What if Repair Cost is Less Than Excess?

Having car insurance can provide peace of mind in the event of an accident or damage to your vehicle. However, most policies come with an excess – the amount you must pay towards any claim before your insurance covers the remaining cost. This excess can sometimes be more than the actual repair bill. So what happens if the repair cost is less than your excess amount?

What is an Insurance Excess?

An excess is the portion of any insurance claim that must be paid by the policyholder before the insurance provider covers the remaining costs. The excess is a standard feature of most car insurance policies.

There are a few different types of excess:

• Basic Excess – This is the standard excess amount set by your insurer. It applies to all claims you make under your policy.

• Age Excess – Younger drivers usually have a higher age excess in addition to the basic excess. This is because younger drivers are seen as higher risk.

• Voluntary Excess – You can choose a higher excess amount to lower your premiums. This is voluntary excess.

• Imposed Excess – Insurers may impose additional excess for high risk drivers or modifications.

Excess amounts can range from a few hundred to a few thousand dollars depending on your policy, age, driving history and other risk factors. They are designed to discourage small claims and reduce premiums.

Why Would Repair Costs Be Less Than The Excess?

There are a few common scenarios where you could find yourself in a situation where the repair bill is less than your insured excess:

• Minor Damage – Small repairs like replacing a broken taillight, fixing minor dents or scratches can often cost a few hundred dollars – sometimes less than standard excess amounts.

• Quotes from Non-Approved Repairers – If you get quotes from repairers not approved by your insurance company, their prices are often cheaper. But your insurer may not accept these quotes.

• Market Value Less Than Excess – If your car’s market value has depreciated significantly, repair costs can exceed the car’s worth. The insurer may decide it’s not economical to repair an old cheap car.

• Modifications/Non-Standard Parts – Your excess is based on the standard car. If you modify or upgrade parts, the insurer won’t pay for aftermarket parts. So repair costs for standard parts may be less than your excess.

• Discounted Repair Rate – Some repairers may offer you a discounted rate if you pay in cash, don’t go through insurance. Their quote could be less than your excess.

What Happens if Repair Cost is Less Than Excess?

If the repair cost is less than your excess amount, you have a few options:

• Pay for Repairs Yourself – You can withdraw the claim and just pay for the repairs out of pocket. This avoids paying the excess and prevents premium increase at renewal.

• Make an At-Fault Claim – You can still lodge a claim with your insurer. But you will need to pay the full excess amount before they pay the repair cost. This can increase your premiums.

• Ask Insurer to Waive Excess – Some insurers may waive the excess if repair costs are marginally below your excess. But they are not obliged to do this.

• Negotiate Excess Amount – You could ask the insurer if they will reduce the excess to match the repair cost. But they are unlikely to do this.

• Claim on Liability Insurance – If the damage was caused by a liable third party, you may be able to claim against their liability insurance for repair costs without paying an excess.

Should You Withdraw Your Claim?

If the repair quote is less than your excess, is it better to just pay yourself and avoid claiming? Here are some pros and cons of withdrawing your insurance claim:

Reasons to Withdraw Claim

• Avoid paying excess – don’t pay excess if repairs cost less
• No premium increase – claims can increase your premiums at renewal
• Keep no claim bonus – avoid losing a no claims bonus if you have one
• Avoid impact on cover – claims can affect your ability to get insurance in future
• Quicker repairs – no delays dealing with insurer processes
• Choice of repairer – insurer may require approved repairers

Reasons to Proceed with Claim

• Contractual right – the policy is a contract for agreed coverage
• Administration – insurer handles quotes, invoices, payments
• Liable party pursuit – insurer can try to recover costs from liable third party
• Full repair coverage – insurer will ensure repairs meet required standard
• Ongoing damage – insurer will cover subsequently identified damage
• Peace of mind – assurance that repairs are covered as agreed

How to Withdraw Your Insurance Claim

Withdrawing a claim is usually a simple process:

• Notify your insurer – call them as soon as possible and advise you wish to withdraw the claim.

• Confirm in writing – follow up your call with written confirmation via email or letter that you are withdrawing the claim.

• Cancel any repairs booked – contact the repairer and advise you no longer need the repairs booked under your claim.

• Keep paperwork – hold onto any quotes, photos, reports etc related to the damage in case you need to refer back later.

• Pay for repairs – you will need to pay the repairer directly. Get an invoice to keep for your records.

• Check with insurer – make sure the insurer has closed the claim and no further action is needed from you.

Withdrawing early can save time and avoid excess payments. But once repairs are approved or in progress, it may be too late to withdraw without excess impact.

Does The Insurer Refund Excess if Repairs Are Less?

If you lodge a claim and pay your excess, then find repairs cost less than estimated, what happens to your excess?

• The insurer will pay the actual repair cost to the repairer.

• They will not refund the difference between the repair cost and your excess amount.

• You do not get your excess payment back even if repairs come in under budget.

• The excess is your contribution under the policy for any claim, regardless of repair cost.

• If repair costs exceed the excess, your insurer covers the rest. If it’s less, they only pay the repairer and excess is not refunded.

The excess helps to deter small or unnecessary claims. It is not conditional on the repair costs. Once you lodge a claim and pay the excess as required, you cannot get a refund if repairs cost less than estimated.

Tips for Managing Excess vs Repair Costs

Here are some useful tips to consider regarding excess amounts when weighing up whether to claim:

• Increase your voluntary excess – choosing a higher excess reduces premiums. Consider whether a higher excess would have avoided this situation.

• Ask about repair price upfront – get written quotes before deciding to claim so you know the estimated cost.

• Understand your policy excess – check all the excess types that may apply and how they add up.

• Consider excess waiver or reduction – some policies allow this if you have a good claims record.

• Compare market value vs repair cost – is it worth repairing an old cheap car? Or consider whether to withdraw and put money towards a newer car.

• Discuss options with insurer – they may suggest alternatives like capping repair authorisation to your excess amount.

• Maintain your car – keeping your car well maintained can reduce risk of repairs needed.

• Build up a repair fund – regularly put aside money to cover future small repairs below excess amounts.

Can You Negotiate the Excess Amount?

If the repair quote comes in just under your excess, is it possible to ask the insurer to reduce your excess so it matches the repair cost?

• You can certainly ask, but insurers will generally not negotiate excess amounts.

• The excess is set when you take out the policy based on risk factors. Reducing it mid-policy undermines this rating process.

• Fixed excesses apply to all claims regardless of repair cost. Renegotiating excess for each repair sets a precedent they want to avoid.

• An insurer may cap authorised repairs to your excess amount. But this still requires you to pay the full preset excess.

• If repairs exceed the excess, they cover the extra cost. There is no refund when less.

• The best way to reduce excess is choosing voluntary excess when you first take out a policy.

While you can ask, insurers will typically not negotiate excess downwards mid-policy or on a single claim. The excess agreed at inception is designed to apply to all claims throughout the policy period.

Options If Market Value is Less Than Repair Cost

If your car’s current market value has depreciated to below your excess amount, repairs may not be economical. What are your options?

• Withdraw the Claim – Pay for any minor repairs and keep driving your existing car. Just maintain it rather than fixing major damage.

• Cancel Cover – If the car is old you may decide to withdraw your claim and cancel your comprehensive insurance. Switch to Third Party cover only.