A travel insurance excess is an amount of money that policyholders are required to contribute towards a claim. It serves as a financial commitment when making a claim on your travel insurance policy.
Understanding the concept of an excess is crucial when purchasing travel insurance, yet it is often overlooked by many individuals. While most of us obtain travel insurance to have peace of mind during our holidays, the truth is, we would rather not have to make a claim, especially if the claim surpasses the value of our actual loss.
In this comprehensive guide, you will find all the information you need to know about travel insurance excesses, ensuring that you can obtain coverage on your own terms and with a clear understanding of the financial implications involved.
How does an excess work?
When you make a claim, it's important to understand that an excess amount may be deducted or payable by you, depending on the nature of the claim. The excess is the initial portion of any claim that you are responsible for paying out-of-pocket before the insurance provider steps in.
To explain further, let's consider an example: If your policy has an excess of £100 and you submit a claim for £500, the claim payment will be adjusted to £400 after deducting the excess amount. On the other hand, if your excess is set at £200, the claim payment will be reduced to £300, as you'll be responsible for a higher portion of the claim.
Understanding the excess amount is crucial in managing your expectations and making informed decisions when it comes to insurance claims.
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Who has to pay an excess?
Unless explicitly specified in the policy wording, the excess is typically applicable on a per person basis. This means that if you are listed on a group or family travel insurance policy, the excess will be applicable to each individual for every claim made.
To illustrate this, let's consider a scenario where four people are travelling under the same policy, and the cost of the holiday is £500 per person. In this case, the excess is set at £200 per person. Now, let's assume that two of the travelling companions decide to cancel their trip. They would like to recover as much of their £1,000 holiday cost as possible. However, due to the excess, they would only receive £600 between them, as they are required to pay an excess of £200 each.
It is worth noting that although less common, there might be situations where multiple excesses need to be paid. This typically occurs when you make claims for different aspects of your policy. For instance, let's say you fell ill during your trip and made a claim for your medical expenses, but you also lost your camera during the trip and would like to cover the cost of its replacement. In such cases, it is possible that you would need to pay separate excess amounts for each claim.
By understanding the specifics of your policy and the applicable excesses, you can better navigate the claims process and manage your expectations accordingly.
Types of travel insurance excess
It’s also useful to know that there are four main types of travel insurance excess.
- Standard Excess
This is the standard, set amount that your provider indicates you must pay if you end up making a successful claim.
- Voluntary Excess
There are some instances where you have the option to select the excess amount yourself before making your purchase. Depending on the amount you select, the premium will usually change (a higher excess amount will mean a lower premium, and a lower excess will mean a higher premium).
- Additional Excess
Depending on which provider you ultimately go with, you may find that there is an additional excess to consider for claims against certain items.
- Medical Excess
In order to keep the premium low, some travel insurance providers may include a medical excess to be paid in the event of a claim.
Is an excess always payable?
An excess, which is the amount you need to pay towards a claim, may not be applicable to every type of claim. However, it is important to note that the specific excess amount can vary between different insurance providers. Therefore, it is crucial to carefully review the policy documents of the insurance plan you intend to purchase.
To give you a general idea, the table below outlines some commonly claimed items and provides an indication of where you might expect to encounter an excess:
|Cancellation and curtailment||Yes|
|Medical expenses and repatriation||Yes|
|Total permanent disability||No|
What is an excess waiver?
Some travel insurance providers offer an excess waiver, which is essentially a policy where no excess is required. This means that in the event of a claim, the provider will pay out the full amount you claim without any deduction for excess. With this type of policy, you can have peace of mind knowing that no excess will be deducted from any successful claims settlement and the cost of your claim will be covered in its entirety.
By opting for an excess waiver, you may notice a slight increase in your premium. However, the added benefit of having no excess to pay can be valuable, especially if you anticipate making a claim. It's important to carefully consider your options and weigh the potential benefits against the cost. Ultimately, choosing a policy with an excess waiver can provide you with comprehensive coverage and financial protection when you need it most.
Paying your excess in the event of a claim
So, at what stage of making a claim does the excess come into play? This can vary depending on your provider. In some cases, you may be required to pay the excess amount upfront before the provider pays the difference.
However, it's worth noting that most providers typically deduct the excess amount from the payout if the claim is successful. This ensures that the excess is taken care of seamlessly, allowing you to focus on the outcome of your claim without any additional steps or delays.
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Will the excess affect my insurance premium?
Excesses are additional amounts that are included in travel insurance policies to offset the upfront premium payments. In simpler terms, opting for a higher excess can significantly reduce the amount you pay for your premium.
This can prove to be a beneficial strategy if you frequently embark on short breaks, where the likelihood of having to make a claim is relatively low. By having a higher excess, you effectively lower the risk for insurers, which in turn allows for lower premiums.
However, it's important to consider the nature of your trip. If you're planning on engaging in physical activities such as winter sports, the probability of needing to make a claim increases. In such scenarios, having a high excess can potentially lead to unnecessary complications if you do end up making a claim. Therefore, it might be worth considering paying a little extra for a policy with a lower excess or exploring policies that offer the option of voluntary excess, allowing you to determine the excess amount yourself.
By carefully evaluating your specific circumstances and weighing the potential risks, you can make a more informed decision when it comes to choosing a travel insurance policy that suits your needs.
What amount should my excess be?
This depends on you and your specific circumstances. If you're in the market for specialist cover for pre-existing medical conditions, it's worth noting that the medical cover included in the policy may offer significantly higher value than your excess. This can be particularly beneficial if your condition is severe and requires extensive medical attention.
When checking the excess, it's important to ensure that you're getting value for your money in the event of making a claim. However, we always advise prioritising finding suitable cover that meets your individual needs before getting too caught up in concerns about the excess. By focusing on securing adequate coverage, you can have peace of mind knowing that you're protected in case of any medical emergencies or unforeseen circumstances.Get a quote