.
Q: Can you choose your excess?
A: Most insurers allow you to select from several excess options when buying or renewing a policy.
Q: Is excess paid upfront?
A: Sometimes it is paid to the repairer, or it may be deducted from your claim payout.
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