Travel Insurance Guide: The Basics

Cancelled reservations, lost luggage, diverted flights, missed connections, bad weather, and can turn a well-deserved holiday into a horror story. Mishaps can happen at home as well, but they take on a different layer of complexity when travelling.

Travel insurance can pick up the pieces and minimise financial loss should the unexpected happen. Typically, a travel insurance policy will provide an amount of cover for the following:

  • Cancellation and loss of deposits
  • Medical treatment costs
  • Costs for returning home in certain emergencies
  • Loss/theft of luggage and personal items
  • Personal liability, excluding deliberate acts and use of motor vehicles.

Why have travel insurance?

“For some travellers the temptation to leave travel insurance off the list to save money proves too much, but before trimming your travel budget you need to consider if saving a few dollars is worth it should things go wrong. If travellers decide they can’t afford the relatively small cost of travel insurance then they really can’t afford to travel.

“¦Consider the $80,000 cost of a medical evacuation home to New Zealand from one of our Pacific neighbours should you fall seriously ill, or be seriously injured while on holiday. In some countries medical assistance is limited and repatriation to New Zealand for urgent treatment is the only option.”

Without a comprehensive travel insurance policy, the theft of your wallet could set you back by hundreds of dollars, the cancellation of your flight could set you back by more than a thousand and an illness or injury could cost into the tens of thousands. It’s a financial risk that you simply shouldn’t take.

How much does travel insurance cost?

Premiums will vary depending on your destination, your planned activities, the length of your stay, the type of cover requested and your health and age.As a general indication, our recent travel insurance star ratings report calculated the average premiums for some of the most popular destinations as:

Country* Number of trips per year Average travel insurance premium for 10-day holiday (couples)
Australia 995,400 $103.57
USA 120,660 $258.05
Fiji 106,080 $120.05
UK 94,400 $190.70
Cook Islands 71,200 $123.02
China 66,740 $217.14
Thailand 39,560 $190.21
France 14,280 $216.43

Source: Canstar

Premiums can vary significantly between providers, so it is worth shopping around.

What to think about

Premiums will vary ““ but so will inclusions. It is very important to ensure that whichever travel insurance policy you choose will provide cover for the things that are important to you. As a start, some questions you should consider are:

  • Do you have any particular items of value that require extra cover?
  • Do you have any pre-existing medical conditions?
  • Does any member of your close family have any pre-existing medical conditions that could potentially impact on your holiday plans?
  • What dollar limits are you willing to accept on claims, either for individual items or as a whole?
  • What proof will you need in order to make a claim?
  • How will you contact your insurer when you are overseas?
  • What paperwork do you need to take with you on your holiday?
  • Is there any risk that your holiday plans could change while you are overseas?

You MUST read the paperwork!

Of the thousands of travel insurance-related complaints that are received by our external dispute resolution schemes, only a small percentage are accepted for investigation. The rest are simply a case of travellers not reading the fine print on their contracts. It’s so important to read the paperwork, to ensure that you have the cover you need.

“Travel insurance was the financial product most frequently complained about in the cases investigated this year. Complainants who have made a claim under their travel insurance policy are often disappointed to find that the amount and scope of cover under the policy wording is less than they expected”¦”

Financial Services Complaints Ltd, 2011/12 annual report.

To find out more

Travel insurance is a must and the travel insurance you choose should suit the specific needs of your family. For more hints and tips, download our free travel insurance awards report.

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