Knowing everything there is to know about travel insurance is tough even for the most seasoned travelers. Many people don’t know their policies all that well. In fact, most people don’t even read the terms and conditions. When certain terms are used, some people get confused because they don’t understand the meaning of those terms. When you come across the word “excess” in a travel insurance policy, you will discover it’s a little more complicated than its definition in a standard dictionary.
What exactly is “excess” in relation to travel insurance? Basically, excess is the part of a travel insurance policy you agree to pay. The insurance company that you are insured with covers the remaining costs up to the limit of your coverage. This applies to the submission of claims. Instead of the company insuring you for the amount of your coverage and then you having to pay the rest, it’s the opposite. You pay a set amount, say $500, and if the claim is for more, the insurance company covers the rest up to the maximum amount of coverage.
That may seem backwards, but it offers a huge perk: very low premiums. Since accidents are usually rare, this option can be a great investment. You spend less money on premiums with a policy that includes excess if nothing does happen.
All types of insurance policies – not just travel insurance – can include excess, so no matter what type of policy you choose, you will have to pay excess on the policy. This way, it should have little impact on the type of policy you actually need. For single trip insurance, which covers only a single trip, it’s very low-risk. Single trips are usually short so the risk of accident is much lower.
When it comes to annual trip travel insurance, the risk is still quite low. Annual trip insurance is usually used by business people because it covers multiple trips per year; it is also popular with frequent holiday travelers. These policies tend to have some restrictions when it comes to travel days and number of trips, but it’s very convenient for most travelers.
Long stay travel insurance is obtained when people anywhere from 3 to 18 months. Excess can come in handy here because the premiums are very low. If you’re going to be paying for insurance for 18 months, you want to get the premiums as low as possible.
Excess is even included in medical travel insurance, cruise travel insurance, car rental insurance, and fight accident insurance. There are policies that don’t include excess, but the practice is becoming more and more common because it’s really the best option for some people.
While it may sound risky on the outside, excess is actually a really good option for people who are looking for low premiums. In the event that something serious does happen, the excess amount is usually nothing compared to the amount the insurance company will cover, so it’s not that much of a risk.
Damian Tysdal is the founder of CoverTrip, and is a licensed agent for travel insurance (MA 1883287). He believes travel insurance should be easier to understand, and started the first travel insurance blog in 2006.