Usually, yes. If your claim is accepted, you’ll generally pay an excess. The amount can depend on the type of claim and the cover you’ve added. For RACV Home and/or Contents Insurance, there are two exceptions: you may not need to pay an excess for liability claims or food spoilage claims. (refer to Section 2 of your RACV Home Insurance Product Disclosure Statement for more details).
Property
Which excess amount should I choose?
Basic excess
Decreasing your excess
Home insurance excess: what it is and how it works
Your home insurance excess may affect both your premium and what you pay if you claim, so what does ‘excess’ actually mean?
Knowing how your insurance excess works can help you choose cover with confidence and budget for any out-of-pocket costs if you ever need to claim.
An excess is the amount you may need to pay towards a claim for an insured event, such as storm damage, fire or theft. If your claim is covered, your insurer may pay the remaining amount, up to any applicable limits, terms and conditions of your policy.
Here are the key things to know about excesses on a home insurance policy:
- Different excesses can apply depending on the type of cover and the incident.
- Your chosen excess may affect your premium (higher excess can mean a lower premium, and vice versa).
- Some claims may include a special excess in addition to your basic excess. You can confirm what applies to you in your Certificate of Insurance.
More: What is sum insured mean?
When does an excess apply?
An excess may apply when you make a claim that is accepted under your home insurance policy. If more than one excess applies to the same claim, you may need to pay each applicable excess.
For RACV Home and/or Contents Insurance, there are two exceptions: You may not have to pay an excess if you make a liability claim, or a claim for food spoilage. See Section 2 of the RACV Home Insurance Product Disclosure Statement for more details.
Which excess amount should I choose?
Choosing a higher excess can reduce your premium, but it also means you’ll pay more out of pocket if you need to make a claim. Choosing a lower excess can increase your premium, but may reduce the amount you need to pay when your claim for an insured event is processed.
When reviewing excess options, it can help to decide whether you’d rather budget for a higher ongoing premium, or a higher one-off payment if you make a successful claim. Consider your budget, how likely you are to claim, and your risk tolerance. If your excess is set too high, it could put pressure on your finances at the time you need support most.
More: How to find a home insurance policy that suits your needs
Home insurance excess options
Home insurance can help protect homeowners, renters and landlords by covering your home, contents, or both against certain unexpected events (depending on your policy), such as storms, flooding, fire and theft. Your policy may offer a range of excess amounts and types.
For example, RACV Home Insurance policies include a variety of excess options. These are outlined in your policy documents and in the Premium, Excess and Discounts Guide (PED).
What types of excess are there for home insurance?
It’s important to choose the right type of home insurance for you. RACV Home Insurance offers three types of excess:
Basic excess
This is how much you pay when making a claim, including claims for optional fusion cover and portable items (if you’ve added them to your policy). Your basic excess can be $100, $200, $300, $500, $750, $1,000, $2,000, $3,000, $4,000 or $5,000. If you are aged 50 or older the $100 excess is not available to you; however you may choose a $0 excess.
Accidental damage excess
If you add accidental damage cover and make a claim for a relevant insured event, you’ll pay a $300 excess instead of your basic excess. For example, this could include breaking a TV screen under RACV Contents Insurance or accidentally putting a foot through the ceiling while working in the roof cavity under RACV Buildings Insurance.
Special excess
A special excess may apply for one of the listed events. A special excess is payable in addition to your basic excess. Any special excess applicable to your policy will be shown on your current Certificate of Insurance.
Can I change my home insurance excess?
When you start a Home Insurance policy you can select the excess that suits you. By choosing a higher basic excess can reduce your premium. But if you make a claim, you'll pay more out of pocket.
Changing your excess may also affect when it makes sense to claim. For example, if the cost of repairs is not higher than your basic excess, you generally won’t be able to claim.
Increasing your excess
If you have an RACV Insurance policy, you can do this at any time during the policy period, if no claims are pending.
Decreasing your excess
If you have an RACV Insurance policy, you can only do this when your policy is due for renewal, and no claims are pending.
Your current Certificate of Insurance shows the amount and types of excesses that apply to your policy.
Your home insurance policy may offer a range of excess amounts and types. Image: Getty
FAQs about home insurance excess
Yes. For some claims, you may have to pay your basic excess plus any special excess that applies to the event (if your policy lists one).
If the repair or replacement cost isn’t higher than your excess, you generally won’t be able to claim. Even when it’s only slightly higher, you may choose to weigh up the benefit of claiming versus paying out of pocket.
Your Certificate of Insurance shows the excesses that apply to your policy. Your policy documents and the Premium, Excess and Discounts Guide (PED) can also outline how excesses work for different claim types.
The information provided is general advice only. Before making any decisions, please consider your own circumstances and the Product Disclosure Statement and Target Market Determinations. For copies, visit racv.com.au. As distributor, RACV Insurance Services Pty Ltd AFS Licence No. 230039 receives commission for each policy sold or renewed. Product(s) issued by Insurance Manufacturers of Australia Pty Ltd ABN 93 004 208 084 AFS Licence No. 227678.
