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Don't let your holiday send you broke

Don't let your holiday send you broke

According to a report by Galaxy research, 1 in four Australians leave the country without being properly insured for their travel.

According to the same research almost half of all Australian travellers made a claim in 2013 after heading abroad and those who were not properly insured were left out of pocket with an average cost of AU$850 and a total bill of 3.6 million!

So it’s clear that there’s a high chance that travelling without the right (or any) travel insurance could be very, very expensive, especially when a medical evacuation to Australia can cost over AU$100,000. (Ouch.) And if you’re thinking that travel insurance is a rort then consider this.

The Financial Ombudsman Service (FOS) reports that in the 2012-13 financial year, more than 200,000 travel insurance claims were paid, while less than one-tenth of that – about 20,000 claims – were declined in the same year.

Of the claims that were denied, many boiled down to a misunderstanding of the policy by the person that bought it.

The consumer watchdog Choice in a report commissioned by the Department of Foreign Affairs and Trade (DFAT) summarises the importance of the right travel insurance like this... Travel insurance should be considered as crucial as your passport because:

  • The Australian Government will not pay your bills for you
  • Some countries won’t let you in without it
  • It can cause massive stress during your holiday if things go wrong
  • You could end up with massive expenses that you or your family or friends might have to pay and could send them or you bankrupt.

And they point out that the wrong travel insurance can be as bad as no travel insurance – because you’ve paid for something, which won’t be of any help.

To help you get it right here’s a guide about what to look for when buying travel insurance:

1. Find out the answers to these questions - will my insurance cover:

  • All the places I am going?
  • How long I am going for?
  • What I am doing when I get there?
  • Valuable items I am taking with me?

How do you do that? Read the policy before you buy. 

2. Don’t just choose travel insurance on price

Not all travel insurance policies are created equal. Compare providers and policies to make sure what you are getting for your money is what you need. 

How do you do that? Read the policy before you buy.

3. Know what you’re not covered for

There are heaps of things that travellers think they’re covered for but often actually aren’t. These include skiing off slope, parachuting, rock climbing or mountaineering, riding a motorcycle without a licence, or having an accident while over the alcohol limit (this includes crossing the road) or theft of valuables you have left unsupervised in public. There are many more. 

How can you find out about all the exclusions? Read the policy before you buy.

4. Don’t leave it too late

If you choose to put off buying travel insurance keep in mind that only a few insurers allow you to purchase insurance after you’ve already departed Australia (look for the “Have you already left Australia?” checkbox on your insurer's website).

Finally prevention is better than making an insurance claim. Keep your eye on travel warnings before you go at smartraveller.gov.au.

More information

Disclaimer: NRMA Travel Insurance is issued by Great Lakes Reinsurance (UK) PLC trading as Great Lakes Australia and promoted by Insurance Australia Limited trading as NRMA Insurance. Cover-More Insurance Services Pty Limited acts under a binder authority from Great Lakes Australia to arrange for the issue of and to administer the product on their behalf. This is general advice only so to see if the product is right for you, always consider your own circumstances and the Product Disclosure Statement and Financial Services Guide available at nrma.com.au/travel.