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Customers surprised at being charged excess more than once per claim

Last updated 19:46 07/03/2017


In one case, the insurer said each carpet stain was a separate event, and charged four lots of excess.


Can you be charged an excess on your insurance claim, when a car crash wasn't your fault? Are insurers allowed to charge an excess more than once when you make a claim?

Bad news for insurance customers: in both cases, the answer is yes.

The Insurance and Financial Services Ombudsman (IFSO) Karen Stevens said about 10 per cent of the calls her office received related to insurance excesses.

"If someone's car has been damaged by another driver, people can be surprised about having to pay the excess up front," she said.

* ​READ MORE: Call to change insurance law to stop 'ruined lives'

"If the other driver was insured, and their company accepts they were at fault, the excess can be refunded and the no-claims bonus reinstated. But in many cases, the only way to recover the excess is to take the other driver to the Disputes Tribunal."


Another common complaint was when separate events resulted in a customer being charged excess more than once, she said.

If several windows in a house were broken on separate occasions, or if a car was damaged in a couple of different events, the insurer would often charge the excess amount for each event.

She said, even in the case of a house fire, a claim might be made under a house policy and a contents policy, and an excess could be charged for each.

In one case dealt with by IFSO, a landlord made a claim for damage caused by tenants.

There were stains on the carpet in the lounge and two bedrooms, ripped vinyl in the laundry, broken glass in a window and lifting laminate on a kitchen bench.

The insurer paid a cash settlement of $2010 for the flooring damage, deducting $500 in excess per room because the damage was caused by different events. 

The bench was replaced without an excess because the fault was related to an earlier claim. The window cost less than the $500 excess that would have been charged if the landlord had claimed for it.

"In most cases, it is absolutely standard to have to pay an excess when your claim is accepted," Stevens said.

"An excess is a form of self-insurance. It helps to avoid too many small claims, which would otherwise increase premiums for everyone else."

Stevens said anyone who ws unsure should read their insurance policies and ask their insurers for details. Some people could choose to increase their excess in return for a lower annual premium.

- Stuff

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