Travel insurance buying guide
The good, the bad and the exclusions.
Tickets, money, passports, insurance!
Holidays are a time for rest and relaxation and having travel insurance gives you peace of mind. But buying the wrong policy can be as bad as having none at all.
Travel insurance is an essential part of planning a holiday, but who wants to study insurance small print when you could be poring over maps and goading jealous friends with travel brochures? This guide to getting the right travel insurance will have you back in holiday mode in no time.
Also check our guide to what's better credit card or annual multi-trip travel insurance?
- Additional expenses
- The rest: dental, funeral costs, life insurance, public liability and car hire insurance
- Older travellers
- Domestic travel insurance
This is the number one reason to buy international travel insurance. Look for the insurer's benefits table, usually on the quotes screen online or near the front of their Product Disclosure Statement (PDS), for a quick read on what they're offering. Most policies in our travel insurance comparison have 'Unlimited' sum insured.
Pre-existing medical conditions – mental illness, cancer, pregnancy, heart-related medical conditions, hip problems, the list goes on. Any condition you've had before, be it chronic or cured, could be up for exclusion. The PDS has a section listing all the medical conditions to consider, but if you're unsure check with the insurer. You may have to be assessed for your condition but it could save you a lot of hassle later on.
Australia has reciprocal healthcare agreements with several countries: Belgium, Finland, Italy, Malta, Netherlands, New Zealand, Norway, Republic of Ireland, Slovenia, Sweden, and the United Kingdom. If you've got Medicare you can get subsidised treatment for essential services in these countries which often leads people to ask if they still need travel insurance.
And the answer is yes, for two reasons:
- Should you require extended treatment, travel insurance can pay for a medical escort to repatriate you home.
- In a scenario provided to us by Smartraveller, an Australian coming home from Europe had breathing difficulties causing their flight to be diverted to the United Arab Emirates (UAE). A neurologist recommended hospital admission but in the UAE this is contingent on having insurance or paying an up-front fee and they didn't have either. So their family had to fork out for the hospital stay, not an insignificant wad of cash in the UAE.
Read our babymoon advice for tips on what kind of insurance to look for if you're travelling while pregnant and use our travel insurance comparison to find the right cover for your stage of pregnancy. Note some insurers advise keeping babymoons local; there's nothing quite like a hospital at home should you need it.
This is the second main reason to buy international travel insurance (first for domestic travel insurance). Many policies offer unlimited cover but if yours isn't an expensive holiday you could save money on your premium by checking our online travel insurance comparison for policies that provide lower or variable cover for cancellation.
Terrorism: We're often asked which travel insurers cover terrorism – most of them cover medical expenses but very few cover cancellation expenses in the event of terrorism.
Pandemic or epidemic: Commonly excluded.
Military action: Commonly excluded.
Natural disaster: Covered more often than not.
Travel provider insolvency: (For example an airline or tour operator going broke) commonly excluded.
Travel agent insolvency: Excluded by the vast majority of policies.
Cancellation due to travel provider's fault: Insurers commonly exclude cover for delays or rescheduling caused by the transport provider. As John from Melbourne found out:
"A scheduled train service was delayed, seriously diverted then terminated so we missed our flight home by several hours. Re-booking fees, emergency accommodation and related fees cost us $1000-$1500 but they wouldn't pay the claim – not in policy!"
When an insurer refers to cover for "unforeseen circumstances", it means something that wasn't publicised in the media or official government websites when you bought the policy. If it became known before you purchased the policy, you're not covered.
So the earlier you buy your travel insurance, the better your cover will be. And the best news is it won't cost you more to buy early, the premium is based on the dates you're travelling not from the date you buy it.
The best source of information about events that may affect your travel or your insurance is the Department of Foreign Affairs and Trade (DFAT) notifications via Smartraveller. So keep an eye on their alerts for the areas that you're travelling to.
There are several scenarios where a travel insurer could cover you for extra expenses:
- Additional accommodation and travel expenses en route if you can't travel due to injury or sickness; if your journey is interrupted by an unexpected event; or if you need to return home because of a relative's illness or injury.
- Expenses to resume your trip if you returned home due to a relative's illness or injury.
- Additional travel expenses to reach a pre-arranged tour, wedding, conference or other special event if your scheduled transport is cancelled or delayed.
- Additional meal and accommodation expenses if a scheduled transport is delayed.
- Cover to return home for a sick or injured relative is usually dependent on the age of that relative, so your 84-year-old grandma may not be covered.
- It's also limited to relatives that live in Australia, or in some cases New Zealand.
- Your relatives are subject to the same pre-existing condition exclusions as you, but you may be able to apply for their pre-existing condition to be assessed.
- Cover for transport delay is typically lower than other cover limits and is often limited per 24-hour period.
- Transport delay is only covered after a certain number of hours delay, usually six hours but it can be as long as 12.
Insurers often exclude cover for rescheduling caused by the transport provider but some insurers may cover additional accommodation and travel expenses in this scenario for travellers en route.
Baggage cover varies the most, with policies in our travel insurance comparison ranging from $1000 to $25,000. So if you're not carrying expensive items, save on premium by selecting a policy that provides less cover.
- Individual items are subject to sub-limits that can range from $250 to $1000 (but usually a bit higher for electronic items like laptops, cameras, smartphones and tablets).
- You can pay extra to specify items you want extra cover for (insurers are always happy for you to pay extra).
- Valuables locked in a car or checked in on an airline, train or bus may not be covered and any items locked in the car overnight may be excluded.
- Generally any items left unattended may be excluded from cover, so keep your belongings close.
Compensation that's not recoverable by the transport provider (e.g. an airline) for baggage lost temporarily, can be recoverable from the insurer. This usually applies for baggage lost for more than 12 hours, though the minimum time limit varies per insurer, as does the level of cover from $100 to $5000 for a family on some policies.
The list of what you're potentially covered for seems endless, as do the exclusions:
- Dental for emergencies or sudden and acute pain (i.e. not for dental tourism).
- Cover for funeral costs and for someone to escort your remains home, should this unexpectedly become your last holiday.
- Limited cover for life insurance in the form of total and permanent disability cover and income protection, but this is no replacement for a life insurance policy.
- Personal liability and any subsequent legal costs you may incur, but this is generally excluded for car crashes in which you're the driver, so drive safely.
- If you're hiring a car and don't feel like paying the extortionate 'extra insurance' the car hire company charges, then you use the collision damage excess cover in your travel insurance. Stick with recognised car rental companies in this case since this cover only applies if the car hire company already has its own comprehensive insurance.
If your policy has an excess, be aware that this applies once per claimed event and items below the excess level can't be claimed.
CHOICE member Michael Freeland found this out the hard way.
"During our holiday we had a number of small mishaps. The excess clause was applied not once, but in three separate incidents." Seeing a doctor and purchasing medicine for a sinus infection cost less than $150, so there was no cover.
The excess also came into play when he claimed for a personal item worth less than $150. Then, the insurer deducted another $150 from what Michael could claim for a stolen wallet.
Many people don't like being placed in the 'Seniors' category but if we're lucky enough we'll all get there eventually. And if you're even luckier, the time for working is over and the time for letting your hair down (what's left of it) and travelling begins.
Unfortunately, the cold hard numbers that insurers apply tell them older travellers are higher risk, so they may exclude or charge more once you're over a certain age. Use our travel insurance comparison to keep an eye out for:
- Policies that charge more as you get older: We use a price rating for 65- and 75-year-olds to indicate how competitive insurers are for these ages but insurers may start charging higher premiums for people as young as 50.
- Higher excess: Travellers as young as 60 but more commonly over 80 may be subject to a higher excess for their age.
- No cover: Many policies will only cover up to a certain age which ranges from 29 to 100.
- Restricted conditions: Subject to medical assessment, reduced medical cover limits, reduced travel time, policy to be purchased six months in advance – all these conditions can apply to travellers over a certain age.
Most of us already have medical cover at home, be it Medicare or private health insurance, so the two main reasons for domestic travel insurance are:
- Cancellation: If it's a high-value holiday, which vacations in Australia often are, then it's not too much extra to buy travel insurance in case of the unforeseen. Bear in mind that many of the usual exclusions, such as pre-existing medical conditions, still apply.
- Car hire excess: If you're hiring a car, you can save money using travel insurance to cover the collision damage excess at home, rather than paying the car hire comany's extra charge.
If you go overseas more than once a year, consider a multi-trip travel insurance policy rather than buying insurance before every trip. See our reviews of annual multi-trip travel insurance policies and credit card insurance policies.
If you've read this far and are thirsting to know more about what to look out for and how to save money on your travel insurance, check our travel insurance comparisons, download our comprehensive Travel insurance buying guide or go to smartraveller.gov.au/insurance.