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The excess on a travel insurance policy is not always as straightforward as it seems. For instance, the excess may differ according to the type of claim (e.g., lost baggage vs. delayed baggage) and you may be required to pay more than one excess in some situations. We'll explain the nuances of a travel insurance excess so you understand how much risk you're taking when you sign up.
- What Does Travel Insurance Excess Mean?
- The Excess is Different for Some Claims
- How Many Excesses Will I Pay?
What Does Travel Insurance Excess Mean?
You are responsible for paying the first part of each travel insurance claim—the amount that you pay is called the "excess." For example, if the stated policy excess is £100 then you would pay the first £100 in the event of a valid trip cancellation claim and your insurance company would pay the rest, up to the Cancellation limit.
|Travel Insurance Claim Example|
|Policy details:||Cancellation limit||£3,000|
|Value of your cancelled trip (i.e., your claim)||£2,500|
|Travel Insurance pays||£2,400|
While this example is relatively straightforward, in some situations you may pay more than one excess or the excess may differ from the stated excess.
Paying A Different Excess for Some Types of Claims
Travel insurance policyholders pay a different excess for different types of claims. The stated excess on your policy is the amount you'll typically contribute towards cancellation, baggage and emergency medical claims.
However, for claims where the benefit is determined on a per hour or per day basis (e.g., delayed departure, delayed baggage, hospital benefit, etc.), there is typically no excess payment required. Personal accident, personal liability and legal assistance also usually have no excess. Similarly, if you've purchased a winter sports add on then claims for piste closure and avalanche often have no excess.
|Typical Excess by Type of Claim|
|Cancellation, baggage and emergency medical||The stated policy excess (e.g., £0, £50, £100, etc.)|
|Delayed departure, delayed baggage and hospital benefit||No excess|
|Personal accident, personal liability and legal assistance||No excess|
|Piste closure & avalanche||No excess|
Additionally, there may be special situations where the excess is higher or lower than the stated excess. These fine print changes to the excess are sometimes to the benefit of the policyholder, and other times to the detriment. To give you an idea of these exceptions, here are some examples we've come across in the Policy Wording of various plans:
Lower Excess on a Lost Deposit: You may pay a lower excess if you are only claiming for a lost deposit in the event of trip cancellation. For example, Direct Line charges a £10 excess for each insured person claiming for a lost deposit.
Higher Excess on Medical Claims for Volunteer Work: Those insured with Insure & Go or Travelinsurance.co.uk who injure themselves doing volunteer work will have their excess on emergency medical claims increased to £100, even if they've purchased an excess waiver.
Higher Excess on Riskier Activities: Those engaging in riskier activities such as skiing or glacier walking are subject to a higher medical excess of £250 with Travelinsurance.co.uk.
Lower Excess on Medical Claims with EHIC: Most travel insurers will waive the excess on emergency medical claims if you have presented a valid European Health Insurance Card (EHIC) or any other reciprocal healthcare arrangement to reduce the cost of your treatment while abroad. Terms vary by insurer but if you're travelling to Europe, this is yet another reason to carry your EHIC card with you.
How Many Excesses Will You Pay?
If something goes wrong on your holiday, you might get another bit of not-so-good news—depending on the circumstances, you might need to pay more than one excess when it comes time to claim.
Typically, travel insurance companies will apply the excess in one of two ways: one excess per insured person per incident, or one excess per insured person per incident per each section of the policy you claim under. For policies utilizing the second option (i.e., an excess per person, per incident, per section), you may pay more excesses and therefore receive less back from the insurance company for a valid claim.
For example, the theft of a rucksack containing a jacket, camera and cash would trigger claims under two sections of your policy: Personal Belongings and Baggage (for the bag, jacket and camera) and Personal Money (for the cash). If your policy imposes an excess per section then you'll pay two excesses—one for the Personal Belongings and Baggage claim and another for the Personal Money claim—even though it was just one incident. Assuming a standard excess of £50, here's what you'd pay in excess(es) under the two scenarios:
|Excess Example: Theft of Personal Possessions||Sections Claimed||Number of Excesses||Total Excess You Pay|
|One excess per insured person, per incident||Personal Belongings and Baggage||1||£50|
|One excess per insured person, per incident, per each section you claim under||Personal Belongings and Baggage||2||£100 (2 x £50)|
For another example of paying multiple excesses, take a family of four whose trip is cancelled due to unexpected emergency. As most policies apply an excess per person for cancellation, there would be four excesses applied—a family of four whose standard excess is £50 would therefore be required to pay the first £200 (4 x £50) of the cancellation claim.
|Excess Example: Cancellation for a Family of 4||Sections Claimed||Number of People||Total Excess|
|One excess per insured person, per incident||Trip Cancellation||4||£200 (4 x £50)|
|One excess per insured person, per incident, per each section you claim under||Trip Cancellation||4||£200 (4 x £50)|
By understanding how the excess works, you'll be better prepared to check the accuracy of insurance payouts should you ever need to claim.
Lower Excess on Premium Travel Insurance
Many travel insurance companies offer a range of plans, from budget to premium. You'll find that in many cases the premium plans have a lower excess, or no excess at all. When there is no excess, then the insurance company will compensate you for a valid claim up to the limit, without you having to contribute anything.
Those who don't want to pay an excess in the event of a claim might prefer the simplicity of a premium plan, despite the higher premium. Premium plans will typically sport higher limits and better features as well, all else equal.
What is an Excess Waiver on Travel Insurance?
By paying an extra premium, some plans include an excess waiver which will remove the excess from your policy. That means you won't need to pay an excess should you need to claim. An excess waiver can be handy for someone who wants a policy with no excess, but who doesn't want to pay up for a premium travel insurance plan.
Whether or not the excess waiver is worth it depends on the size of the extra premium required. Compare the extra premium to the size of the excess to help you decide—for instance, if an excess waiver costs almost as much as the excess to be waived, it may not be worth it, especially if you're a single traveller who won't get caught out on multiple, per-person excesses.
Changing the Excess to Increase or Decrease the Premium
Some travel insurance providers give you an option to choose your excess. When this option is available, choosing a higher excess should lower your premium. This is because a higher excess means you are taking on more risk, and the insurance company consequently has less risk exposure. Before going down that route, however, be sure you'd be comfortable paying the higher excess (per person, per incident, and possibly per section you claim under) and consider the amount you're saving in premium.
In contrast, some people prefer to choose a lower excess so they are better covered by the insurance company in the event of a claim—whether or not a lower excess is worth the inevitable higher premium is also a personal decision.
It's also worth noting that the excess on a travel insurance plan might be higher when purchased from a comparison site than direct from the insurer's website—a higher excess is one of the ways a comparison site is able to offer lower prices. Also, you might find a slightly lower excess on annual policies
Most travellers don't think much about how travel insurance works, until they claim. By understanding the nuances of a travel insurance excess you can better choose a travel insurance plan suited to your risk profile. Plus you'll be better prepared to understand the reimbursements in the event of a claim.