Domestic travel insurance: A guide to travel insurance for Australia

There’s nothing like getting to know your own backyard. While parts of the world’s Covid pandemic emergency measures have been rolled back, opening up international borders for travellers coming to and from Australia, some are opting for domestic holidays instead. 

And why wouldn’t you? The perks of living in an international tourist destination means you’re never far from something to do, see, or experience. 

But before you set out on a long-awaited adventure around Australia, you may want to consider travel insurance options.

Global jet-setters might be more experienced with international travel insurance, but if the last few years of travel restrictions and snap lockdowns have taught us anything, it’s that unexpected events can derail domestic holidays too.

Domestic travel insurance can help cover some of the costs associated with accidents that happen while you’re travelling around Australia, as well as delays and cancellations that could impede your journey.

But what kind of cover can domestic travel insurance in Australia provide? And when might you want to take out a policy? Let’s explore more.

Just like car insurance or home insurance policies, the events or items covered by domestic travel insurance can differ between providers and individual policies. The options below are some of the coverage points that may be included, but be sure to carefully read a policy’s product disclosure statement (PDS) for what is included before taking out domestic travel insurance.

Lost, damaged or stolen belongings

This can cover the cost of valuable items like cameras, laptops and luggage if they’re lost, stolen or damaged while you travel. 

Most policies will have some per-item caps on the amount they’ll pay out if a claim is accepted, so if you think your phone or glasses are worth more than the policy limit, you may want to investigate increasing the cap (which usually comes at an additional premium).

Having some proof of purchase for more expensive items can help during the claims process.

Cancellation of pre-booked activities 

If pre-paid flights, tours, accomodation and other holiday activities are cancelled due to unforeseeable circumstances and you can’t get a refund through the various providers, your travel insurance may cover your losses. The insured unexpected events usually include natural disasters, accidents and illness.

Cancellation of transport 

Costs associated with some transport delays – like having to pay for a hotel if a flight is delayed – can also be covered. Although you’ll often find this is only valid for events that are external to the airline, like natural disasters. 

Things the airline company is responsible for, like mechanical faults, are not covered by insurance, though sometimes you can get compensation from airlines to cover costs caused by these delays.

Rental car insurance excess reduction 

You can usually take out insurance for a rental car with the company you hired it from. But these policies often come with a high excess, so you could face a significant bill if you get into an incident and need to make a claim. 

Hire car companies will often offer ‘excess reduction’ to bring excess costs down (sometimes to $0), but this comes at a price. 

Meanwhile, some travel insurance policies can also include cover for part or all of the excess charged by the rental company. This is often the more affordable way to minimise potential excess for hire car cover, according to research from consumer group CHOICE.

Despite the pandemic rapidly shrinking to a blip on people’s radar, domestic travellers and tourism operators may still be affected by Covid-19 in the months and even years ahead. 

Covid outbreaks can force the closure of venues and accommodation for cleaning, the cancellation of flights and potential lockdowns, which could see you lose non-refundable holiday deposits or payments. 

Before Covid, you could almost guarantee that pandemics and epidemics were excluded from the roster of coverable events by most travel insurance providers. That has changed a little since 2020. 

While some domestic policies do cover Covid-related incidents, the amount you’re covered for, and how you are covered will change depending on your policy, the nature of your claim, and the circumstances. Most offer some form of cover for cancellation costs related to Covid-19 or the costs incurred if you have to cut your trip short because of the pandemic. 

But as always, remember that every policy is different and can have specific exclusions about locations and venues, as well as limits which might invalidate your claim.

And if you’re flying, it’d be worth checking if your flights have flexible booking options (most do). This feature lets you rebook with credits at a later time, should your flight get cancelled due to Covid-19, which might influence your decision about whether or not to take out domestic travel insurance.

Like international cover, the cost of domestic travel insurance is dependent on a huge range of factors related to where you’re going and who you are. The cost can even vary based on the provider and policy you chose. Things that impact the price of domestic cover include but are not limited to:

• Your age 
• The level of cover you take out
• The duration of your trip
• The activities you plan
• Any optional extras or increased item coverage limits you add.

The specific activities covered by domestic travel insurance will differ between providers and policies and can be altered to match your preferences. More adventurous holiday activities like 4-wheel driving, mountain biking and snow sports may be covered by some policies, only offered as optional extras (for an additional price) in others, and completely excluded in some insurance policies. 

Don’t forget: for domestic policies the ‘cover’ you get for these activities is generally related to cancelling your trip due to injuries you might sustain while on a listed adventure, not any medical expenses beyond what Medicare covers (like ambulance costs).

For a better idea of exactly what kind of activities and events are included in a given policy, you’ll need to carefully read that policy’s PDS.

The big one to remember when travelling in Australia is that domestic insurance policies will rarely cover medical costs. Since you’re a resident and travelling at home, you’ll have access to medical treatment covered by Medicare.

Other common exclusions or actions which may invalidate your domestic travel cover include: 

• Not disclosing a pre-existing condition. If you have a chronic health condition or other ailments, let your insurance provider know before signing up. Otherwise, if you make a claim related to this condition it may be denied.
• Ignoring medical advice. Similarly, if a doctor says you shouldn’t travel based on their medical assessment, your travel insurance may be invalidated. 
• Being careless with your belongings. If you leave your luggage or valuables unattended and they’re stolen, an insurance provider may reject your claim.
• Acting recklessly or unlawfully. If you were under the influence of drugs or alcohol when the event you’re claiming for happened, it’s unlikely to be accepted. The same goes for if you were breaking the law in any way (like if you were speeding).
• Cancelling travel on a whim. Your insurance company won't reimburse you for any cancellation costs or other losses if you cancelled a trip simply because you changed your mind about travelling.
• Operating vehicles without a licence. While you obviously need a drivers licence to get behind the wheel and still be covered by insurance, this also includes things like operating a boat (at a certain power level), jetski or other machinery unlicenced.
• Doing certain activities without an instructor. Even if things like scuba diving are included in your policy, you’ll need to either be a licenced diver or be led by a certified instructor for it to be covered.
• Doing any other activities not specified in your policy. You’ll often need to opt-in for more extreme activities like rock climbing or snow sports if you want cover in case you’re injured on your adventure. Since you’re putting yourself at greater risk, this will likely come alongside a premium increase. 

And remember: if you’re taking a cruise in Australian waters and become ill or injured, medical care costs get a little more complicated (read on to find out more).

The main reason you’d consider cruise travel insurance through Australian waters is for health and medical cover.

Private cruise ships are not required to have a Medicare-approved doctor on board, which means you may not be able to access treatment through Medicare if you get sick on the ship. Smartraveller also warns that you might not be able to claim via private health insurance, so you could be facing bills in multiple circumstances.

In some policies, cruise-specific insurance can also cover you for the on-board entertainment or prepaid shore excursions you miss if you’re confined to your cabin. And if your cruise departs without you due to unforeseeable circumstances, this brand of domestic travel insurance can help cover alternative accommodation and travel costs.

Yes, pregnant people can take out domestic travel insurance, but there are usually conditions and limitations depending on your gestational period and if you’ve had any complications with the pregnancy. 

Many insurance providers set a limit based on how far along you are in the pregnancy, with some covering people up to 30 weeks pregnant, and others only in the early 20s. They will also often ask for a doctor’s sign-off that it’s safe for you to travel before granting cover.

Insurance companies consider pregnancy a pre-existing condition, so be sure to disclose the details when you apply for a policy or you could risk voiding your insurance. Some policies simply won’t cover pre-existing conditions, so be sure you’re not signing up to one of those.

When you are comparing domestic travel insurance to cover you while you’re pregnant, you may want to look for policy details that ensure you’re covered for unexpected pregnancy-related complications up to the third trimester, as well as cancellations if your doctor later advises you not to travel due to the pregnancy.

And like all other types of travel insurance, there may be exclusions related to your pregnancy. This could be exclusions for claims related to childbirth and the care of a newborn, if you’re carrying twins or triplets (or more!), if you’ve experienced any complications with the pregnancy, or if you conceived through an assisted reproduction program.

Domestic travel insurance excess levels are usually set somewhere between $50 and $250.

This differs between providers and some may give the option for a flexible excess. The excess on your policy is the amount you need to pay before cover kicks in when you make a claim.

Your insurance provider will usually have an online claims portal or form you can access to start your insurance claim, as well as a phone contact. It can be helpful to contact them as soon as possible so you know all the requirements for the specific type of claim you’re making. 

Generally, you’ll need to collect evidence related to the incident. If it’s for cancellation costs, you’ll need documentation from venues, tour operators and any other service providers showing what it cost you to cancel. You’ll also need to supply evidence for the reason you’ve cancelled, which might be medical documents if you fall ill or are injured, or confirmation from tourism providers if it’s related to a natural event.

When making a travel insurance claim for lost or damaged belongings, you’ll need to provide evidence of your ownership of the items and their value. A receipt is ideal, but other proof like bank statements showing the purchase, photographs of you with the items or warranty documents may also be accepted. Be sure to get a police report in writing in the case of a theft or any other criminal activity.

Check out some more of our handy travel insurance guides, so you know what to look out for when choosing a policy that suits your needs!