Travel insurance without an excess – can it be done?
No one likes paying more than they have to, especially when it comes to insurance. Having travel insurance is a godsend when something goes wrong, but if nothing happens, it can feel like you paid all that money for nothing. So the thought of paying extra money upfront to reduce or eliminate your excess may strike some people as a down right nutty thing to do, right? But what if it wasn't?
This article is your quick guide to getting travel insurance without excess, its benefits, drawbacks, and which insurers offer this service.
Here is an overview of the general conditions for extending cover from a number of Australian insurers.
What is excess in insurance?
Probably a good place to start. An excess is the amount you pay if you need to lodge a claim on your policy. It is a way of placing a portion of the risk on you and also stops you from making claims for minor amounts. Once you've paid the excess, the remaining amount is paid by the insurer up to the limit of the benefit.
The majority of travel insurers apply a standard excess amount to each policy. This excess will be deducted from any claim paid to you. However, some insurers allow you to choose your excess. There are two options:
Travel insurance without excess
- What is excess reduction? For a nominal fee, generally in the neighbourhood of $10 to $30, you can choose to remove the excess from your policy.
- So why reduce your excess? While excess reduction insurance means you're paying more up-front for your premiums, you'll end up paying a lot less if and when it comes time to claim. Plus, it means that you don't get stuck in 'claims limbo' in situations where the claim and excess add up to a similar amount.
- How do I reduce my excess? Excess reduction goes by many names and varies from insurer to insurer. Look out for things like excess eliminator, excess waiver or change your excess when you're applying for travel insurance, if you want to reduce your excess.
Can I pay less now and more later (if need be)?
If the excess eliminator is not for you and you'd rather do the exact opposite, some policies allow you to increase your excess, which is sometimes called double excess. This option is exactly like it sounds: you're hedging that you're not going to make a claim and so are assuming more of the risk from the insurer.
Higher excess leads to no claim
Walter went to Mexico with his colleague Jesse. Before he left, Walter (being risk-averse) paid an additional $25 up-front to reduce his excess. Jesse, on the other hand, chose the double excess option, which meant he would have to pay $200 to make a claim.
This did not work out well for Jesse.
While wandering the streets of Mexico city, both Walter and Jesse were robbed. Jesse had $250 on his person, which was the claimable limit of his policy. However, because of the double excess, he only received a $50 benefit.
If you're after excess reduction and no excess travel insurance, check out the table below, with all of the providers in our panel that offer this service.
|Brand||Excess eliminator?||Excess Option 1||Excess Option 2||Excess Option 3||Additional cost?||Enquire|
When do you pay an excess?
How and when you pay an excess depends on your insurer. Some require you to pay the excess upfront, while others deduct the amount from the benefit.
Do I pay multiple excesses for multiple claims?
Another thing to look out is whether you pay an excess per claim or per incident. A per-incident style of excess is preferable to a per-claim excess, as the insurer will only deduct the excess once for an incident, even if the incident has multiple individual claims expenses. In contrast, with per claim the insurer deducts the excess for each individual claim.
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