Going overseas? You'll need travel insurance - but remember to check the fine print, reports Patricia Howard.
It wasn't that long ago that the Aussie dollar languished at
48 US cents and holidaymakers stayed put. But with the Aussie nudging 70 US cents, overseas destinations are again affordable. All the more reason, then, to pack that all-important piece of paper with your passport: travel insurance.
For the sake of a few hundred dollars you can protect yourself against the unexpected and save yourself lots of angst and money.
For instance, top cover (with no excess) for 23 days at QBE is $209 for a single or $414 for a family of four for travel to the US; $179 and $354 to Europe; $162 and $321 to Asia; and $120 and $238 to the Pacific.
Travel insurance covers emergency medical and dental care; refunds of deposit and cancellation charges; additional travel and accommodation expenses; loss of baggage and accidental injury or death.But the policies come with loads of exemptions and exclusions, which means travellers should take nothing for granted and check the fine print.
For many people, medical cover is their top priority.
"We have a case on file of a young lady who fell ill in the United States and eventually had to stay in a Los Angeles hospital for 12 days," says Mike Hatton, the chief executive officer of the Australian Federation of Travel Agents. The bill? A mere $US150,000 ($218,000).
"The simple lesson is: never leave Australia without travel insurance," he says. When you pay for your holiday, or for your airline ticket, simply buy your insurance at the same time for the specific period you're travelling. Then you won't get caught."
Many people fail to realise that it's important to buy the insurance at the same time that you purchase your ticket. This will protect you
in the event that you need to cancel your trip due to accident or illness prior to departure and cover you for any deposits or cancellation charges.
So why do so many Australians choose to spend thousands on a holiday and then fail to take out insurance?
"We find most people either don't think about insurance, they think it will be too hard or they just run out of time before they leave for overseas," says Phil Turnbull, executive general manager of sales and marketing with the RACV.
"Often people think it is just too expensive. But you really have to weigh the cost up against the cost of something going wrong. Then it really is a false economy. Even if you are travelling within Australia, you should take out insurance, as you never know what might go wrong," he says.
If cost is an issue, then Turnbull suggests the best way consumers can reduce the cost of travel insurance is to look at changing the excess payment options in order to reduce the premiums.
"Most policies offer these variations," he says. "It means that at an agreed price, the insurance company will reduce your premium but in return, you will pay a higher excess if something goes wrong. So you may pay the first $300 of any claim, rather than, say, $200."
But others argue strongly that travellers should always pay the extra $10 premium or so required, so if you make a claim you won't need to pay any excess. Rather than focusing so heavily on cost, experts says you should focus on what you are getting for your money.Heather Reid, a spokeswoman for the Insurance Council of Australia, suggests all travellers read through the insurance policyvery carefully before they buy it.
"Each insurance policy is different, so it is important you read through the policy document carefully and understand exactly what is covered and what is not covered before you spend your money," she says.
"The insurance provider needs to be recognised around the world and, in particular, the underwriter needs to be well recognised as an insurance underwriter in the part of the world that you intend travelling in.
"You should ask whoever is selling the insurance who the underwriter is and what their insurance credentials are. If they can't tell you or if you haven't heard of the company, then perhaps you should consider a different policy."
The biggest single cost in any travel insurance policy is medical cover. If you are travelling through the United States or Canada, then you should ensure any medical coverage you take out is unlimited, says Lisa Goldsmith, a spokeswoman for STA Travel.
"If you are travelling to Europe, South America, the Middle East, Japan or Africa, you will need at least $750,000 in medical cover; if you are travelling to Asia, a minimum of $400,000; and if you are travelling to the Pacific, at least $100,000," she says.
"Travellers should also be aware travel insurance no longer covers acts of terrorism, nor do most policies cover losses incurred from companies that go into administration or collapse."
If you are travelling to countries such as the United Kingdom, which have reciprocal medical agreements with Australia, it is still advisable to take out some form of medical insurance.
"It's getting increasingly difficult to get into public hospitals for anything other than emergency procedures, particularly in the UK," says Bill Jackson, the national sales manager with QBE Travel.
"So often, people who fall ill overseas find themselves being treated in private hospitals. If you fail to take out medical insurance because you believe you can count on Australia having reciprocal rights with another country, you may find yourself with a very big medical bill from a private hospital if something happens to you."
Another important issue to keep in mind when selecting insurance cover is to make sure the company has a 24-hour, seven-day-a-week hotline that you can contact easily from anywhere in the world,
says Jackson.
"That might not sound very important now, but if your spouse or travelling companion suddenly falls ill or has a heart attack, then you will need to contact your insurer as soon as possible and you will need a 24-hour emergency phone number."
Most quality medical insurance will cover the full cost of any medical evacuation back to Australia. But you should double-check this with the insurer before you book the evacuation, as their idea of what is adequate may not be the same as your own, says Heather Reid of the Insurance Council."For example, if you break your leg overseas you may think a first-class airline seat is essential to allow you to keep your leg up during the flight," she says. "Your insurance company may not agree. So make sure you check before you book the trip home." Also, if you plan to rent a car, check whether the policy has an adequate excess waiver so that if you have an accident and damage the car you are fully covered. Once you have this you can ignore the pressure from car hire firms to buy their insurance, which can cost more.
The other big issue in travel insurance is declaring any medical conditions. This was the subject of a recent landmark court case, which has prompted all insurance companies to tighten up their policies. (See story on page 10.)
Jackson says it is vital you declare any medical condition you may have when you are completing the application form.
"It really is one of the trickiest aspects of taking out medical insurance and it is vitally important you get it right. If you have any doubts, you should discuss them with the insurance company providing the cover," he says.
It's in the cards
For many people, one of the most affordable sources of travel insurance, either as a main form of insurance or as a top-up to another policy, is the cover offered by your credit card provider.
Depending on the card and the benefits attached to it, you may find that if you pay for your airline ticket using the credit card, you are entitled to up to $500,000 accident insurance, as well as 24-hour emergency assistance.
But check the wording, as the cover may offer only limited protection.
"The travel insurance offer, or the benefits that are usually 'bundled' into a credit card account, are offered and determined by the issuing banks and not by the card company," says Eva Diaz, a spokeswoman for MasterCard Australia.
"It is actually the banks that determine the level of cover they offer to credit card holders. In most cases, the level of cover depends on whether you have a gold, silver or platinum card. Again, this is determined by the banks and not by the card provider."
If you are a bank customer, particularly if you have a home loan with a bank or qualify for a professional
package, you can usually get a premium credit card facility, either free of charge or at a reduced cost. Depending on which premium card you choose, and which bank you are doing business with, you will find one of the benefits attached to that card will be travel insurance.
Just how much depends on the bank and what they are prepared to bundle into their credit card package, so you need to read the offer documents carefully to see exactly what you are entitled to. Typically they will only provide accident insurance in very limited and specific situations, so you may not be covered if you have a pre-existing illness or if you lose your luggage.
Kate Gore, a spokeswoman for the ANZ Bank, says despite the value offered to customers by packaging travel insurance into their credit cards, few customers found it an attractive option.
"In fact, we reviewed our credit card services at the start of this year and we now only offer travel insurance on one of our credit card packages," she says.
"If you are thinking of travelling overseas, you should check to make sure you still have insurance attached to your particular credit card."
No worries, be happy
Most people would shudder at the thought of travelling through China during the recent outbreak of SARS. Yet for Andrea Corcoran, who left China just four days before they closed the borders to control the SARS outbreak, such events are just part and parcel of travelling overseas these days.
"I'm young, I'm single and I love living life to the full," she says. "As part of that, I like travelling to unusual countries, and if you do that, the risks of something going wrong are much greater than if you travel to less unusual places.
"But you can't not travel because it's risky, nor can you travel and ignore the risks," she says. "I can't understand why anyone would travel overseas these days and not take out insurance.
"It's something I do the moment I buy my ticket. I would never leave Australia without travel insurance, because the risk that something might happen is just too high."
Corcoran's last trip overseas was in April, when she travelled on the Trans-Mongolian Railway from China to Russia, then on to Sweden, the Czech Republic, Budapest, the United States and New Zealand.
Despite travelling through so many different parts of the world, Corcoran made sure her travel insurance provided her with full cover for every leg of her trip, including the 10 hours she spent entering the United States in Los Angeles. All up, it cost about $150 - less than the cost of a night or two's accommodation overseas.
"The main reason I buy travel insurance is simply for the peace of mind," she says. "If I fall ill or I'm in an accident, I want to know I will be flown home to Australia as soon as possible.
"If I lose my luggage, I want to know I can go out and buy $1000 worth of new clothes right there and then, without mucking around trying to make-do. If I break a leg two days before I'm due to depart for overseas, I know I haven't lost all that money.
"But most of all, it's just for the peace of mind and knowing my family won't have to worry, or deal with any added expenses, if something does happen to me while I'm travelling overseas."
