Insurance excess explained: a New Zealand guide

What is an insurance excess?

An excess is the part of a covered claim that you contribute under your policy. The premium is the price you pay to keep the insurance in place. Paying the premium does not mean every claim is paid in full, and paying an excess does not make an excluded loss covered.

This guide focuses on home, contents and private motor insurance in New Zealand. Other insurance types can work differently. ICNZ's insurance basics explains the relationship between the policy, premium and excess.

Find the amount and the rule together

Open your current policy schedule alongside the policy wording. The schedule records details for your insurance; the wording explains how the cover operates. ICNZ describes this distinction in its insurance health check.

Search the documents for “excess”, then make a short note with three headings:

Amount

Copy the amount shown and the document date. If there are several entries, keep the label beside each one instead of choosing the smallest figure.

When it applies

Write down the relevant wording and page number. Mark anything unclear, such as a reference to another clause, for the insurer to explain.

How it is handled

Ask whether you pay someone directly or the excess is deducted from a settlement, and when that would happen for the claim concerned.

A note saying “$500” is easy to misread later. “$500, contents schedule dated [date], application to be confirmed under clause [reference]” preserves the question you actually need answered. Keep the policy number in your private notes.

A simple calculation, with clear assumptions

Fictional illustration only: assume an insurer has accepted a loss, the amount before the excess is $2,400, and one $600 excess is the only deduction. The arithmetic is $2,400 minus $600, leaving $1,800 after the excess.

Change the assumed excess to $1,000 and the remainder is $1,400. This exercise shows the effect of that one number. It does not estimate what a real claim would pay, whether it would be accepted, or how payment would be made. Limits, valuation, exclusions and other terms still need to be checked.

For your own comparison, leave the claim outcome blank. Write “insurer to confirm” beside it. That keeps a budgeting exercise from turning into an assumed entitlement.

Does one event always mean one excess?

No. Consumer Protection explains that some policies apply one excess to an event, while others can require an excess under each policy involved. Ask how your actual policies interact rather than relying on the number of things damaged.

If an event affects both the building and belongings, make two columns headed “house policy” and “contents policy”. Ask the insurer to identify the applicable excess in each column and explain any rule that changes the combined amount. Keep the written answer with the claim correspondence.

Before asking to change an excess

A higher excess can reduce a motor premium, but it also increases the amount you may need to contribute. Consumer Protection's car insurance guide recommends considering whether you could manage that payment.

Request an actual quote rather than assuming a saving. Compare the same cover, insured amounts, payment period and other terms. Then record three questions: What changes in the premium? What amount would I need available? Has anything else in the cover changed? There is no single excess amount this article can recommend for everyone.

Take a specific question into the conversation

You could begin with: “I want to understand the excess on my contents policy and what I would need to budget for. Which documents should I provide?” James can confirm the scope of the discussion and how to share them. Use the contact page for a short outline, without attaching private policy or financial details to an initial enquiry.

See the personal insurance topics for the wider context. If you are organising records about belongings, the home contents inventory guide addresses that separate task.