Travel insurance FAQs: what you need to know about your next policy

When preparing to travel, we generally take a variety of precautions to ensure that we won’t have to spend our time away fretting about one scenario or another. We make sure that we’ve packed all we need (like enough pairs of undies), we’ve let the neighbours know to put our bins out for us, we’ve got the time-off from work, as well as a range of other little steps that help us feel secure enough to enjoy our holiday in peace. 

But there’s another step which often gets overlooked – the importance of a travel insurance policy which suits your needs. 

However, with myriad choices out there it can be difficult to understand what you may need from your travel insurance policy, especially when scrolling through a product disclosure statement (PDS) that Shakespeare himself would find intolerably wordy. 

So, whether you’re taking the family on a tour of Europe, or you’ve pencilled-in a big, solo adventure, this guide is sure to answer at least a couple of your big travel insurance FAQs.

Travel insurance covers you financially against mishaps that occur whilst travelling away from home. It’s usually reserved for overseas trips and domestic trips where you’re more than 200km from home (depending on what the provider states). 

Often you’re covered for things like personal belongings (e.g. lost luggage), trip cancellation, medical expenses, and personal liability. 

When it comes to both international travel insurance and domestic travel insurance policies, your cover will vary in scope, price, inclusions, and exclusions.

Travel insurance for your holiday is not mandatory, however Australian Governmental agencies, like Smartraveller, do recommend you pack a policy before heading off on your adventures. 

It’s just one way to minimise your financial risk on the off-chance that things go wrong while away from home. For example, if you’re overseas and end up in hospital, travel insurance may cover a significant portion of your emergency medical bills. That’s good for countries like the USA, where hospital bills can come at a premium.  

Mozo tip: When looking for travel insurance keep in mind each policy will provide you with a different level of cover, so always take the time to read the fine print to ensure you’ll have the cover you need.

Like most kinds of insurance, the upfront cost (known as the insurance ‘premium’) varies between policies. That’s because travel insurance is tailored to you and your needs. 

The price changes depending on factors like where you’re going, what you’re doing, if you have pre-existing medical conditions, if you’re adding optional extras (like snow travel or cruise insurance), as well as more personal factors, like age.

If you’ve never made an insurance claim before, then the term ‘excess’ might not have much meaning to you. But it’s actually a fairly important part of insurance, which shouldn’t be overlooked when comparing insurance policies. 

You can think of excess as the fee you pay to exercise a successful insurance claim. Let’s look at an example of when you might need to pay excess. 

Say you’re travelling overseas when your handbag, worth $500, is stolen from your hotel room. You contact your travel insurance provider and complete the claim process. Once your claim is approved, your provider may charge you $100 excess to cover a portion of your $500 claim. In reality, your successful insurance claim for your handbag saw you reimbursed for $400. 

Why do insurance providers charge excess?

Insurance providers charge excess to prevent customers from making small insurance claims on a regular basis. It is also thought that by placing some of the financial responsibility on the customer, it will result in less claims (due to people being more careful) and more affordable policies overall. 

Insurance companies will often provide the option to lower the excess payable on an insurance policy by charging a higher initial premium.

Different travel insurance policies and providers will cover different sorts of expenses, however there are some which usually come as standard. Not all policies will cover you for these, and of those that do, you may be looking at differing coverage amounts and different premiums. 

Some of the more common travel insurance coverage includes: 

• Luggage and personal effects 
• Overseas medical expenses 
• Flight cancellations and delays
• Personal liability  

Luggage and personal effects

Your luggage and personal effects could be covered in case they’re lost, stolen or damaged during your journey. That’s good news for those who won’t want to dip into their travel budget to buy a whole new wardrobe overseas. 

Overseas medical expenses

If you’re outside of Australia (where your private health insurance and Medicare can’t cover you), then your travel insurance policy may be able to cover a portion of your medical bills if you end up in an overseas hospital. This can be especially advantageous in countries like the USA, where medical bills are higher on average. 

Flight cancellations and delays

Flight cancellations and delays can put a spanner in the works of your holiday and waste your time. You might even miss out on pre-booked activities due to not being able to reach your destination on time. By getting cover for this sort of event, you may be able to recoup your losses, or even arrange for an alternative mode of transport to your destination. 

Personal liability

If you damage someone else’s property or somehow manage to harm a stranger by accident, your provider could have you covered. The amount of cover you’re insured for can range anywhere from $1 million to upwards of $5 million, depending on which provider and policy you opt for.

Generally speaking, travel insurance policies come in three levels: basic, standard, and comprehensive. When choosing a level of travel insurance cover, it’s important to consider the differences. 

What does basic travel insurance cover? 

Basic travel insurance will usually cover the bare minimums, like luggage and personal effects, as well as personal liability. Occasionally, it will also cover overseas medical bills, up to a certain amount. 

What does standard travel insurance cover? 

Standard travel insurance will usually have more cover options and higher limits than basic travel insurance. This could be, for example, unlimited medical cover, as well as the addition of flight cancellation and delay cover. 

What does comprehensive travel insurance cover? 

As it’s the top level of cover, comprehensive travel insurance usually has the widest coverage, with the highest limits. The inclusions on a comprehensive travel insurance policy can range from the cost of pet boarding (if your return home is delayed), to higher item coverage (like an expensive smartphone), to extensions on the sorts of circumstances leading to the cancellation of your trip. 

As always, make sure you read the product disclosure statement (PDS) of the policy before you commit, so that you’re aware of what is offered by the policy, and what is excluded by it.

Exclusions are essentially clauses in a travel insurance policy which will void cover. Some exclusions are out of your control, such as your destination being subject to, or the instigator of, an act of war, terrorism, or civil unrest, while other exclusions are dependent on your individual actions. 

Some common travel insurance exclusions which may affect your cover include: 

• A pre-existing condition which has not been declared 
• Being involved in illegal acts 
• Travelling to a destination despite Smartraveller warnings not to
• Taking part in a risky activity which has not been approved as part of your cover (like snow sports) 
• Any activities related to cruise ships, when cruise cover has not been purchased as an extra 
• Being drunk or inebriated
• Pandemics and epidemics

Most policies have a long list of exclusions which you should familiarise yourself with before choosing to take out said policy. It’s important to know what you are covered for, but equally important to know when you won’t be covered at all.

As the world comes to grips with the fact that the novel Coronavirus mightn’t leave us for some time, travel insurance providers have factored in the pandemic to their policies. 

While there are a few that do cover COVID-19, there are also many that do not. In the case your provider of choice doesn’t provide cover for the virus, Covid has become a risk that you may have to accept. 

Of course, there are numerous policies which do cover the virus, including emergency medical and hospital care, and trip delay and cancellations. Some credit card travel insurance providers even include cover for Covid under their policies.

A good place to start is by comparing travel insurance policies with Mozo. You’ll be able to see what the policies cover at a glance, and get an idea of which policies suit your needs. From there, you can deep-dive into the individual providers’ websites to see their range of policies and choose the best one for you. 

Get started here: