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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.

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.

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.

However, if you have adequate travel insurance, you can travel confidently knowing you can get financial help in an emergency.

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. However, even if you disclose it, you still might not be covered for an accident that happens because of that activity, as it may be excluded from the policy. 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
• Pre-existing medical conditions. If you have experienced symptoms of a condition before travelling, even if the condition wasn't diagnosed, medical expenses for it will generally not be covered. Read your policy's terms and conditions carefully
• 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.

While Kiwis are eligible for free emergency hospital treatment in Australia under our governments' Reciprocal Health Agreement, New Zealanders visiting Australia still have to pay for non-hospital treatments, such as visits to a doctor or medical centre, and repatriation, which is a very expensive process.

What else should you do before you travel?

In addition to organising travel insurance, before you leave:

1. 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.
2. 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.
3. 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.
4. Keep a record of the contact details of the New Zealand Embassy in your country of destination – just in case you need them.