What does excess mean in travel insurance?

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21 November 2018 Insider hacks & tips
by Anne Wentworth

Travel insurance excess is an amount of money that is deducted from the total claim payment you receive. So let’s say your flight gets cancelled and you go through the process of making a claim. If that claim is approved, a small excess fee will be deducted from the money that is returned to you. That way you don’t have to fork out any more money.

How much does travel insurance excess cost?

At Holiday Rescue we don’t charge excess on medical, personal liability or funeral claims, and we charge a standard excess of $100 for all other claims (cancellation, personal items, rental vehicle etc).

Why do insurance companies charge an excess?

With all types of insurance, the premium collected goes into what’s called a “pool”. Out of this pool claims are paid. The excess is designed to set a baseline cost for events which can be claimed. Basically, if insurance companies have to process and pay lots of small $5, $10 and $20 claims, the “pool” would empty quickly, and the cost of processing all of those small claims would be astronomical. The only solution would be to put premiums up to cover those costs. Rather than do that, insurance companies set an excess level.

Why doesn’t Holiday Rescue charge an excess for medical claims?

We think travel insurance should also be for all of the small medical mishaps and illnesses that happen on holiday. Back home we’re covered by the public health system or our health insurance, but on holiday when we’re overseas, we’re vulnerable – and worse – in the hands of a medical system we’re not familiar with. If it’s a minor issue we can get you in contact with a doctor back home, and help you figure what’s the best course of action, then let you know the best place to seek treatment if that’s the right thing to do. If it’s more serious and you need inpatient treatment, most likely we’ll be covering the hospital costs directly, and assist you further by sending in a local expert to help you understand the foreign medical system. In neither scenario does it make sense to try and get back a lousy $100 from you!

Do I actually have to pay my travel insurance excess?

Let’s get this out of the way: the excess is NOT an additional fee you need to pay. It’s deducted from your claimed costs. For example, if you’re claiming for stolen property, you have a police report and receipts for your stolen laptop, and your claim is for $800, we simply deduct the $100 excess from your claim and pay you $700 so you can get on with your holiday.

We’d rather you always seek our help and support especially for when you need (or could use) medical advice overseas. It’s always better to seek medical advice early, than ‘wait and see’ only to discover the infection has worsened – especially when it could have been dealt with earlier! That’s why we offer a free telemedicine service so you can get advice from a doctor without leaving your hotel room, and guidance on where to go (no matter where you are overseas), if you need to be referred or receive medical care from a local facility. 

If you want a more in-depth look at how our travel insurance excess works check out ‘What is travel insurance excess, and when do I pay it?

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