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Excess reduction and no excess travel insurance

Travel insurance without an excess – can it be done?

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Richard Laycock
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Important:

Travel insurance rules continue to change as a result of the coronavirus pandemic. We’re working hard to keep up and make sure our guides are up to date, however some information may not be accurate during the pandemic. It’s even more important to double-check all details that matter to you before taking out cover. Please know that some policies may not be available through Finder at this time. Here are some helpful tips:
    • If you're buying a policy today, it's unlikely that you'll be covered for border closures
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    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.

    I just want to compare the different travel insurance policies

    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

    mexico

    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.

    Which insurers offer excess reduction travel insurance?

    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.

    BrandExcess eliminator?Excess Option 1Excess Option 2Excess Option 3Additional cost?Enquire
    1-cover-new1

    1cover

    		No$100$200Varied
    AMEX Travel Insurance

    American Express

    		Yes$0$100$250Varied
    Budget Direct Travel Insurance

    Budget Direct

    		Yes$0$100$200Varied
    Fast Cover

    fastcover

    		Yes$0$100$500Varied
    InsureandGo

    Insureandgo

    		Yes$0$100$200VariedGet quote
    Skiinsurance.com.au

    Ski-insurance

    		Yes$0$100$25
    travel insurance saver logo

    Travel Insurance Saver

    		Yes$0$100Varied
    Virgin Money

    Virgin Money

    		Yes$0$150Varied

    Table updated September 2019

    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.

    Are you ready to compare travel insurance policies?

    If you're ready to compare your travel insurance options, use the comparison tool below to compare policies and excess from over 20 travel insurers.

    warning Finally, some good news! Domestic travel is picking up, so some insurers have started offering cover again 🦘
    Just remember, you won't be covered for any pandemic related claims if you do take out domestic travel insurance.
    International travel insurance is limited and sometimes unavailable at this point.

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