If you are purchasing travel insurance for the first time, you may find yourself hearing terms that you know nothing about. One of these terms is “excess”. Excess is a very important part of travel insurance coverage and should be taken into consideration when selecting a policy.
What is travel insurance excess?
If you file a claim against your policy, the claim will need to be greater than the excess amount and you will be responsible for paying that amount before the insurance company will kick in their share.
Why is excess important?
Excess is important for three reasons:
1. It will determine the cost of your travel insurance policy. The higher your excess, the less expensive your policy will be. If the cost of a policy is a major factor for you, then you may want to take out a larger excess. However, do not take out a policy with an excess that is too much or you may find yourself with bills that you are unable to pay.
2. You will be responsible for paying the excess amount before you get any additional payments from the insurance company, so it needs to be an amount that you can easily afford.
3. If the expenses from your accident do not exceed the excess amount, you will get no financial help from the insurance company. The entire debt will fall on your shoulders. If you have a very large excess attached to your policy in order to achieve a lower rate, you may end up hurting yourself financially should you need to file a claim.
Don’t take excess lightly just to get a lower rate
You should carefully examine the fine print of each policy and how much of a discount you will get, before you decide what your excess should be. You will want to make sure that the financial savings is worth the risk of having to shell out the excess amount.
Furthermore, when deciding what excess amount should be included with your travel insurance coverage, it is important to remember who will be paying the money if your injuries are fatal. You do not want to leave your family with a large bill that they cannot pay. The Insurance Council of Australia has more on what you should know about travel insurance before you purchase a policy.