There’s an old saying “If you can’t afford travel insurance, you can’t afford to travel” and this is something that I strongly agree with. However there’s no point buying just any old travel insurance policy if it doesn’t provide cover that’s relevant to you.
Prior to purchasing a policy many travellers simply check the amounts they are covered for in the event of hospitalization whilst abroad or cancellation, but there are other factors that you might like to consider before hitting the ‘Buy Now’ button.
Not all policies are created equal so here are a number of things you should be aware of in order to help you on choose the right travel insurance policy for your trip.
One of the first things I always check when considering travel insurance is the insurer’s age limit restrictions. As my parents and in-laws are now in their 70s and 80s, it’s important for me to know that I would be covered if I had to return home from overseas due to the sudden illness or death of one of them.
If you’re a backpacker in your 20s with parents in their 40s and grandparents aged in their 60s, this probably isn’t a consideration for you, whereas for those of us with ageing relatives (and who are ageing ourselves!), it is.
Upper age limits covered can vary from around 75 to 85 years of age, so if you - the traveller - or one of your immediate family members is 70 or over, you should pay attention to your policy’s age definitions.
In some instances, cover for travellers aged 75 years and over is not automatic and is subject to approval by the insurer (after lodging your application).
As I mentioned, each insurer has different age limits and definitions but to give you an example, I quote the Allianz Travel Insurance PDS (22 September, 2016):
“Relative means for the purposes of this policy, your or your travelling companion’s mother, mother-in-law, father, father-in-law, step parent, step parent-in-law, sister, sister-in-law, brother, brother-in-law, wife, husband, son, son-in-law, daughter, daughter-in-law, step child, foster child, grandparent, grandchild, partner, fiancé(e), spouse or guardian only if they are under 85 years of age and resident in Australia or New Zealand.”
Q: Are you, any of your travelling party or your immediate family members over 70 years of age?
If so, be aware of the age limit restrictions on your chosen policy.
Pre-existing medical conditions
Similarly to carefully checking the age limits of your policy, it’s also important to know what covered is provided - if any - for any pre-existing medical conditions that you have.
Some insurers have a list of pre-existing medical conditions that are automatically covered on the policy. These can include conditions like diabetes, asthma, hypertension, etc but again, each insurer has their own list and they can vary widely.
Don’t assume – check the policy wording and never buy on price alone.
For any pre-existing conditions that are not automatically covered by your insurer, you will need to declare them on your application form. In some cases the insurer will provide cover for a pre-existing condition for an additional premium, but in other instances, no cover will be offered for this particular medical condition.
Pre-existing medical condition clauses also apply to your immediate family members.
Q. Do you, any of your travelling party or your immediate family members have a pre-existing medical condition?
If so, familiarise yourself with what pre-existing conditions are and are not automatically covered by your insurer. You can, in some cases, apply to have conditions that aren’t automatically covered included in your policy’s cover.
Wholesaler, travel agent or travel provider insolvency or collapse
It’s probably fair to assume that most travellers think they would be covered by their travel insurance policy if their travel agent, airline, cruise line or tour company goes bust but unfortunately this isn’t always the case.
Most standard policies don’t provide protection for insolvency, collapse or default of airlines, travel agents, wholesalers, cruise operators, tour operators, hotels, car hire companies, etc. Those that do offer this cover often have a defined list of wholesalers and/or travel providers that are covered by the policy.
When you’re forking out a substantial sum of money for your overseas holiday, the last thing you want to happen is to be out of pocket through no fault of your own. Should the worst happen and one of your travel providers or your travel agent goes bust after you’ve paid them your hard earned dollars, it can be comforting to know that you can recoup that loss via your travel insurance.
For travellers who tend to travel quite independently without pre-booking or pre-paying for any of their travel arrangements, insolvency cover is possibly not something they require.
It generally costs quite a bit more to purchase a policy with insolvency cover but, depending on your circumstances and whether or not you pay for a lot of your travel arrangements in advance, you might find this a worthwhile additional expense.
Q. Do you pre-pay a large portion of your travel expenses in advance?
If so, are you confident that your travel services provider won’t go into liquidation or do you have other ways of recouping lost funds (for example via credit card chargeback?)
Policies that include cover for lost, stolen or damaged luggage all have a specific amount to which they will pay out, and this amount varies between insurers.
Additionally, a maximum amount is specified for each item that you are claiming for. For example, if your policy will only pay a maximum of $3,000 for your lost, stolen or accidentally damaged camera, and your camera is worth more than that amount, you may choose to pay an additional premium to increase the amount you would be paid out if claiming for that item.
Another thing to keep in mind is that some related items may be regarded as a single item by your insurer. For instance, if your camera, lenses and tripod are all lost or stolen, the standard policy terms and conditions may mean that a single item limit will be applied to all of them.
Similarly, there are strict limits and conditions attached to claims made for luggage and personal effects stolen from a motor vehicle so make sure you know what you are and aren’t covered for.
An acquaintance of my husband left his camera in his hire car whilst he visited a supermarket overseas. When he returned to the car park (just after sunset), the car had been broken in to and his camera stolen.
As he hadn’t locked the camera in the glovebox or boot, and the equipment was in the car ‘outside daylight hours’, his insurer refused to pay his claim. Had the gentleman read his policy wording in full, he would have been aware of the insurer’s terms and conditions.
Keen photographers and those who carry expensive equipment with them on their travels, should carefully consider the wording of their insurance policy PDS.
Q. Are the individual item amounts included in your policy enough to cover any items that may be lost or stolen on your travels?
If not, you may need to consider paying an additional premium to cover any expensive items.
Loss of income
If you are still in the workforce and would suffer a financial loss should you not be able to return to work in Australia due to an injury causing your disablement overseas, a policy with loss of income cover might be worth considering.
The inclusion of this cover won’t be of concern to retirees or ‘gap year’ travellers, but may be important to those in the workforce.
Each insurer applies their own terms and conditions and waiting period to the cover, so know what you will be covered for.
Q. If you were to become disabled whilst on holiday and couldn’t return to work in Australia, would you suffer financially due to loss of income?
If so, consider whether loss of income cover would be suitable for your situation.
Rental vehicle insurance excess
If your overseas holiday includes hiring a rental car, having vehicle excess cover on your travel insurance policy is a good thing.
When hiring a car, the rental company almost always applies a specified excess amount. If you have an accident or damage the vehicle or it is stolen during your rental contract period, you are liable to pay the excess which can be in the vicinity of $5000.
Most rental companies offer their own insurance to reduce the excess to a smaller amount (for eg. $500) however many travellers may choose not to pay this additional insurance if their policy has vehicle insurance excess cover.
It is often a requirement of the travel insurer that some form of insurance (such as Collision Damage Waiver insurance) is purchased from the rental car company in order for the vehicle insurance excess cover apply.
If it’s included in your policy, the insurer will specify a set amount of cover for the vehicle insurance excess so make sure the amount equals or exceeds the excess applied to your hire car.
Q. Do your travel plans including renting a car?
If so, consider a policy with vehicle insurance excess cover.
Evacuation cover - ship to shore
It’s not a given that your travel insurance policy will cover the cost of evacuating to land should you become ill or injured whilst onboard a cruise ship, so if you’re heading off an a cruise, this is an important inclusion to consider.
The cost of evacuation from an ocean going ship is extremely high and would likely require another mortgage to re-pay the bill.
Q. Do your travel plans include a cruise?
If so, check that your insurer provides evacuation cover.
Cover for extreme sports and activities
If you’re the adventurous or sporting type and plan on indulging your passion whilst on holidays, be sure to check that any activities you partake in are covered by your insurer.
Popular sports and activities that may not be automatically covered include motorcycling and quad bike riding, paragliding, skiing and snowboarding, hot air ballooning, bungee jumping, etc.
The Product Disclosure Statement (PDS) of your insurance policy will list any activities that aren’t covered and in some cases you may be able to pay an additional premium to be covered.
Q. Are you likely to participate in any action sports or activities whilst on holiday?
If so, ensure the activities you will be undertaking are covered by your insurer.
Leaving their beloved pet at home whilst they travel can be difficult for many travellers. If the worst happens and the traveller can’t return home as planned, added cattery or kennel charges can add to their distress.
That’s were pet cover comes in. Should the traveller be delayed due to flight delays or medical emergencies, the insurer will pet a specified amount per day for pet boarding costs.
Similarly, if the pet requires veterinary care whilst you are away, the travel insurance policy will cover the bill up to a specified amount.
Q. Are you leaving a pet behind (either at a boarding facility or in the care of family or friends) whilst you travel?
If so, consider purchasing a policy with pet cover.
What is the policy excess?
In my experience, it also pays to check the excess amount applied to your policy. In many cases an excess of $250 per claim is standard however it may be possible to reduce this (in some instances to nil excess) for an additional premium.
This is definitely worth considering as most policies apply the excess to each claim made as a result of a ‘separate event’.
Therefore, if you need to make a claim for your stolen camera and a claim for additional transport costs due to the cancellation of a ferry in Greece, these are regarded as two separate events. The excess applicable to your policy would apply to each claim.
This is by no means a complete list of everything you should check before purchasing travel insurance. I strongly recommend you read the PDS carefully to ensure that your own circumstances are covered and that you purchase the travel insurance policy that is right for your trip.
The above is general information only. Please consult the PDS of the travel insurance policy/policies you are considering for full terms and conditions.
- Do I really need travel insurance? Yes, you do!
- Why I never travel overseas without travel insurance
- Tips for making your travel insurance claim go smoothly