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Travel insurance excess charges explained

You can save on travel insurance by agreeing to pay more out of pocket if you have to make a claim.

If you’re looking for an easy way to save on your next travel insurance policy, a higher excess usually means a lower premium. Many brands let you choose an excess anywhere between $0 to $200 (this is the “standard” excess for most policies).

How does a travel insurance excess work?

A travel insurance excess is the amount you’re agreeing to pay an insurer if you end up claiming on your policy. Let’s review your travel insurance options for a week in Bali. The same policy could cost you $60 with a $200 excess, $72 with a $100 excess or $108 with a $0 excess. As you can see, choosing a higher excess can save a quite a bit.

That’s the good news. The bad news is that you’d have to pay that amount before you could claim anything. Say you lose your phone that’s worth $500 and you have a $200 excess. Once your insurer approves your claim, you’ll have to pay the excess amount, which means you’d only get $300 back.

Choosing the higher excess option is slightly riskier if you do end up needing to claim, but if you’re just looking to save some coin in the short term, it’s not a bad way to go.

Compare NZ travel policies

Name Product Medical Cover Cancellation Cover Luggage and Personal Effects Cover Default Excess
Cover-More Comprehensive
Unlimited
$10,000
$25,000
$250
Includes unlimited cover for emergency medical, accommodation and transport expenses, $25,000 cover for luggage and travel documents, and $10,000 for legal expenses.
Holiday Rescue Comprehensive
Unlimited
$50,000
$5,000
$100
Comprehensive travel cover that includes unlimited emergency medical with no excess, up to $5,000 for lost and stolen items, and 24/7 access to a registered nurse abroad.
Cover-More Annual Multi-Trip
$7,500,000
$10,000
$4,000
$250
Peace of mind as you travel the world with insurance that covers you over a 12 month period. An affordable option for those who take multiple trips over the year.
Holiday Rescue Essentials
Unlimited
$50,000
$0
$100
Essentials travel insurance protects you abroad with up to $1,000,000 for personal liability, $500 for dental expenses, and more.
Cover-More Domestic
$1500
$10,000
$5,000
$25
Travel around New Zealand with the security of $200,000 in personal liability cover, up to $4,000 for rental vehicle excess and $10,000 in cancellation cover.
Holiday Rescue Domestic
No cover
$50,000
$0
$100
Cover as you travel around New Zealand with $5,000 for rental vehicle excess, up to $1,000,000 in personal liability protection, and $5,000 in alternative travel expenses.
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Types of travel insurance excess

There are usually two types of excess: standard and voluntary excess.

Standard excess

A standard excess is the set amount stipulated by the insurer that you must pay if you make a successful claim.

Voluntary excess

A voluntary excess amount you choose from a range of options and voluntary excesses are normally split into two groups as well: an excess eliminator or a double excess.

  • Double excess. If you want to pay less for your policy, choose the double excess option. This will mean you pay less for the policy up front but will pay more than the standard excess should you need to claim. One of the potential shortfalls of this option is for lower value claims, where the claim amount would end up being comparable to that of the payable excess.
  • Excess eliminator. If you’re more risk-averse, choose the excess eliminator (also referred to as the zero (0) excess option), which means you’ll pay more for the policy upfront but won’t have to pay an excess when filing a claim.

Benefits of comparing excesses

When you’re comparing policies it’s not a bad idea to glance across the comparison section and have a look at the excess options. You can use this as a way to split the decision between two similar policies. That is, if they are both offering the same level of cover for an item, opt for the option with the lower excess. Or if one policy only offers a standard excess and you’re more inclined to opt for a double or nil excess option, this can serve as another differentiator.

When is an excess payable?

Every policy is different. Here are some commonly claimed items and whether you will generally be expected to pay an excess when claiming on these items.

CoverExcess payable?
Medical benefitYes
Lost or stolen luggageYes
Hospital cashNo
CancellationYes
Travel delay expensesNo
Delayed luggageNo
Trip curtailmentYes
Medical evacuationYes
Passport or travel documentsYes
Loss of incomeNo
Total permanent disabilityNo
Personal liabilityYes
Accidental deathNo

What am I paying for?

Most travel insurance policies cover the three main areas of risk. These are:

  • Hospital and medical cover this is always the most important, especially when you are travelling to a country with an expensive health care system such as Japan or the USA.
  • Lost or stolen luggage and belongings this can be a common occurrence, especially when visiting countries with high crime rates and it is one of the most frequent sources of claims on travel insurance policies.
  • Trip delays and cancellations this is particularly important if you have pre-paid some or all of your holiday travel and accommodation expenses.

Excesses vary within each area of cover and it is comparing these excesses that will help you determine whether a policy offers good value for money in your particular circumstances.

When do you have to pay your excess?

How and when you pay an excess will depend on the policy and the insurer. Some insurers require you to pay the excess upfront before they will pay the claim, while others will simply deduct the amount of the excess and pay out the remainder of the benefit.

Some insurers will even waive the excess altogether, as in some car insurance claims, where you were not at fault and the insurer is able to recover the amount from the other party.

Does multiple claims mean multiple excess charges?

Now you might be asking yourself, if you’re claiming on multiple sections of the policy, will you pay multiple excesses? The answer is generally no. Most of the time you’re charged one excess for an event even if you are claiming on multiple benefits.

The same goes if you’re claiming on a family policy, even if that event impacts multiple travellers such as both parents and children, you’ll only pay the excess once.

Travel insurance FAQs

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