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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02.What's covered

Depending on where you're going, travel insurers offer you different types of policies with different premiums. Usually the best and most expensive cover applies to policies for travel to the USA or 'worldwide', while the lowest cover level is for policies for travel within Australia or to Pacific countries.

Check and double-check: Travel insurance coverage is limited. Conditions, exclusions, amounts of cover and premiums vary greatly from policy to policy. Read several policies carefully before making your final decision to understand exactly what's covered. If you have any questions, double-check with the insurer.

Medical and dental

The Insurance Council of Australia (www.ica.com.au) recommends having unlimited medical cover for trips to the United States, Japan and Europe. Daily hospital costs in the USA can approach $10,000, while medical evacuations to Australia regularly cost up to $95,000 and sometimes up to $300,000.

Policies usually cover:

  • Medical costs, emergency evacuation when necessary.
  • Cover for a relative to accompany you if you’re ill or injured and travelling alone.
  • A travel companion's or family member's extra accommodation or airfare home if you’re ill or injured (if they're insured under the same policy).

Most policies don't cover:

  • Dental: While overseas cover is usually only provided for pain relief and the repair of a tooth up to the dressing stage after an accident. When you get back to Australia, you’ll have to pay for any subsequent dental work.
  • Pre-existing medical conditions or pregnancy, unless you've informed the insurer of this and they agreed to cover you. If you have a pre-existing condition you must tell the insurer before you sign the insurance contract. If you don't tell the insurer at the time you apply for cover, your whole travel policy — not just medical cover — could be cancelled or claims refused.

Medicare agreements

In countries that have a reciprocal agreement with Medicare (Finland, the Republic of Ireland, Italy, Malta, the Netherlands, Norway, New Zealand, Sweden and the UK), you’re entitled to benefits similar to Medicare for immediately necessary medical and public hospital treatment.

Exactly what you’re entitled to varies from country to country and Medicare says the agreements don’t replace the need for private travel insurance. If you use a private hospital in a country with a reciprocal agreement, most insurers will pay some expenses, but some only do this on a case-by-case basis, so double-check.

For more information, go to the Health Insurance Commission's website www.medicareaustralia.gov.au or phone Medicare on 13 20 11.

Legal costs

Cover for defending a legal action taken against you. Many policies won’t pay if you need to pursue compensation for an accident or injury. Most won’t pay legal expenses if you have a car accident.

Personal liability

If, for example, you cause an accident when abroad and injure someone, this insurance is intended to cover your liability and legal expenses.

Most policies cover several million dollars’ worth of personal liability, although legal expenses after a motor vehicle accident are often excluded and limits can be far lower with budget and backpacker policies.

Baggage

Cover usually (not always) starts at $2000–$3000 and can be as high as $12,000 for lost or stolen baggage.

  • The limit for individual items in your baggage may be capped at around $750. Many policies will cover specified valuables like cameras or laptops for up to about $3000.
  • You may be able to extend valuables cover for around $4 per extra $100 insured.

Most policies do cover:

  • If your luggage is stolen from your hotel room.
  • If luggage is stolen from the boot of a locked car during the day. Some even cover you if it’s left in the boot overnight. However, limits may apply and some policies don't provide cover for valuables, such as your camera or mobile phone, if they’re left in the car.

Most policies don't cover:

  • Normally you're not covered if you leave your baggage unattended in a public place and it’s stolen.
  • Some don’t cover loss of cash. Those that do usually say it must be “on your person”.

Cancellation

Buy insurance when paying for your trip and check the cancellation cover; if you need to cancel because of an unforeseen event, the policy may entitle you to get your money back. Conditions, exclusions and the level of cover vary.

  • Most policies cover cancellation because of a serious illness to a close relative, but most limit this to relatives aged under 76 who live in Australia and exclude those with pre-existing conditions.
  • Some policies don’t cover cancellation because you’re retrenched from your employment; others may cap the travel agent cancellation fees you can claim back.
  • You’re usually not covered if the travel agent or airline goes out of business (check if your travel agent is a member of the Travel Compensation Fund, www.tcf.org.au, which may be able to provide compensation)
  • You’re also usually not covered if you cancel your trip because of terrorism at your destination. However, you might be covered if there's a travel warning.

Delay

Cover for some accommodation and additional expenses if the delay’s caused by severe weather, strike, riot and civil commotion, for example.

Most policies only pay after a delay of at least six hours; typically around $200 for the first six hours and another $200 for each subsequent 24 hours.

Resumption of journey

Cover for some expenses if you have to stop and then resume your journey because, for example, you had to return home for a sick relative. Conditions apply.

Rental cars

Cover for collision damage excess on a hire car — this may save you having to buy an expensive daily excess waiver from the car rental company.

However, sometimes (for example with the so-called travel insurance provided with some credit cards) you're only covered if you've taken out and paid for all (even discretionary) waivers the rental company offers.

Trap: This only covers the excess on your rental car insurance, it can't replace car insurance.

Excess

Excess is an amount of money you have to pay out of your own pocket before the insurer starts paying after a claim.

The excess usually varies from $50 to $250. Some policies have no excess or a cheaper one if you're taking a shorter holiday (up to 38 days).

Some policies have an excess buyout, which allows you to pay a flat fee when you take out the policy to make your cover excess-free. Beware of policies that apply the excess more than once if you claim under different sections of the policy for one event.

Bells and whistles

Travel insurance policies contain other benefits not covered in this report because we consider them non-essential.

If you have a need for benefits like hijack cover or the payment of a cash allowance while you’re in hospital, talk to insurers to find out what’s available, and compare any policies that offer what you’re looking for.

 

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