What is travel insurance and why do you need it when you travel?
Travel insurance provides financial cover for emergencies, accidents or loss that might occur to you or your belongings while you are travelling either domestically or internationally.
International comprehensive travel insurance covers not only your possessions but, more importantly, it will also provide financial assistance for medical treatments that you could require while away from New Zealand, including in Australia.
Using Canstar's comparison table, you can compare travel insurance policies for domestic travel, international travel and for trips across the Tasman Sea to Australia.
Why do you need travel insurance?
The New Zealand government website SafeTravel recommends travel insurance for anyone taking a trip away from home, especially overseas.
If you don’t have travel insurance and you lose your luggage, have an accident, medical emergency, or legal incident, you could face huge bills.
Cancelled flights and hotel accommodation can leave you out of pocket by thousands of dollars, but medical expenses can be even more expensive. If you suffer a health emergency while overseas, it could end up costing hundreds of thousands of dollars, especially if you need to be brought back to New Zealand for treatment.
This is why travel insurance is important is important even if you're making a short trip to Australia. For while we have a reciprocal health agreement with Australia, it doesn't cover non-emergency hospital treatments or repatriation.
However, if you have adequate travel insurance, you can travel confidently knowing you can get financial help in an emergency.
Domestic travel insurance is also an important consideration if you're planning a holiday in New Zealand. Cover for cancelled or postponed expensive travel and accommodation bookings, plus for your valuable possessions, can provide financial peace of mind should your Kiwi holiday plans go awry.
Types of travel insurance and what they cover
There are three main types of travel insurance cover policies:
1. Domestic travel insurance
Domestic travel insurance policies usually cover you for events such as:
- Lost or stolen luggage or other items
- Cancelling your trip unexpectedly due to illness, accident, holiday leave being revoked, or a natural disaster at home or at your intended destination
- Rental vehicle excess if you have an accident driving a hire car
- Legal liability: the vast majority of policies researched include coverage for legal liability.
Domestic travel insurance usually doesn't cover you for:
- Medical cover. However, this is not a big problem because, as long as you're in New Zealand, you can still access publicly funded health services or your private health insurance, if you have it
- Certain hazardous pursuits. If you’re doing dangerous activities on your holiday, such as skiing, scuba diving, bungee jumping or rock climbing, you need to disclose it on your application. Always ensure you read your policy terms and conditions carefully
2. International travel insurance
International travel insurance policies usually cover you for events such as:
- Medical or dental emergency. Typical emergency medical cover will include hospital admission, emergency care and medical evacuation to another country's hospital. If your medical situation is not an emergency, it is recommend you contact your insurer before you receive treatment, to check if it's covered by your policy
- Repatriation if you fall sick overseas and need to be evacuated back to NZ for treatment. Or if tragedy strikes, repatriation covers the cost of flying your body and belongings back home to NZ. Some travel insurance policies also include a separate sum for funeral expenses
- Lost or stolen luggage, passport or other items. Replacing luggage and travel documents is the most common claim for travel insurance
- Cancelling your trip unexpectedly due to illness, accident, holiday leave being revoked, or a natural disaster at home or at your intended destination
- Legal liability if you break a local law and need a lawyer and/or interpreter. Ignorance of local law is no excuse in most countries, so make sure you check SafeTravel before you depart. For example, in some Muslim countries it is an offence to wear a bikini on a public beach. If you break a law intentionally, your travel insurance policy may not cover your legal fees
International travel insurance usually doesn't cover you for:
- High-risk countries. Check the government's SafeTravel website for the travel advisory status of your destination. Countries flagged with a “Do Not Travel” advisory may not be covered under your policy
- Risky behaviour. Any injury or loss caused by you behaving recklessly while you were under the influence of alcohol or drugs can be excluded from cover. This doesn't apply to medication prescribed to you by a doctor and taken as prescribed
- Serious pre-existing medical conditions. Pre-existing condition rules vary by insurer. Always check the policy's Product Disclosure Statement (PDS), or contact the insurance provider directly, to confirm what is included.
- High-value items. Many policies have a dollar limit that you can claim for each item, which may not be as much as it costs to replace the item
- Notification period. Your policy may specify that you need to notify your insurer of an accident or event within a specified timeframe, such as 24 hours. It's important to be aware of that notification period and to call your insurer as soon as you can, in the event of a potential claim
- Loss of items left unattended. Keep an eye on your belongings at all times. You might not be covered if you leave your wallet and keys wrapped in a towel on the beach, or hidden in a shared room, or even in your checked-in luggage
- Hazardous pursuits. Dangerous activities such as scuba diving, bungee jumping, rock climbing, off-piste skiing and hang-gliding are usually excluded, but they can often be added to your policy for an extra fee. Also be aware that riding a moped or motorcycle overseas might also not be covered, even if you are legally entitled to ride one in NZ
- Pregnancy related medical costs arising from late-term pregnancies are usually only covered by optional policy extras
- Elective surgeries. If you head overseas for cosmetic surgery or other medical procedures, expenses incurred due to any issues that arise will not be covered.
3. Cruise travel insurance
Cruise travel insurance is sometimes sold as a separate insurance product, or as an add-on level of cover. Comprehensive cruise insurance generally covers possessions, personal liability and medical cover, including evacuation at sea.
It’s worth noting that some cruise ships won’t let you board without cruise-specific insurance, so you might want to check with your holiday provider before booking to see what cover you need. Government or private health insurance may not cover you while on a cruise, even in New Zealand waters.
Other travel insurance products include:
Medical-only policies: as the name suggests, such policies only provide cover for medical treatments, and often personal liability, and not for a traveller's possessions. Due to their limited cover, these policies are generally cheaper than comprehensive policies.
Multi-trip policies: provide cover for multiple trips within a set period, and can cover multiple destinations. For frequent travellers, a multi-trip policy can work out cheaper than purchasing individual single-trip policies.
Working overseas policies: offer the benefits of standard travel insurance policies, but with extended timeframes suited to those spending long periods living and working overseas.
NB: No travel insurance policy will cover you for every possible eventuality while you're away, so it's always important to read your policy's terms and conditions carefully to discover the full extent of your cover. If you have any doubts about your level of cover, talk to your insurance provider before you travel.
Do you need travel insurance for Australia?
The short answer is yes. If you're travelling to Australia, it's a good idea to purchase travel insurance to cover your possessions and any possible medical-related costs you might incur while overseas.
New Zealand and Australia share a reciprocal healthcare agreement that covers both:
- Medically necessary care as a public patient, including public hospital inpatient and outpatient services
- Some prescription medicines
However, this isn't a replacement for travel insurance. While you might be able to access free treatment should you need to go to A&E, it won't cover a wide range of other medical expenses – such as private specialists, some prescription costs, or emergency transport, like an airlift back in NZ. Nor will it cover any additional accommodation, rescheduling of flights, lost luggage, personal liability or other issues that can arise when travelling abroad.
So while travel insurance is not required, and you can access some health care benefits in Australia without it, it's always recommended you take out a travel insurance policy when travelling overseas.
Is there a separate travel insurance policy for visiting Australia?
Most travel insurance providers don't have a separate OZ insurance policy. Instead, you typically choose from a selection of standard policies plus add-ons. However, while travel insurance policies remain fairly standardised, prices vary country by country.
Travel insurance for Australia: what options are there?
Each provider has its own policies. Some might offer a single policy with many add-ons and customisation options, while others might opt for several policy options, such as: medical only, basic cover, comprehensive, and frequent flyer.
Below we've listed some common travel insurance inclusions, to help you decide which ones are most relevant or of concern to you:
- Medical expenses (especially those not covered by the reciprocal healthcare agreement)
- Cover before you depart
- Emergency dental treatment
- Cancellation fees and lost deposits
- Additional accommodation and travel expenses due to illness or injury
- Damaged or lost baggage
- Personal liability should you injure or damage someone else or their property
- Emergency companion cover (cover for you if your travel partner gets ill or injured)
- Personal items if they are stolen or damaged
- Rental car excess should you have an accident
- Funeral costs
Other inclusions you may require, which are typically required as an additional add-on (for an additional expense)
- Ski/snowboard cover
- Sports cover (eg. if you're going mountain biking)
- Cruise ship cover
It's also important to note that different policies will offer different levels of cover. Would you need $2000 to replace your luggage, or $5000?
It's also worth noting that certain policies may allow you to adjust the level of cover for each inclusion.
Ultimately, you need to read carefully over the terms, and ask any necessary questions, to avoid confusion about what your policy covers.
How to find the best travel insurance?
There's no one-size-fits all solution when it comes to the best travel insurance for your trip. Instead, you need to look for the policy that best meets the needs of your budget and your travel plans. For example, if you're headed to Australia for a short trip and not taking any valuable possessions, you may decided to opt for a lower-cost policy that only provides medical cover. Or if you're taking a winter sports holiday, the best policy will be one that covers your choice of activity at a competitive price. When comparing travel insurance, it's important to think carefully about your specific needs, to ensure you can find a policy that covers them at a price that suits your budget.
How much does travel insurance cost?
The cost of a travel insurance policy depends on a number of factors, including:
- Your travel destination
- Your choice of holiday, for example cruise or winter sports holiday
- The length of your trip
- The ages of those travelling*
- Whether anyone travelling has pre-existing health conditions
- The policy type
*Seniors can pay more for their travel insurance, especially those over 85, as insurers consider that there are more potential health risks associated with older travellers.
How to find cheap travel insurance?
If you're looking for cheap travel insurance, consider the following:
- Use Canstar's comparison table: By clicking the 'Cover rating' or ‘Price guide’, you can compare a range of different policies on both price and cover levels.
- Look for deals: Some providers may offer exclusive deals and discounts to Canstar customers who use our comparison table. There may also be deals that are more broadly available on providers' websites.
- Avoid paying for things you don't need: Cover for adventurous activities such as skiing, snowboarding or white water rafting can make an insurance policy more expensive, so if you don't plan on partaking in these activities, then it doesn’t make sense to have extras like these included on your policy. Consider only what you require (i.e. cover for medical expenses, travel delay and cancellation, lost or stolen luggage etc.) when comparing policies.
- Increase your excess: As with most types of insurance, you'll usually be required to pay an excess when making a claim. You can often reduce your travel insurance premium by increasing your excess amount – if your chosen provider allows for this. It's important to note that you'll need to be able to contribute this higher excess amount when making a claim.
- Check your credit card: Some credit cards come with complimentary travel insurance, which may mean you won’t need to take out a standalone travel insurance policy. This type of travel insurance, however, can come with a host of terms and conditions, such as all (or most) of your travel-related purchases having to be made using the card. The policy itself may also be rigid in what it covers. This feature is also usually only offered by more premium credit cards with higher annual fees and purchase rates, which means it's important to consider these factors and whether they erode any savings you could make in travel insurance costs, before taking out a card such as this.
What else should you do before you travel?
In addition to organising travel insurance, before you leave:
- If you are going overseas, visit the SafeTravel website's Travel Advisories page to ascertain the current risks of travelling to your chosen destination. If a country is flagged with a “Do Not Travel” advisory, be aware that you may not be able to obtain insurance for the trip.
- Regardless of where you are going, register your plans with SafeTravel. Your details will be stored securely and only used to reach you in an emergency.
- Ensure you have all the relevant travel documentation to take with you on your trip, and that a trusted friend or relation in NZ has a copy, too.
- Keep a record of the contact details of the New Zealand Embassy in your country of destination – just in case you need them.
