Excess is a part of most car, home and travel insurance policies. It’s an odd word, and not always fully explained in an insurance context. If you ask people about excess and what it means, many will have some explanation, but most won’t fully understand what excess is and how it applies to their holiday insurance policy. Let’s have a closer look at excess, and explain properly what it means and why it’s on your policy.
Excess is the part or portion of the travel insurance claim not covered by the travel insurance company. It’s usually the first part of the claim rather than a cap on the claim itself. This means that the excess is more likely to be the first £1-£500 pounds of a travel insurance claim rather than only covering you for £1-£500 of costs and then you have to pay the rest.
Excess is also often applied to personally caused travel insurance claims rather than claims involving a third party. Though it seems like an odd idea, excess works because most low cost losses, damages, and thefts etc. that are caused by the policy holder could be easily fraudulent or not a situation which would necessitate insurance action. An example of this would be you playing with a beach ball indoors and smashing a window. The cost would be quite low, but you couldn’t really claim it was anyone else’s fault, so it’s not a situation where your holiday insurance should come into effect. However, if you tripped over your own feet in a museum and smashed a £1,000,000 vase while on holiday, insurance payouts would be necessary to cover the costs over the £500 excess that you would pay.
A high excess might seem to negate the point of travel insurance in the first place, but it has its up side. A high excess is usually accompanied with low premiums. It’s much better to pay low cost premiums with a possible excess than paying high premiums for something that probably won’t happen. High excesses are employed by some cheap travel insurance companies to keep prices low, but really good companies will have low premiums and excesses of about £50-£250 per person per claim, obviously on a case by case basis. Companies with a much higher excess and higher premiums are price gouging, and should be avoided.
Excess is very rarely if ever charged on cases involving third-parties where the claim is their fault. Be wary if a company wants to charge you non-refundable excess on such an accident. Travel insurance companies may ask you to pay the immediate costs – it’s impractical for them to get a representative out to a small Greek island to pay the fee to tow your car – but most companies reimburse these expenses, so they aren’t really excess.
Excess is a good idea all the way around, and if you are looking for cheap travel insurance it is a good way of keeping premiums down.