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.
In the helpful case studies you'll find throughout this guide, we've changed some names and details to protect privacy.
If you're leaving Australia, travel insurance is just as essential as a passport.
Holidays don't always go as planned
Medical expenses are the number one reason to get insurance, but sometimes other things can go wrong, such as trip cancellations, delays, lost luggage or even the big stuff like natural disasters and pandemics.
If you end up out of pocket because of these things, insurance can make up for that.
The Australian government won't pay your medical bills
The Consular Services Charter describes what the government can and can't do to help Australians overseas. In an emergency, the Australian government can only help so much.
68% of travellers mistakenly believe the Australian government would ensure they get medical treatment if they need it overseas, and 43% believe the government would pay their medical bills.
If you end up injured or sick while overseas, you'll be footing the hospital bill and the cost of flying home. If you're really unlucky, that could cost you or your family hundreds of thousands of dollars.
Some countries won't let you in if you don't have insurance
Singapore, the UAE and Thailand all require you to have travel insurance. Not to mention all 26 European countries in the Schengen Area if you're applying for a visa to visit.
Read the Smartraveller travel advice for information about your destination.
Still need convincing?
Research by Smartraveller found that one in four Australian travellers experienced an insurable event on their last overseas trip.
Most common insurable events
- Flight or tour cancelled
- Flight delayed more than 12 hours
- Received medical treatment
- Lost, damaged or stolen luggage
- Missed a connecting flight
- Lost, damaged or stolen cash or personal items
- Forced to cancel trip before departure
Travel insurance for countries with reciprocal healthcare arrangements
Australia has reciprocal healthcare agreements with several countries: Belgium, Finland, Italy, Malta, the Netherlands, New Zealand, Norway, the Republic of Ireland, Slovenia, Sweden and the United Kingdom. If you have Medicare, you can get subsidised treatment for essential services only in these countries, which often leads people to ask whether they still need travel insurance.
The answer is yes, for the following reasons:
- You're usually only covered for urgent care that can't wait until you get home.
- If you're very ill, travel insurance can pay for a medical escort to bring you home to Australia.
- You still may have to pay fees for treatment and medication. For example, in New Zealand reciprocal health care doesn't cover you for free or subsidised care by a general practitioner or ambulance.
- Travel insurance can cover you for cancellations, delays, stolen items and more.
Remember to take your Medicare card with you. You'll need it, along with your passport, to prove you're eligible for reciprocal health care. For more information, visit servicesaustralia.gov.au.
Do you need domestic travel insurance?
Most of us already have medical cover at home, be it Medicare or private health insurance or both, but there are a few reasons to consider domestic travel insurance.
- Cancellation: If you've spent a lot on your holiday, then it's not too much extra to buy travel insurance in case of the unforeseen.
- Baggage cover: If you're travelling with valuables, consider whether you want them covered for theft, loss or damage.
- Car hire excess: You can save money using travel insurance to cover your collision damage excess, rather than paying the car hire company's extra charge.
Many travel insurers now offer limited cover for COVID-19, but the available cover varies quite a lot.
Over 90% of travellers will look for insurance that covers them for cancellation and medical expenses caused by COVID-19.
Some policies only cover medical and repatriation costs if you get COVID-19 overseas, while other policies provide limited cover for cancellation costs in addition to medical and repatriation costs.
You should always check the details of your insurance coverage, particularly how it applies to COVID-19 and travel disruptions.
If you're planning to go on a cruise, be extra careful. Some travel insurers may not offer COVID-19 cover for multi-night cruises, or they may restrict the cover provided on cruises.
Also, don't rely on the travel insurance on your credit card unless you check it closely – it may not cover claims related to COVID-19.
There are cooling-off periods for COVID-19 cancellation cover, so it's best to buy your travel insurance at the same time as you book your trip. Some insurers may only cover cancellation if you test positive to COVID-19 and the policy was purchased more than 21 days before your scheduled departure date.
Make your travel plans COVID-safe
You need to be prepared for your travel plans to be interrupted at short notice. As travel insurance may not protect you from government border closures, general lockdowns or quarantine requirements in your destination country, the key is to book only with providers that allow you flexibility should things change.
- Check the rules for travelling to your destination. For example, are there any entry requirements? What are the vaccination requirements? And what type of travel insurance do you need?
- Read the terms and conditions of your airline, accommodation and travel tours before you book. Will they refund you if you can't travel due to COVID-19? If they only offer a reschedule or a credit, will you be in a position to redeem the credit in future?
- You can book flexible tickets for flights but be aware you usually have to pay the difference between the prices for the tickets you bought and the new tickets. So changing your flight dates at short notice can be very expensive.
- If you book through a travel agent or booking site, what are their terms and conditions? Will they refund you or provide a credit? Are there cancellation fees?
- If you pay by credit or debit card (and you selected 'credit' when you paid), you may have access to credit card chargebacks if something goes wrong.
- Keep on top of the latest travel advice and requirements at smartraveller.gov.au. Travel restrictions can change at short notice.
- If you do have to cancel, your travel insurer will ask you to claim what you can back from travel providers first. Read our advice on how to get your money back on travel cancellations and ask your travel insurer if you can get a refund or partial refund of your travel insurance premium.
You can buy travel insurance from a travel insurer, travel agent, insurance broker, credit card provider, or even from your health, home or car insurer.
You can buy travel insurance online (direct from the insurer's website, from a comparison site or through an airline booking site), over the counter or over the phone.
Buy travel insurance as soon as you know your travel dates. That way you're covered if your trip is cancelled before you even leave or if you're unable to travel at all.
You can certainly buy travel insurance quicker than it will take you to read this guide, but do you know what you'll be covered for? Will you be covered if you trip over after having a drink? If you crash your scooter in Thailand? If you lose your wallet during a stopover? If you need to isolate because you contract COVID-19?
There are a lot of 'what ifs' to consider, depending on where you're going and what you'll be doing, so it's worth reading the product disclosure statement (PDS) first to make sure you'll be covered.
If you're leaving Australia, travel insurance is just as essential as a passport.
1. Where you're going
86% of travellers say they're more cautious after the COVID-19 pandemic about travelling to places where it could prove harder to return home in a crisis.
The level of cover and the cost of travel insurance can vary depending on the region you're travelling to, and some risks may be of greater concern than others.
Not all policies cover you for changing your plans due to a riot or civil commotion, for example, and not all travel insurance policies cover COVID-19 and other pandemics or epidemics such as SARS, so consider the risk levels in the country you're visiting.
Travel insurance also may not be available for countries with travel alerts. Look up your destination on smartraveller.gov.au and make sure you're aware of any risks or safety advice.
And make sure you buy a policy that covers you for every country you're travelling to or transiting through. If you're going to Europe via a one-night stopover in the US, then get cover for the US and Europe. Usually a worldwide policy will cover this.
Destinations vs regions
Insurers sometimes apply policies to regions rather than having a policy for each destination.
- Asia Pacific: Destinations such as New Zealand, Bali, Fiji and Papua New Guinea.
- Asia: Destinations such as India, Indonesia, Thailand, Singapore and Malaysia.
- Europe: Destinations such as the United Kingdom, Ireland and Western Europe.
- Worldwide: All of the above as well as regions such as North America, South America, Japan and Africa.
These definitions differ for each insurer. For example, several insurers cover travel to Bali under their Asia Pacific policy but not to the rest of Indonesia, while some will only cover travel to Bali under their Asian region travel policy.
2. How long you're going for
Just a quick trip?
Simply buy a standalone travel insurance policy for a set number of days.
Consider an annual multi-trip policy or a credit card with complimentary travel insurance, but make sure it gives you the cover you need.
Note: Annual multi-trip policies and credit card policies can restrict the length of each trip you take – anywhere from 15 to 365 days depending on your policy. Some allow you to pay for extra days.
3. What you're going to do there
Cruising the open road on a moped? Carving up the ski slopes? Partying at a wedding? These things aren't necessarily included in a travel insurance policy.
Scan the insurer's list of included activities and those that you'll have to pay extra for. And take it easy on the grog – if your alcohol or drug intake is the cause of an adverse event, it won't be covered by your policy.
4. Taking valuable items
Do you need cover for a digital SLR camera or an expensive tablet or laptop? Cover for such valuables can vary from a few hundred dollars to thousands, and higher cover will often mean a higher premium.
Consider adding cover for portable valuables to your home insurance policy instead, but check on the excess and if the policy will cover you worldwide and not just in Australia.
Policies also vary when it comes to how they cover valuable items. Valuables in your check-in luggage often aren't covered, while cover for baggage stored in your hire car is inconsistent. And baggage left unattended is never covered, which can include a bag that is stolen from the seat beside you in a restaurant while you're looking the other way.
Make sure you have receipts for your valuables as travel insurance will not pay if you can't prove you own them.
5. Medical conditions
If you have a medical condition that existed before you bought your policy, it may not be covered.
This can range from something as common as allergies or asthma through to diabetes, heart conditions and knee replacements.
If you're not sure, contact the insurer to ask whether they'll cover your condition automatically or whether you need to do an assessment.
Case study: The Massoud family was holidaying in Singapore when 13-year-old Nazreen had a recurrence of severe bronchitis, which she'd had in Australia before their trip. The family's travel insurer refused to pay any hospital bills as Nazreen's bronchitis was a pre-existing medical condition. As a result, the Massouds had to ask their friends to transfer the $17,000 they needed to cover Nazreen's hospital expenses, additional accommodation and the cost of changing flights.
It's important to compare policies for cost and cover. Some travel insurance premiums increased by as much as 30% between March and June 2022.
1. Buy early
62% of people travelling overseas who buy insurance do so on or before the day of booking travel.
The further out from your departure date that you buy travel insurance, the more you're likely to pay for it, but you'll be covered from the moment you buy your policy.
For example, if you buy insurance two months before you fly, you effectively have cheap cover for any events that affect your travel plans in those two months.
If you pay for your trip in full six months in advance, but you only buy an insurance policy two weeks before you depart, you may not be covered for any cancellation costs if you contract COVID-19.
Left it until the last minute, or even later?
Only a few insurers let you buy insurance once you're already overseas (look for the 'Have you already left Australia?' checkbox when viewing policy options).
2. Buy online
While not all policies offer online discounts, plenty do. Make sure you understand the policy and what it covers. Sometimes (but not always) a reduced price may mean reduced cover.
CHOICE tip: Check asic.gov.au/afslicensing to find out whether the agent has an Australian financial services (AFS) licence or is an authorised representative of a licence-holder. Take the usual precautions when giving your credit card and other details over the internet.
3. Member discounts
Does your health, car or home insurance provider also sell travel insurance? Some companies give 10–15% discounts to members.
4. Shop around
Trying to negotiate with a website probably won't get you a better price, but if you're buying over the phone or through a travel agent, give it a go.
Travel agents pocket a commission when they sell you insurance, so if you find a better deal elsewhere, ask them if they can beat it.
5. Compromise on cover
While good medical cover is always essential, you could save money on your premium by choosing a policy with lower or variable cover for cancellation, delays and baggage, particularly if you aren't spending big on your holiday or taking expensive items with you.
6. Use your credit card
Some credit cards come with 'free' travel insurance when you use them to buy a ticket or to pay for other travel expenses (we say 'free' because you'll pay a premium in fees for the card itself).
This type of insurance can sometimes be a money-saver, but make sure it gives you the cover you need.
You're about to click 'buy', so you just tick the "I acknowledge I've read the product disclosure statement" checkbox and bon voyage…
But wait. You know what they say about checking the small print? In the insurance world, that small print is contained in the product disclosure statement, or PDS (that thing you said you'd read).
How to read a PDS
There are hundreds of policies out there and if you tried to read all the paperwork that comes with each, you'd have to extend your holiday just to recover.
If you don't have time to read the whole PDS, at least look for the following:
- The table of benefits is an overall summary of your cover.
- The policy cover section is essential reading and is generally split into 'what we will pay' and 'what we won't pay'.
- General exclusions are also essential reading; these are events that aren't covered by any section of the policy.
- Pre-existing conditions can remind you of forgotten ailments and are essential reading for anyone with any kind of medical condition, no matter how mild.
- The word definition table might contain a few surprises – a good place to check on the definition of a 'relative' or a 'moped', for example.
- The claims section lists further points to be aware of (e.g. it's a good idea not to admit fault or liability in the case of an accident) and the paperwork you may need to collect while you're away if you need to make a claim, such as police reports.
- COVID-19 cover section – many policies have a special section listing medical, cancellation and other cover available for COVID-19.
- The 24-hour emergency assistance contact number (write it down and keep it handy).
Misunderstood terms and conditions
The list of travel insurance disputes taken to the Australian Financial Complaints Authority (AFCA) reveals a battlefield of unread or misinterpreted terms and conditions. Between 1 July 2020 and 30 June 2021, AFCA received more than 2000 travel insurance complaints related to COVID-19.
Australian travellers lodged almost 300,000 insurance claims in 2018–19, the last financial year before COVID-19 travel bans. Almost 90% of those were paid out. The top four reasons for declined claims were:
- due to policy exclusions, or not included in the policy conditions
- claim amount was below the excess
- claim was due to a pre-existing medical condition
- claim was for an item that was stolen while it was unattended.
If you've been knocked back on an insurance claim and want to dispute it, here are your options.
Internal dispute resolution
Complain to the insurer first. They'll usually keep you up to date about the progress of your complaint every 10 business days.
Once you've lodged your case and all the supporting information and documents, the insurer has 45 days to complete its internal dispute resolution process.
External dispute resolution
If you aren't happy with the insurer's decision, you can take your complaint to the Australian Financial Complaints Authority (AFCA). They'll handle your case for free.
- The AFCA will mediate between you and the insurer to find a resolution.
- If mediation is unsuccessful, they may make a preliminary assessment or give a determination straight away on your dispute.
- A determination is legally binding on the insurer but not on you.
- There's no appeal process with the AFCA.
- For more information, visit afca.org.au.
If you're unhappy with the AFCA determination, you might want to consider taking legal action against the insurance company.
Stock images: Getty, unless otherwise stated.