Back in 2015, I came across an interesting travel insurance statistic; out of the 2.2 million Kiwis who travelled overseas the previous year, 15% of them did not take out travel insurance > It pays to take out travel insurance.

With the way that the world has become more ‘uncertain’ since then and with increased access to information, you would think that just about every traveller would take out insurance. But, in a recent article by Insurance Council CEO Tim Grafton, he mentioned that one in five travellers don’t take out travel insurance.

Over the last 18 or so months, we have done a decent amount of travel and on each and every occasion, we made sure to buy travel insurance right after making our bookings. Our last overseas trip was to Zimbabwe and 3 or so days before we were due to return to New Zealand, an unexpected event occurred. This event directly impacted a family member living in Zimbabwe and saw us having to extend our stay, therefore, changing our return flights to NZ.

It was going towards Christmas at the time, a peak period for airlines which for us meant paying about $300 each to change our departure date.

Travel insurance excess

In the interest of trying to save a few dollars, at the time of taking out the policy, we chose the option with a $250 excess which at the time amounted to a saving of about $35. Our travel insurer of choice, Southern Cross Travel Insurance has excess options of $0, $100 and $250. They explain their excess as follows:

“Your policy excess is the amount that will be deducted from any claim payment made to you except where the claim relates to a benefit under D1.6 Funeral expenses/return of mortal remains, D6 Personal accident, D7 Personal liability or D8 Rental vehicle excess of your TravelCare policy. The excess will be payable once only per unexpected event. Choosing a lower excess amount will increase the cost of your policy.”

For a 22 day trip to Zimbabwe buying up the insurance excess resulted in an increase in the premiums as follows:

• $250 excess – $166.85
• $100 excess – $186.48
• $0 excess – $202.18

As already mentioned, an unexpected event occurred and we had to extend our stay. This meant two things as far flights and insurance were concerned:
1. changing flights
2. extending travel insurance
Both of these items came at a cost. Both of the costs were a necessity but one of them was going to be reimbursed due to taking out travel insurance.

When putting in the claim, there was the mention of the $250 excess on our policy. It was only then that it clicked that it would have been worth our while to take out the policy with the $0 excess. At the end of the day, after paying and not paying the excess was a toss between losing out on about $35 or $250 depending on a claim being put in.

This is only to serve as food for thought when taking out travel insurance. If your provider gives the option to increase or decrease the excess, it may pay to take a moment to look at the difference in premiums in the event that you do make a claim.