What Is Voluntary vs Compulsory Excess in Australia?
In a Nutshell: Your excess is the amount you pay when you make a claim. Compulsory excess is set by the insurer — you can't change it. Voluntary excess you choose — a higher voluntary excess lowers your premium. Together, they form your total excess. Most Australian drivers have a total excess of $500–$2,000.
Compulsory Excess
Compulsory excess is the minimum amount your insurer requires you to pay on any claim. It's fixed by the insurer based on your risk profile.
| Factor | Why It Affects Compulsory Excess |
|---|---|
| Your age | Drivers under 25 may have a "young driver excess" added |
| Your driving history | More claims = higher compulsory excess |
| Your vehicle type | Performance or luxury cars may have higher compulsory excess |
| Your location | Some postcodes have higher compulsory excess |
Typical compulsory excess:
- Standard driver (25+): $300–$600
- Young driver: $400–$800 (plus young driver excess)
- High-risk driver: $600–$1,500
Voluntary Excess
Voluntary excess is your choice — you decide how much extra you're willing to pay if you claim, in exchange for a lower premium.
| Voluntary Excess | Typical Premium Saving vs $0 Voluntary |
|---|---|
| $0 | Baseline (highest premium) |
| $200 | Save 5–10% |
| $500 | Save 10–15% |
| $800 | Save 15–20% |
| $1,000 | Save 18–25% |
| $1,500 | Save 22–30% |
| $2,000 | Save 25–35% |
💡 Rule of thumb: For every $100 increase in voluntary excess, your premium drops by roughly 2–5%.
Total Excess
Your total excess when you claim = compulsory excess + voluntary excess + any applicable additional excesses.
| Component | Example 1 | Example 2 |
|---|---|---|
| Compulsory excess | $500 | $400 |
| Voluntary excess (your choice) | $500 | $1,000 |
| Young driver excess (if under 25) | $0 (driver is 35) | $500 |
| Total excess payable on claim | $1,000 | $1,900 |
How Excess Affects Your Decision to Claim
| Total Excess | Minor Damage Claim ($800) | Medium Damage ($2,000) | Major Damage ($8,000) |
|---|---|---|---|
| $500 | Claim if cost >$500 | Claim | Claim |
| $1,000 | Pay yourself ($800) | Claim | Claim |
| $1,500 | Pay yourself ($800) | Claim if non-urgent | Claim |
| $2,000 | Pay yourself ($800) | Pay yourself ($2,000) | Claim |
💡 Strategic tip: If your total excess is $1,000 and the damage cost is $900, it's cheaper to pay for the repair yourself and avoid the claim (which would increase your premium next year).
How to Choose Your Voluntary Excess
| Your Situation | Recommended Voluntary Excess |
|---|---|
| You have savings to cover a claim | $1,000–$2,000 — maximise premium savings |
| You're on a tight budget | $400–$600 — balance between saving and affordability |
| You rarely claim | $1,000–$1,500 — you're confident you won't claim |
| You're a young driver | $500–$1,000 — reduce premium but keep excess affordable |
| You have a high-value car | $1,000–$2,000 — premium savings outweigh claim risk |
Key Takeaway
- Compulsory excess = set by insurer, based on your risk profile.
- Voluntary excess = your choice — higher = lower premium.
- Total excess = compulsory + voluntary + any special excesses.
- Higher voluntary excess can reduce your premium by up to 35%.
- Only choose an excess you can afford to pay if you have an accident.
- Consider paying for minor repairs yourself to avoid a claim (and premium increase).
- Total excess on most Australian policies: $500–$2,000.
Last updated: July 2026
Disclaimer: This article provides general information about voluntary and compulsory excess in Australian car insurance. Terms and rates vary by insurer. Always check your PDS for specific excess amounts.