You spend a great deal of time researching and planning out your holidays in order for them to run smoothly and without unwanted surprises. When it comes time to purchase your travel insurance to protect your hard earned holiday, you should also take a bit of time to understand the basics of your policy.
Although you aren’t expected to be a genius in regards to knowing everything about travel insurance, you should know certain components which could affect how much your premiums are as well as how any claims you may make will be affected. One component you should familiarize yourself with is your policy’s “excess”.
Excess is the amount of money you agree to pay should the unfortunate happen and you need to make a claim to your insurer. For instance let’s say you had a medical situation travelling abroad which was covered under your travel insurance policy. If your policy’s excess was set at $100, it means when you go to file an eligible claim that is accepted, you will be responsible for the first $100 and your insurer will pay off the rest of the amount.
In cases where your eligible claim may be thousands of dollars, the excess you pay is very small compared to the majority of the bill covered by your insurance company. This is why travelers purchase travel insurance; so to rule out the possibility of being hit with sometimes very large expenses in the event of accidents or unforeseen circumstances.
Standard Excess vs. Voluntary Excess
An insurer may offer different types of excess that can apply in different situations or apply concurrently. One thing most top insurers will allow is for you to increase or decrease your excess in order to alter the cost of your premium to a level that suits you. The excess amount set by your insurer that must be paid towards any claim is known as “standard excess” whereas the option to increase or decrease the amount you’re responsible for in a claim is called a “voluntary excess”.
One of the easiest ways to decrease the amount you pay for travel insurance is to increase the excess amount by let’s say doubling it. You instantly save money on your policy, keeping in mind that should you need to make a claim you will need to cover a bit more of the cost related to the incident you are claiming. You are basically taking more of a risk in order to save guaranteed money upfront. You should always only select an excess amount that you are willing or able to afford should you need to make a claim.
If you wish to be fully covered in the event you need to make a claim, you can set your policy’s excess to $0. This means in the event you need to file an eligible claim, you will pay nothing and your insurer will cover the entirety of your expenses for an accepted claim. You will pay a bit more for your policy by choosing this option but it may prove beneficial should you need to file a claim.
Paying Your Excess in the Event of a Claim
You may wonder when you will have to pay your excess amount in the event you make a claim. This will ultimately depend on your travel insurance company’s policies. You may be asked to pay the excess amount before they pay the remainder of the claim or they may simply deduct the amount from the claim they are paying you for.
Knowing What Excess Amount You Should Choose
When looking at excess options, think in terms of value for money. You may not want to pay a high excess amount that covers you for an event which has a small claim value such as lost luggage. On the flip side, with things like trip cancelation or medical cover, your claim value may be exponentially greater than your excess.