Paying Too Much for Travel Insurance? Overinsuring versus Underinsuring
Looking at information from many travel insurance companies, you can see a visible push towards the highest level of cover. You are urged to be careful, not to take chances with your health, and to put in just that little bit extra to get a lot in return. It is very true that comprehensive travel insurance plans often give customers much more value than the extra cost represents. You can increase the number of adverse events you are covered for by 100%, for only a 20% greater charge (over and above basic travel insurance). But do you really need that extra cover? Today we are looking at the risks of over-insurance and excessive caution, as well as the risks of underinsurance.
The risks not having enough travel insurance
The risks of getting less travel insurance than is prudent are obvious. You could potentially lose money, time and health through all sorts of avenues, including:
- Having to pay for emergency medical treatment
- Having to pay for the cost of coming back home early, or not being able to leave at all
- Having to pay to take legal action against somebody in the country you visited
- Having to pay the costs associated with you injuring somebody else overseas (personal liability costs)
- Having to pay the cost of medical evacuation, or your family having to do so
- Your family having to pay the cost of removing your remains to Australia if you die while overseas
- Missing time at work due to being stuck overseas
These risks are significant, and are a potent argument for people to get the highest level of travel insurance they can afford. However, over-insurance does exist, and has its own negative impacts.
The risks of having too much travel insurance
The most serious financial and health consequences often occur when people don’t have insurance. Ironically, over-insuring yourself on a prior trip is one of the main reasons that people fail to take out travel insurance on their current trip. The situation is understandable:
- You pay for the highest level of travel insurance cover on your first trip overseas, although your destination is considered relatively safe and has few endemic diseases. You get all of your necessary travel vaccinations.
- The extra expense restricts you from going as many places or doing as many things during your trip as you would have liked.
- You don’t encounter any (or most) of the dangers that overly-cautious travel insurance sites mention, such as local wildlife, excessive mosquitoes, any unsavory characters, and don’t engage in any adventure sports.
- You come home feeling a little unsatisfied with your trip, with the distinct feeling that you paid for something that wasn’t necessary.
- On future trips, you forego travel insurance altogether.
This scenario is not universal, by any means. It is a common train of thought in people that go to great extra expense taking out more travel insurance than they need. When thinking about the level of travel insurance cover you need, go to a wide variety of sources to help you assess the potential risks in your particular country of travel. Balance them all and weigh them up with your personal tolerance of risk, as well as your financial situation should any true emergencies arise. And remember, over-insurance can potentially lead to dangerous situations, just as under-insurance can!
