Your excess is the amount you pay out of pocket when you make an insurance claim. Understanding how excess works can help you choose the right policy and manage your premiums.
An insurance excess (sometimes called a deductible) is the portion of a claim that you agree to pay yourself before your insurer covers the rest. For example, if you have a $500 excess and make a claim for $3,000 in damage, you pay $500 and your insurer pays the remaining $2,500.
Excess applies to most types of insurance in New Zealand, including car insurance, house insurance, contents insurance, and more. The amount varies depending on your policy and insurer.
The Financial Markets Authority (FMA) oversees insurance regulation in New Zealand and provides consumer guidance on understanding policy terms including excess.
Note
Excess is not a fee or penalty - it is your agreed contribution toward any claim. It exists to share risk between you and your insurer and to discourage small or frivolous claims.
Types of Excess in NZ
There are two main types of excess you will encounter on New Zealand insurance policies:
Tip
Always check your policy schedule for the full list of excesses that apply. Some policies have different excesses for different types of claims.
Compulsory (standard) excess - This is set by your insurer and applies to every claim. You cannot change it. It is typically between $100 and $500 depending on the type of cover.
Voluntary excess - This is an additional amount you choose to pay on top of the compulsory excess. Opting for a higher voluntary excess usually lowers your premium.
Special excess - Some policies include additional excess for specific situations, such as young or inexperienced drivers, natural disaster claims, or high-risk areas. For example, Tower applies location-based excess for earthquake-prone areas.
Typical Excess Ranges by Insurance Type in NZ
Insurance Type
Typical Compulsory Excess
Voluntary Excess Options
Car Insurance
$300 - $500
$250 - $1,000+
House Insurance
$200 - $500
$500 - $2,500+
Contents Insurance
$200 - $400
$250 - $1,000+
Travel Insurance
$100 - $250
Varies by policy
Pet Insurance
$100 - $300
$0 - $500
How Excess Affects Your Premiums
There is a direct relationship between your excess and your premium. A higher excess means you are taking on more of the financial risk yourself, so your insurer charges you less in premiums.
According to Sorted.org.nz, increasing your excess is one of the simplest ways to reduce your insurance costs. However, it is important to ensure you could actually afford to pay the excess if you needed to make a claim.
As a general guide, increasing your car insurance excess from $400 to $750 could reduce your annual premium by 10-15%. The exact saving varies between insurers, so it is worth comparing quotes at different excess levels.
Important
Do not set your excess higher than you can comfortably afford. If an unexpected event occurs and you cannot pay the excess, you may not be able to make a claim.
When Do You Pay Excess?
You pay your excess each time you make a claim on your policy. Here are some common scenarios:
If another party is at fault and your insurer recovers costs from them (or their insurer), you may get your excess refunded. However, this is not guaranteed and can take time.
Some policies have excess-free options for specific events. For example, some car insurance policies waive the excess for windscreen-only claims. The Insurance & Financial Services Ombudsman (IFSO) can help if you have a dispute about excess charges.
You have a car accident and claim on your own policy - you pay your excess
A storm damages your roof and you claim on house insurance - you pay your excess
Your laptop is stolen and you claim on contents insurance - you pay your excess
Another driver is at fault and their insurer pays - you typically do not pay excess on their policy
Choosing the Right Excess
The right excess depends on your financial situation and risk tolerance. Here are some factors to consider when deciding on your excess level:
Your emergency savings - Could you cover a $500 or $1,000 excess at short notice? If not, a lower excess may be more appropriate even if it means a higher premium.
How often you are likely to claim - If you rarely make claims, a higher excess can save you money on premiums over time. If you tend to claim more frequently, a lower excess may work out better.
The value of what you are insuring - For a high-value asset like a house, even a higher excess is small relative to the total claim value. For lower-value items, a high excess might mean the claim is barely worth making.
You can compare policies with different excess levels on Compare.org.nz to see how excess affects the overall cost of your cover.
Key Takeaways
Excess is the amount you pay toward a claim before your insurer covers the rest
Compulsory excess is set by your insurer; voluntary excess is your choice
Higher excess generally means lower premiums, but ensure you can afford it
You pay excess each time you make a claim
Special excesses may apply for young drivers, natural disasters, or high-risk areas
Always read your policy schedule to understand all excesses that apply
Frequently Asked Questions
It depends. If you claim on your own policy, you typically pay your excess upfront. If your insurer recovers costs from the at-fault party, your excess may be refunded later. If the other party's insurer handles the claim directly, you generally do not pay excess.
Yes, most insurers allow you to adjust your voluntary excess at renewal or sometimes mid-policy. Changing your excess will affect your premium. Contact your insurer to discuss your options.
If the claim amount is less than your excess, there is no payout from your insurer. For example, if you have a $500 excess and the damage costs $400 to repair, you would cover the full cost yourself.
In New Zealand, excess and deductible mean the same thing. Excess is the more common term used by NZ insurers. Both refer to the amount you pay out of pocket before your insurer pays the rest.
Most general insurance policies (car, house, contents, travel) include an excess. Life insurance and health insurance typically do not have an excess, though health insurance may have a similar concept called co-payments or waiting periods.
Disclaimer: This guide is for informational purposes only and does not constitute financial or insurance advice. Excess amounts, terms, and conditions vary between insurers and policies. Always read your policy wording and contact your insurer for specific details. Information is current as at the date of publication but may change.
Compare Insurance Policies
See how excess varies across NZ insurers and find the right balance between excess and premium.