But what exactly is travel insurance excess, how much should you expect to pay, and how can it affect your cover? We asked Southern Cross Travel Insurance to demystify the term.
What do I need to know about travel insurance excess?
Travel insurance excess is the amount you pay if you make a successful claim for benefits like travel delays or lost or stolen items. The rest will typically be refunded to you by your travel insurer, up to the limit set out in the ‘schedule of benefits’ in your policy.
For example, let’s say traveller John needs to visit the doctor overseas and is given a bill for $1,000. As per his policy wording, John needs to pay the insurer an excess of $100 for medical claims. He pays the $1,000 bill and receives $900 back from the insurer once his claim is successful.
Depending on where you buy your travel insurance, excess can be a set amount specified in the policy, or a flexible amount that you can choose to increase or decrease, depending on your needs. If you have the option to increase or decrease your excess, this option will often be made available to you during the purchase process.
The term ‘deductible’ is often used to describe an excess. It’s also worth noting some travel insurance policies come with no excess options but usually charge higher premiums.
How much should my excess be?
Your excess amount could depend on several factors, including:
- Your chosen travel insurer
- Whether or not you choose to pay an additional fee to reduce your excess amounts
- Whether or not you choose to pay a ‘voluntary excess’ to your insurer, which means you pay more when making a claim, but this reduces the overall price of your policy
Travel insurance providers each have their own excess charges, which are outlined in their policy documents. That’s why it’s important that you always compare travel insurers to find the best option for your needs.
For example, if you’re planning to undertake high-risk activities like heli-skiing or off-piste skiing, you may need to find a specialist insurance policy, which may have a higher excess amount to match your risk level.
Does an excess apply to all claims?
Depending on your insurer, you may not have to pay an excess for certain benefits of your policy. For example, we charge a $100 excess for claims relating to changes to your journey, baggage and personal items, and cash/travel documents, but we don’t charge an excess for medical and evacuation, personal accident and personal liability claims.
Experience has shown us that claiming for items like doctor’s visits and prescription costs can amount to less than the cost of the excess. This can deter travellers from making a claim, or even deter them from seeking medical treatment at all. For this reason, we choose not to charge an excess on medical claims.
When do I need to pay excess?
Depending on what travel insurer you use, you may be required to pay an excess up front before your claim is paid, or the excess will simply be deducted when the claim is paid into your bank account.
It’s important to remember that if an unexpected event occurs overseas and you need to make a claim, some insurers may require you to pay multiple excess amounts. For example, if a pickpocket steals your necklace and injures your neck in the process, you may need to pay an excess for a medical claim and an excess for your stolen valuables. Other insurers will charge a standard excess rate per unexpected event.
Some travellers may be deterred by the thought of paying an excess. However, when you consider the astronomical costs of some medical claims, a typical excess is small change, particularly when you consider some of our top medical claims have come to more than $500,000!
Article by the experts at Southern Cross Travel Insurance