TRAVEL INSURANCE

Get Yourself FinLit

Travel Insurance

It’s one thing for events to take a wrong turn right here at home, it’s an entirely different situation when it happens overseas, in a place you’re not familiar with and has none of the support of citizenship, family, or even a common language. Medical emergencies, trip cancellations, theft, lost luggage – there are so many factors you cannot control… but you can prepare for the unexpected.

Travel insurance covers you financially for a wide range of mishaps that may occur abroad, and provides a safety net if you find yourself falling into not-so-great times mid-vacay. Here’s what you need to know.

When do you need travel insurance?

While travel insurance isn’t compulsory, it’s strongly recommended that you get some if you are travelling overseas, and if you’re booking a tour or organised trip, often they will require you to have pre-purchased travel insurance. Sure, a lot of the time nothing bad happens on your holiday and you end up not needing your travel insurance. But sometimes – probably more often than you think – bad stuff can happen when you’re away from home. In particular, medical bills are what could potentially leave more than just a dent in your travel budget – they could leave you tens of thousands of dollars in debt.

So overseas travel insurance is a bit of a better-safe-than-sorry situation.

As for domestic travel, your medical bills are probably already covered by Medicare or - if you have private health cover - by your private health insurance. However, you may want the option of travel insurance if your luggage is lost, something is stolen, or your property is damaged.

How does it work?

Before you jump on a plane and jet set off to some fabulous location, you can purchase travel insurance from a travel agent or through a number of providers online. Shop around a little, because there’s a lot of different options out there, some cheaper and some more comprehensive than others.

Once you’ve made the purchase and outlined the dates you’ll be away, you’re good to go. If you find yourself in strife overseas, most providers should have a 24-hour support line that you can call to get advice on what to do. They’ll also be able to talk you through the process of making a claim – which is what you need to do if something goes wrong and you need financial compensation. Your claim will need to be assessed before the insurance company forks over the cash, but if you can prove what happened wasn’t your fault (for example, that you didn’t leave your luggage unattended resulting in it being stolen), then you should get the financial assistance you need to get back on track.

Types of Cover

There are different types of policies depending on how much cover you’ll need on your trip. This is often based on the kinds of activities you’ll be partaking in while you’re away. If you’re going to be hitting the ski slopes, for example, you’ll probably need to add this as an extra or get more comprehensive insurance as most basic policies won’t cover adrenaline sports.

Essentials

Essentials cover is the barebones necessities of travel insurance and is designed to cater towards the most common needs. Break a leg? Not a worry! OK, so there are some worries, but it takes care of most medical emergencies and personal liabilities.

Be careful though – essentials cover might not cover you for everything you get up to while you’re away, or may only provide financial compensation for a smaller amount than other policies that have greater coverage. So make sure you read the fine print and see what’s included and what isn’t. You’ll usually be able to add on some additional extras, like skiing cover for example, if you need it for your trip.

Domestic

Similar to the essentials cover, a domestic policy is a single trip policy that covers travel around Australia. This will generally be cheaper than overseas policies, as most of your medical costs will be covered by Medicare if you live in Australia. This will provide more cover for stolen or damaged goods you might have, like exxy cameras, laptops and luggage.

Multi-trip

As indicated by its name, multi-trip cover is for multiple trips with a policy duration of generally 30 days, 45 days, 60 days, and up to a year. Under this type of travel insurance (which covers you for a wider range of incidences compared to essentials and domestic such as permanent disability or loss of income) you are taken care of for as many trips under the policy as you like as long as it is under the selected length of the policy.

Comprehensive

A comprehensive policy is more on the pricey side, but that’s because it covers you for most things, and will generally provide more financial compensation than an essentials policy when your stuff is lost or damaged. Comprehensive travel insurance includes a full suite of medical benefits and covers a hefty amount of personal loss.

Again, it’s always best to read the fine print to ensure you’re definitely covered for everything you’ll be doing on your trip.

How Does Excess Work?

When you’re getting a quote for your travel insurance – online or otherwise – you will have to select the amount of excess you’re willing to pay if you need to make a claim. This is an amount of money that you will pay to the insurance provider if something goes wrong and you need financial assistance.

For example, if you select an excess of $200 and you need to make a claim for a broken camera valued at $1,000, the insurance provider will deduct $200 from your claim. So you’ll receive $800 from the insurance company.

The higher excess you choose, the less you’ll initially need to pay for the policy. So, if you think you’re a very safe traveller and you won’t need to make a claim, you might choose a high excess as it’ll lower the cost of your policy. But this means you’re taking the risk that if you have to make a claim, you will also have to pay the high excess. Some travel insurance providers offer $0 excess – so you won’t pay anything if you make a claim – but it generally means the cost of the insurance will be higher.

Having travel insurance is by no means any kind of encouragement to be reckless while you travel. But if things do go wrong while you’re away, travel insurance could help save you a lot of hassle when you’re trying to enjoy your holiday.

This information is provided as an overview only. It is intended to be general in nature and does not take into account your personal circumstances, needs or objectives. Consider its appropriateness to these factors before acting on it.
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