Step by step guide to travel insurance
What you'll learn in this step: Find out who sells insurance and what
they offer before blindly making a purchase.
The trip of a lifetime could turn into a journey to hell without adequate insurance.
Cancellations, lost luggage, accidents and illnesses can all ruin your dream
holiday. And while you think it won't happen to you, statistics show that more
than 20,000 Australians a year have a serious problem when travelling overseas.
Remember, it's bad enough having your holiday spoiled. It's even worse to be
faced with a huge bill aftewards. The wise say, if you can't afford travel insurance
you can't afford the trip.
Learn more: Don't let your dream trip become
a nightmare, Sun-Herald, 19 Nov 2000
We read the fine print on insurance policies.
Who sells insurance?
When you're planning a trip, you'll feel insurance is being thrown at you from
every direction. If you book a flight directly with an airline, they will offer
insurance, particularly if you have non-refundable tickets. Travel agents also
offer comprehensive holiday insurance. Many credit and charge cards advertise
free travel insurance when you book using your card. And your health and general
insurers usually also have a policy they can offer.
Certainly don't accept the first quote you get. Check three or four different
policies to pick the best one for you. Some travel agents will discount insurance
premiums by reducing the amount of commission they receive from the insurer.
What's on offer?
A basic travel insurance policy will include cover for lost luggage, cancellation
of travel, overseas and medical hospital expenses and evacuation back to Australia.
Most policies are available up to the age of 70. But after that, you may find
it more difficult to get cover, mostly without a medical certificate. Often
you may also find you have to pay a higher premium if you are over 70.
The amount of cover you need depends largely on your destination. Travellers
to the US, Canada, Europe, Japan, Africa, South America or the Middle East should
take out the top cover because medical care is particularly expensive in these
countries. Those travelling to the UK, Scandinavia and Asia need the next rung
down, while New Zealand and the South Pacific travellers can get away with a
lower level of cover. Medicare has reciprocal rights in some countries, but
you will need to check this out first.
Premiums also depend on the amount of time you will be away. If you are a business
traveller planning several trips a year, you might be better taking out annual
travel insurance rather than an individual policy for each trip.
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What you'll learn in this step: Learn about standard policy inclusions
so that you will know what you're covered for.
24-hour Hotline
Make sure your insurer has a hotline available 24 hours a day, seven days a
week, 365 days a year and that reverse charges apply. This is vital, because
if you're travelling overseas you are dealing with a different time zones than
in Australia. It's no good if your insurer shuts up shop at 6pm in Australia
and your misadventure occurs at the equivalent of 3am.
Cancellation cover
You can claim cancellation of your trip for a variety of reasons including
becoming redundant, being called for jury duty or the death of a close relative.
But if you merely change your mind about your trip, that's just too bad.
Adventure cover
Make sure your insurance policy covers you for what you plan to do on holiday.
If you're planning the adventure trip of a lifetime with bungee jumping, abseiling
and scuba diving all on your list of must-dos, check the fine print of the policy.
Not all general travel policies cover you for adventure activities. Others will
increase the premium to cover such activities.
Missed connections and special events
You are travelling to your cousin's wedding in Rio de Janeiro and the first
leg of your flight from Sydney to Los Angeles is delayed, so you miss your connecting
flight to Rio. As a result you also miss the wedding. Many insurance policies
will recompense you for missing a special event under such circumstances.
Lost luggage
When you're the last person standing at the carousel, you know your luggage
has gone astray. Tell the airline staff and make sure they have a forwarding
address for you. If your luggage is temporarily lost, for example over 24 hours,
some airlines will give you funds to buy clothes, with the amount sometimes
conditional on the class of your ticket. If your bags are lost forever, travel
insurance will pay you far more handsomely than the airlines, which generally
use the International Air Transport Association (IATA) guidelines for compensation.
IATA recommends payment of $US20 per kg of luggage – an average $US400
for a typical economy traveller. Travel insurance will generally pay in the
thousands of dollars although this will depend on your level of cover.
Learn more: Nothing to wear,
Sydney Morning Herald, 8 April 2000
Beat the bag blues and read our travel checklist
Lost luggage tips
- Label luggage inside and outside.
- Make sure your labels are accurate and current.
- Have a separate list of contents for insurance purposes.
- Keep a copy of your policy in your wallet/handbag with details and emergency
assist numbers.
- Keep a copy of the itinerary inside your case so when it is found it can
be forwarded to the correct destination.
- Have individual markings on your cases so they are easily recognisable.
- Take a spare set of clothes and overnight necessities in your hand luggage.
Videos, cameras and sound equipment cover
The amount paid for loss of your video, camera or sound equipment will depend
on your insurance policy, but there is a maximum single amount you will be paid.
It's usually about $3,000 to $4,000 but check out your individual policy.
Pre-existing conditions
As with all insurance policies, you have a duty of disclosure. You must tell
your insurer of any pre-existing medical problems for yourself and your travelling
companions and for close relatives at home. Insurers will seek additional information
from you if you require pre-existing medical conditions to be covered by insurance.
Many insurers will recompense you if you have to fly home because a close relative
has suddenly become sick or been involved in an accident. But if the relative
already had a pre-existing condition, you may not be able to take out this cover.
Learn more: Going under cover, The Sydney Morning Herald & The Age, October 22 2003
Trying to find travel insurance can be difficult for those with medical conditions, reports Leonie Lamont.
What if I'm injured or become sick?
This is when you need travel insurance the most. While Australia has reciprocal
health agreements with a number of countries including the UK, Ireland and Finland,
if you need hospital treatment overseas this can prove a serious drain on your
pocket. A major insurer cites a number of examples of costs including a 42-year-old
man who slipped on a path in Mexico and had medical bills close on $150,000.
In another case, a 69-year-old with angina, who when hospitalised in the US,
ran up a bill of more than $700,000. If you are unsure, call the emergency assist
provider for clarification.
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What you'll learn in this step: Ensure your cover matches your trip.
Find out how "due care" clauses can affect a claim.
Who's covered?
If you and your travelling companion are not related, that doesn't mean you
cannot join together for the purposes of insurance and take out combined insurance.
Travel policies can give you family coverage for up to six children under the
age of 21. But if you are travelling alone, you may find the number of dependant
children you can carry on your policy is limited to two. So check beforehand.
Learn more: Cover all the bases, The Sydney Morning Herald & The Age, October 22 2003
Going overseas? You'll need travel insurance - but remember to check the fine print, reports Patricia Howard.
Due care and attention
If you leave your hand luggage unattended in a public place (outside the toilet
at the airport, for example) and it disappears, don't be surprised if your insurer
rejects your claim. As far as they are concerned you haven't paid due care and
attention to your goods.
Equally, if you leave your luggage with somebody you don't know – sayat
the airport while you buy a cup of coffee – that, too, is not giving due
care or attention.
This duty of care spills over into your baggage and rented cars. Most policies
will not pay out if your luggage is stolen from your rented car when it is in
the boot overnight. Others refuse if it is stolen from the main part of the
car.
Rental cars
When you rent a car overseas, you may be asked to take out extra insurance
cover so you don't have to pay an excess if you are in an accident. If you already
have travel insurance, you may already be covered for this.
Buying online
You can sometimes save on your premiums by buying insurance online. NRMA, for
instance, offers a 15 per cent savings if you buy via the Internet.
Can you suspend your private health cover?
If you are going away for a long period, it may be worth temporarily suspending
your private health insurance payments. Some health insurers will allow the
suspension for anything from two weeks, but the amount of time and effort would
probably make this an expensive exercise. But if you're going away for two months,
then it is a worthwhile consideration. You need to prove you are out of the
country for that period with documentary evidence such as your passport and
your ticket.
Credit card free cover - what does it mean?
Check out the fine print when you see advertisements offering free travel insurance
when you pay for the trip with your credit or charge card. This is not always
comprehensive travel insurance that you are being offered. In some cases you
– and not your family – may be covered but only when you're in transit
on a recognised mode of transport. So if you paid for your flight to Paris on
the card and your plane crashed you would be covered. But if you were injured
on the Metro and you had not used your card to buy that ticket, you wouldn't
be covered.
Learn more: On the cards, The Sydney Morning Herald & The Age, November 12 2003
Free travel insurance is one of the perks of owning a credit card, reports Patricia Howard.
Learn more: Not exactly covered in glory, The Sydney Morning Herald & The Age, November 19 2003
One of the benefits promoted by premier (read: gold and platinum) charge or credit cards is free traveller insurance. You feel as though you are getting something for nothing and getting special treatment because of your status as a premier card holder. But how comprehensive is it?
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What you'll learn in this step: Reporting a lost or stolen item within
24 hours is one requirement that will help insurers respond to your claim within
10 days.
Forget no-claims bonuses
Mostly travel insurance is a one-off thing, so if you have to make a claim
you won't find your premiums suddenly bumped up the next time. Of course, if
too many people make claims the premiums will rise anyway. But aside from maybe
having to pay an excess, there is no reason not to make a claim. You can't lose
your no-claims bonus.
Will your insurer pay out?
If you are concerned about the reliability of your travel insurance company,
check with the insurance regulators – APRA and/or ASIC.
Learn more: Dodgy insurance claims, Sun
Herald, 11 Feb 2001
One in four travel insurance claims is fraudulent, according to local travel
insurance industry pioneer Tony Dear.
Early reporting
You must report a stolen or lost item to the local authorities within 24 hours
of the incident. And on your return to Australia, you must report the loss to
your insurer within 30 days. You can't just lob back home and say you had your
watch stolen in Stockholm without having reported it to the local police. Most
insurers will respond to your claim within 10 days.
Complaints?
As with all insurance, first talk to your insurance company. If the matter
is not resolved, you can go to the Insurance Enquiries and Complaints Scheme
for help. Call toll free 1300 363 683.
To
get information and advice on an insurance complaint, go to the Financial
Industry Complaints Service website.
For
copies of the general insurance code of practice and information on dispute
advice go to the Insurance Council
of Australia website.
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