Car/House insurance: why excess fee is required to pay first

Our adviser is going to share two real stories of our customers.

The first case is about the car insurance. More than a year ago, Edward was driving at a motorway from Tongariro to Auckland. It was at midnight and a cow suddenly appeared in front of the road. Edward couldn’t stop the car in time. Sadly, the cow was killed by the impact of the high speed. Edward was not injured but the car was smoking. After the police and fire truck came, Edward's car was towed away for repair.

Edward called the emergency number of his car insurance company and lodged a claim. Couple days later, he was required to pay excess fee first so that insurance company can start the claim process. Edward explained it was not his fault. The insurance company, however, still required Edward to do this due to the complexity of the case.

Edward paid the excess and testified in court many times. Eventually it was confirmed not his fault and his excess was fully refunded.

The second case is about the house insurance. In the middle of 2019, Sam hired garden service to do the lawn, and the mowing people accidentally broke the glass of his house. Sam filed a claim with his home insurance company. However, because the Sam was not in New Zealand at the time of claim settlement and unable to complete the claim form or call the insurance company to complete all the declarations, the insurance company accepted his claim but asked Sam to pay a $400 excess first.

It was not Sam’s fault so he refused to pay. As a result, the claim has been put on hold. A few weeks later, Sam was aware that because the claim form was not filled out and he could not confirm all the declaration questions by phone, the insurance company could not determine who the liable party was, this is why he was required to pay the excess. After confirming the liable party was the mowing people, the insurance company fully refunded his excess.

Usually, we do not need to pay any excess if it is not our fault. Only when the insurance company cannot determine who the liable party is, then excess will be required to pay before the claim investigation starts and will be fully refunded when the claim is completed.