A deductible refers to the amount of money that the policyholder must pay out of pocket before the insurance coverage kicks in. Essentially, it is the portion of a covered loss or claim that is not covered by the insurance company. We’ve previously covered this topic when discussing car insurance deductibles but did you know that travel insurance policies also have deductibles? Let us explain how they work in this article.
Deductibles in travel insurance
Deductibles in flight insurance policies can be divided into three types. They are per claim or occurrence deductible, per trip deductible or per person deductible. More details on these types are stated below:
Per Claim or Occurrence Deductible: This type of deductible is applied to each separate claim or incident. For example, if you have an RM200 deductible per claim and you make two separate claims during your trip, you would be responsible for paying RM200 for each claim.
Per Trip Deductible: Some travel insurance policies have a deductible that applies to the entire trip rather than each claim. In this case, you would pay the deductible only once per trip, regardless of the number of claims you make.
Per Person Deductible: In some cases, each insured person on the policy may have a deductible. This means that if multiple individuals on the same policy make claims, each person would be subject to their deductible.
How are deductibles counted?
Your deductible will usually be applied once the insurance company issues the payment for a claim that you submitted. The insurer will deduct the amount from the approved claim amount. Let’s say the approved claim amount is RM5,000, and your insurance deductible rate is RM500, so your insurer will issue you a payment for only RM4,500.
How to choose a deductible?
It’s important to carefully review the terms and conditions of your travel insurance policy to understand how the deductible is applied and what expenses are subject to it. Not all types of expenses may be subject to a deductible. For example, some policies may have specific coverage (such as emergency medical expenses) with no deductible, while others may have deductibles for certain types of claims (such as trip cancellation or baggage loss).
Lower deductible typically means higher premiums but remember that deductibles can vary widely between policies and among insurers. Hence, it’s crucial to choose a deductible amount that you are comfortable with in case you need to make a claim later.
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