Travel insurance

MoneySmart
(ASIC)

Getting some peace of mind

Nothing ruins a holiday or business trip faster than lost luggage or an unexpected accident. Having travel insurance cover won't prevent things from going wrong, but it can make things much easier if you get into trouble.

What is travel insurance?

Travel insurance covers the costs of any unexpected events you might incur while traveling. When purchasing travel insurance, you pay an upfront premium to cover you for a set period. If you travel often, you can also purchase an annual travel policy.

What does travel insurance cover?

Travel insurance typically covers the financial losses caused by a range of events that may affect your trip before, during or even after it has occurred. This includes:

• medical expenses from personal injury or illness
• loss of luggage or personal items
• theft
• disruptions to your travel plans (e.g. cancelled flights, though it pays to check exactly which situations are covered).

What does travel insurance not cover?

Travel insurance usually does not cover:

• injury from extreme sports (e.g. bungee jumping or white water rafting)
• illness or injury caused by a pre-existing medical condition
• pregnancy-related costs (not all insurers will automatically cover women over 22 weeks' gestation)
• loss or injury from acts of terrorism, war and some natural disasters
• loss or theft of unattended luggage (check your insurer's definition of 'unattended')
• claims for travel to areas where an official travel warning has been issued
• losses incurred due to the financial failure of an airline, hotel, other travel operator, or your travel agent.

If you're about to travel overseas, travel insurance should be an essential item on your trip checklist. You need to read the product disclosure statement (PDS) to find out what's covered and what's excluded, especially if you're planning any unusual activities or you have any pre-existing conditions. Cover can differ between insurers so shop around for the cover you want at a price you can afford.

Does travel insurance cover mental health?

Some travel insurance policies cover you if you need to cancel or change your travel plans due to a mental health issue that you suffer after buying the policy. Be sure to let your insurer know of any pre-existing conditions, including any mental health issues, before you take out a policy.

How to choose travel insurance

There are many travel insurers in the market and you have a range of options available when choosing your cover. Shop around to find a policy that suits your individual circumstances and travel plans.

Travel insurance does not have unlimited cover so it's important to choose the right level of cover for your circumstances. Read the PDS carefully to make sure that the things most important to you are covered and how much they are covered for.

Choosing your travel insurance policy

When choosing a travel policy find out:

• the cost of the premium and any excess applicable to claims
• what's included and excluded from the policy (and how this compares to what you intend to do on holiday)
• if there are any age restrictions on the people covered by the policy
• how much you are covered for (dollar limits) for claims on individual items and as a whole
• what proof you need to make a claim
• how to contact your insurer if you are overseas.

Exclusions often apply to 'at risk' activities like parachuting, abseiling, riding a moped or motorbike, as well as any injury sustained while under the influence of alcohol or drugs, or as a result of a pre-existing medical condition. Be honest about the activities you have planned and any personal circumstances that could affect the cover you need.

When you have chosen a policy, be sure to tell your insurer about any changes in your circumstances before or during your travels, as this may impact your cover.

Case study: Sarah's heart attack

When Sarah was planning a skiing holiday in New Zealand she took out travel cover in case she got injured or any of her possessions were lost or stolen. Sarah sometimes suffers from an irregular heartbeat (arrhythmia) but she was relatively young, very active and wasn't taking any medication, so she didn't think her travel insurer needed to know about it.

Five days into her holiday, Sarah suffered a mild heart attack on the ski slopes and had to be hospitalised. When she tried to claim back her medical expenses, her insurer denied her claim on the basis that she had failed to disclose a pre-existing medical condition.

If Sarah had disclosed her condition, she may have been able to get cover, for an additional premium, and would have been reimbursed for all her medical expenses.

Taking out insurance through your airline

Some airlines offer you insurance when you're buying tickets online. It may seem convenient, but it's smart to make sure the cover suits your needs and the cost is competitive, before you agree to buy it. Also watch out for travel websites that automatically select insurance for you, especially if you're travelling domestically.

Credit card travel insurance

Some credit card providers also offer insurance for overseas travel. The cost may be called 'complimentary' but is often included in the credit card's fees (like the application fee or annual fee) or its interest rate.

To be covered, you will usually need to pay for a minimum amount of travel costs with your credit card. For example, you could pay for your overseas return flight, or prepay some of your accommodation costs before you start your trip. Each policy is different, so make sure you check with your provider how to activate it.

As with all types of insurance, it's important to check the terms and conditions to make sure this kind of policy suits your needs. Insurance through your credit card may only cover the cardholder (not your spouse, children, or additional cardholders), and will generally only cover you for the trip you have paid for on your card and only for overseas travel.

Making a claim on your travel insurance

If you need to lodge a claim, be completely honest about events and any mitigating circumstances. There can be serious consequences for making a false claim.

Register your claim or inform your insurer that you intend to make a claim as soon as possible. Some insurers require you to inform them of any incidents within 24 hours.

Your travel insurance policy should include the policy number, details of what is covered and contact details of the insurer for assistance. Always keep a copy of your insurance policy with you when you are travelling.

Smart tip

Before you leave home, take photos of any expensive items you're taking with you, record the serial numbers, copy purchase receipts and make sure they're covered under your policy.

Preparing a travel insurance claim

Your claim is more likely to be accepted if you have the relevant documents:

• Proof of travel - to verify the details of your trip, e.g. flight details, itineraries and hotel confirmations.
• Doctor's report - to prove you became sick or injured while travelling. Written confirmation should be provided by a qualified member of the medical or dental profession.
• Police report - if something was stolen, you were injured in an accident or you were the victim of a crime, your insurer is likely to ask for proof that the incident was reported to the police.
• Valuations and proof of purchase - to prove that you own the item that was lost or stolen and verify how much it cost. This applies to items you've brought with you on your trip and anything you purchased along the way.

Don't forget to keep a copy of your claim that includes all the attachments and proof of submission (like your sent email or registered post details).

Australians and travel insurance

Our  Australians and travel insurance infographic  explains why Australians travel, where they go, what is covered and isn't covered by travel insurance and how to get the best policy for you.

How to complain about your travel insurer

If you've lodged a travel insurance claim and it's been rejected by the insurer, there are things you can do if you think you've been treated unfairly.

• Lodge a written complaint with the insurer's internal dispute resolution department - Details of your insurer's internal dispute resolution process can be found in your insurance product disclosure statement (PDS).
• Take your complaint to external dispute resolution - If you're not happy with your insurer's decision you can complain to the Australian Financial Complaints Authority (AFCA). This is a free independent service and any determination they make is legally binding on the insurer.
• Seek legal advice - If you are still unhappy with the outcome you may choose to seek legal advice. Be aware there is a time limit on further action.

Travelling the world can be a great experience. Spending a little time to find the right insurance cover means you can spend less time worrying about something going wrong and more time just enjoying your trip!