Travel Insurance: Why you shouldn’t leave home without it.

Travel Insurance: why you need it

Accidents can happen to anyone at any time, and if they happen when you’re overseas the cost of medical treatment can be incredibly expensive and financially crippling. Even a brief stay in an American hospital can cost tens of thousands of dollars and a medical evacuation from this region can range from AU$75,000 up to AU$300,000. Worse than this, in some countries hospital admission for medical treatment can be difficult unless you can prove that you have travel insurance or are able to guarantee payment.

Travellers who are not covered by insurance are personally liable for covering the medical and associated costs they incur overseas, so taking out a travel insurance policy before you go is the smart thing to do and I certainly won’t leave home without one. No exception!

Most international travel insurance policies cover you for any financial losses caused by a wide range of events that can affect your travel plans, such as injury or illness, loss or theft of valuables, damage to baggage and cancellations and/or disruptions to flight plans, whether they occur before, during or even after your trip.

Travel insurance provides you and your family with the peace of mind that if the worst should happen everything will be taken care of, and even though you only pay for the period in which you will be traveling, you are actually insured from the moment you take out the policy, so effectively you get free cover for any events that may affect your travel plans during those weeks or months prior to departure. That’s why as soon as I book and make a payment for an overseas trip I immediately take out a travel insurance policy.

A few years ago this practice proved very beneficial to me when a medical emergency dictated that I would need to cancel my fully paid for trip to the UK and Europe just weeks before my scheduled departure date. Because I had taken out a travel insurance policy through Cover-More at the time I booked and paid for my trip, I was able to recover the associated cancellation costs and reschedule my trip when I was feeling better. That’s what insurance is all about!

Level of insurance cover required

Travel insurance premiums are calculated based on the type of cover required and factor in things like age, destination of travel, duration of stay, planned activities, and value of personal belonging, as well as on whether the person has any pre-existing medical conditions.

Before taking out a travel insurance policy you should determine the level of cover required for your individual circumstances and travel plans by answering the following questions.

  • Where are you going and what are the risks associated with the destination/s?
    You need to ensure that the level of cover provided by your insurer matches the risks associated with the place/s you are visiting and, if you’re travelling to multiple countries you need to get a policy that covers you for every destination you’re going to. For example if you’re traveling to Europe with a stopover in the Hong Kong, you need to get a policy that covers both of these regions.
  • How long will you be travelling for?
    Most travel insurers offer a one-off insurance policy for a set number of days that provides cover to individuals, couples or families. If you’re a frequent traveller however, or are planning on traveling for an extended period of time you might want to consider taking out a multi-trip or annual travel insurance policy.
  • What activities are you planning to do?
    If you’re planning a trip that involves adventure sports such as skiing, sky diving or bungy jumping you should check the insurer’s list of covered activities and carefully read the activity definitions as they may be excluded from the policy or require that you pay an additional premium. Additionally, if you plan on partying hard while you are overseas be aware that if an adverse event occurs whilst you’re under the influence of alcohol or any other substance, it won’t be covered and you’ll be personally liable for any expenses incurred. So take it easy and be safe!
  • What valuable items will you be taking?
    If you’re traveling with valuable items such as expensive jewellery, a digital SLR camera, a laptop or a tablet you should look for a policy that covers these items and note any additional premiums, applicable excesses and exclusions, such as loss or theft of unattended baggage, and loss or theft of cash.
  • Do you have any pre-existing medical conditions?
    Medical conditions that pre-exist the purchase date of the travel insurance policy may not be covered. If you have a pre-existing medical condition, ask the insurer if they’ll automatically cover you for it or if you need to be assessed for cover. If you don’t tell your insurer about a pre-existing medical condition when you take out the policy, the insurer may refuse to pay some or all of any claim you make. Also, if you’re having a baby be aware that some insurers exclude pregnancy cover altogether, while others may limit cover for medical expenses associated with pregnancy up to 26 weeks and apply an additional premium.

Which travel insurance company to choose

Choosing travel insurance can be one of the most overwhelming and confusing aspects of planning a trip, simply because of the number of insurance companies out there and the wide range of policies that they offer.

This makes the travel insurance market extremely competitive so it is worth shopping around to ensure that you obtain a level of cover that meets your requirements for the risks that are relevant to your individual circumstances and travel plans.

A good travel insurance company’s policy should include all of the following provisions:

  • Cover most countries in the world
  • Cover you for personal accident, injury and sudden illness
  • Provide a twenty-four hour emergency services help line
  • Provide financial protection should any travel provider you are using goes bankrupt
  • Cover your electronic devices and/or offer the option for a higher coverage limit
  • Cover hotel booking, flight and other transportation cancellations costs
  • Cover you in the event of a family member’s sudden illness, death or some other emergency
  • Cover lost, damaged or stolen possessions like documents, jewellery, baggage and camera equipment etc.
  • Cover emergencies occurring within the country you are visiting that causes you to return early

Before signing up for a travel insurance policy, it is imperative that you take the time to carefully read the travel insurer’s Policy Document and Product Disclosure Statement (PDS), which generally contains a word definition table, information relating to table of benefits, pre-existing conditions disclaimer, general exclusions and claims, to ensure that you have determined and understood details relating to the following information:

  • The cost of the premium
  • The amount of excess applicable to a claim
  • What is included in the policy
  • The policy exclusions, and how these may affect your circumstances
  • How to contact your insurer when you are overseas
  • What paperwork or information you are required to take with you
  • The monetary limits for claims on individual items and as a whole
  • The claim process and the type of evidence required to lodge a claim

Credit card / Health fund travel insurance

Some financial institutions and health funds provide travel insurance cover to their customers as part of their services. As with any insurance product, it is important to read their travel insurance Product Disclosure Statement (PDS) carefully to determine how much cover you will receive under their policy and whether there are any restrictions and/or requirements you need to meet to qualify for this cover.

It doesn’t really matter which insurance company you choose as long as it provides the right cover for the trip you plan on taking and the activities you plan on doing. There’s a good chance that you will never need to use your insurance policy but life is what it is, and it’s better to be safe than sorry, especially when you’re miles away from home and your network of family and friends.

So be smart! Get coverage! Have peace of mind and enjoy your trip!