Travel insurance buying guide

Are you paying too much to insure your holidays? Here's how to find a good deal on travel insurance.
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03.How to save $$$

Are you paying too much?

Research by CHOICE in 2004 revealed just how expensive travel insurance from some Australian companies can be. While we didn’t do comprehensive Australian versus UK policy comparisons to check exactly what they do and don’t cover, we found some Australian insurers charged two to four times as much for their top cover as policies called top cover in the UK.

We asked some Australian insurers to comment on these apparent price disparities. Differences between the Australian and UK markets that they suggested include:

  • Cheap UK policies may have a hefty excess on claims.
  • Australian insurers may provide higher cover levels, face more expensive claims, cover children travelling with you at no extra cost, sometimes waive the claims excess and often cover longer trips to riskier destinations.

Some of the Australian prices can be substantially reduced if you buy online, but the difference may still be significant.

Commissions up to 50%

One factor contributing to high insurance prices is the level of commission paid to companies that sell policies, such as insurance and travel agents.

Some agents may receive up to 50% or more of your premium.

So insurance commissions and agent mark-ups have plenty of room to come down, which should give consumers a chance to get better prices.

How to save $$$

  • Buy online: While not all policies are discounted online, plenty are. Make sure you understand the policy and what it insures; cover is sometimes reduced with online policies so make sure a lower price doesn’t mean reduced cover. Check the agent has an Australian Financial Services Licence or is an Authorised Representative of a licence holder by checking with ASIC, Take the usual precautions when giving your credit card and other details over the internet, use the checklist.
  • Haggle: High commissions leave plenty of room to negotiate with agents, who may be induced to give you a discount. For example, when booking a tour through a travel agent, Ursula was told the tour operator required her to buy insurance, offering her a policy at a 10% discount. Ursula shopped around and found a cheaper online policy with another insurer. When she told the travel agent she’d found a cheaper policy, the consultant said he’d be able to beat the price, before even hearing what it was.
  • Compare annual policies: If you travel overseas several times each year, annual multi-trip policies may work out cheaper overall.
  • Special offers for members: Are you entitled to a member’s discount (for example, are you already a member of a health insurance fund that also offers travel insurance)? Some companies give 10% to 15% discounts to members.

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