Does travel insurance actually get used? You bet it does! Australians made over 280,000 travel insurance claims in 2015-16, 88% of which were paid out. Australians most commonly claimed for cancellations, followed by emergency medical assistance, delays and personal item loss.
Travel insurance is pretty cheap, compared to the actual costs of the holiday itself, and provides cover for a variety of travel related mishaps, such as overseas medical expenses, lost or stolen luggage and valuables, trip and flight cancellations, and personal liability.
So how do you know what to be prepared for when it comes to travel? What types of things should you make sure you’re covered for when you take out travel insurance? To help you on your way, I’ve listed three common inclusions in a travel insurance policy and what you should look out for:
1. Medical emergencies
If you fall ill or have an accident overseas, the costs of medical treatment can quickly add up. For example, as this New York Times article illustrates, a trip to a US hospital to get three stitches cost one patient a whopping US$2,229! Imagine what a dent that would make on your spending money … and that’s only for a few stitches.
Travel insurance protects you from having to pay these costs. Some people mistakenly think that the Australian government will help out with such medical costs, or even help to pay for flights to get you home. They don’t. It all falls back on you.
Things to watch out for:
– You may not be covered for all activities on your holiday. If your holiday involves things like snow sports or scuba diving, you should check that those sports are covered.
– Check your policy for rules about pre-existing medical conditions.
– Read the fine print about accidents that happen when intoxicated. Generally, insurers won’t cover you for accidents that occur when you’ve had a few drinks!
2. Think about your belongings
Tourists are often a target for pick-pockets and thieves. With your gaze turned to take in a beautiful tourist attraction, nimble villains may slip past and grab whatever they can.
The most common item to be claimed on travel insurance is the smartphone2. With the right insurance policy, your phone will be covered; as will any travel documents, money and cards that get nicked, too.
As well as getting cover for theft, you can also get cover for losing or damaging your belongings – whether you’re out sightseeing or in transit. Every now and then, airports send your luggage to the wrong carousel or even the wrong country. Luggage can also get damaged in transit, too. Travel insurance should cover you for these eventualities.
Things to watch out for:
– Don’t leave luggage unattended, as you won’t be covered if it then disappears on you.
– Most insurers won’t cover valuables that are in your checked baggage.
– You should report your loss immediately, or else you may not be covered.
– Many insurers won’t cover money, or credit cards that weren’t on you when they were stolen (for example, if you left them in your room and not locked in the safe).
3. Flight changes and cancellations
From volcanoes to airline disputes, your travel plans can easily be disrupted. Whether you get stuck in an overseas country or you never get off the ground in Australia, it can be extremely disheartening to see your airline tickets get torn up – particularly if you’ve been saving for months for this big trip.
Travel insurance can cover you for flight changes and cancellations, and can also cover your accommodation and a daily allowance if you get stuck somewhere. It can also cover you if you need to return home sooner than planned because of an unexpected death in your family.
Things to watch out for:
– Insurers don’t generally cover acts of terrorism.
– You must make sure that you are not travelling against the government’s advice (check Smart Traveller for the latest advice about the country you are travelling to). Note that some insurers will cover you if you decide to cancel a trip based on DFAT advice.
Also, don’t forget about domestic travel insurance (travel insurance isn’t only for overseas holidays!)
I always say if you can’t afford travel insurance you can’t afford to travel! It can often be easy to overlook the risks when you are travelling in your home country. This however could end up being a costly mistake. As most Australians are already covered by Medicare or private health insurance, domestic travel insurance is there to cover other unexpected events, I’ve outlined some of them below:
– Can provide cover for last-minute trip cancellations
– Can reimburse you for your airline tickets, hotel stays and other deposits in case you need to cancel your trip due to injury, a death in the family, and other covered emergencies
– Can help pay for loss of and damage to your luggage and contents
– Can provide you with a level of cover if you become liable to a third party because you accidentally injure someone or cause damage to their property
I’d recommend doing some research on the right domestic travel insurance policy, remembering that there can be a big difference between basic and comprehensive policies. Comparing travel insurance policies online allows you to see how they stack up side-by-side, and understand what exactly they cover and what they don’t, and then choose the right policy for your needs and budget. I usually use iSelect’s travel insurance comparison as a starting point to get an idea of prices and what is covered.
Always remember that every holiday and every traveller is unique! If you’re heading off on an action-packed snowboarding trip to Japan, you will have very different insurance needs to someone who is going to lie by a pool in Noosa, Australia. Be sure to do your research on both domestic and international travel insurance, what is included and not included in your policy and make sure that your travel insurance ticks all the right boxes for you and your planned holiday.
This article is based off general information. Before making a decision on travel insurance, we recommend you consider the relevant Product Disclosure Statement and assess whether the selected travel insurance product is appropriate for you and your travels.
 Financial Services Ombudsman. General Insurance Code of Governance Committee, General Insurance Code of Practice Industry Data Report 2015-16, page 22.
 IBISWorld Industry Report OD4216, Travel Insurance in Australia, June 2017, page 13.