What could be more pleasant than thumbing your nose at the rest of the world as it shrinks from sight through an aircraft porthole? With umpteen hours of travel ahead and cocooned in space with an exquisite dry white, you could read your visitors insurance brochure and reassure yourself that all is well. Or you could enjoy yourself instead.
Reading travel insurance is best saved for a day that is horrid to start with. Once you get past the pictures of Big Ben and the Statue of Liberty, there’s a black hole full of fine print.
You are better off buying a policy you can easily read and understand than one which is crammed with gobbledegook. Besides, when you buy a policy you sign a declaration saying you have read it and understood its contents. So take a handful of brochures home with you and take your time.
But it is vital you buy your travel insurance before you pay for your ticket and travel arrangements, otherwise you will not be covered against loss of deposit and cancellation charges if you have to cancel due to unforeseen circumstances.
Premiums and benefits generally depend on your choice of destination. To get adequate cover for travel to the US or Japan, for example, you generally need the maximum level of cover.
This is because medical expenses are very high in these countries and anything short of unlimited medical cover is a risk. So benefits (and therefore premiums) are highest for those regions.
Most insurers offer three levels of cover, although some carve the world into four geographic regions while others offer just two levels of cover.
Travel insurance offers a core of basic benefits including: emergency medical and dental care; refund of deposit and cancellation charges; additional travel and accommodation expenses; loss of baggage; accidental injury or death; personal liability, and hijacking.
Some insurers add extras such as: free cover for dependent children travelling with single parents or grandparents; loss of income benefit if you are injured on holiday and unable to work on your return; and resumption of journey – this is a benefit towards the cost of returning overseas if your holiday is disrupted because of a relative’s death or illness.
But there are exclusions and conditions attached, so claiming for any of these events is not all plain sailing. Getting compensation for something as simple as loss of baggage can turn into a nightmare, as the story below illustrates.
Most complaints heard by the panel are for claims rejected by insurance companies for stolen and lost baggage, usually on the grounds that the insured did not take reasonable precautions to protect possessions, or left them unattended in a public place.
Here’s a typical example. A man was travelling to Los Angeles and, due to the riots in that city, his flight was diverted and arrived in San Francisco at 11 pm, where a curfew was in force. He had no option but to spend the night at the airport.
He collected his luggage and placed it under a couch-type seat. When he awoke five hours later his money belt had been cut from his waist and his luggage was gone.
He reported his loss to the airport police. The insurance company rejected the claim on the grounds that the luggage and/or personal effects had been left unattended and that he had failed to take all reasonable care of them.
The panel upheld the company’s decision – at least for the luggage. Had the insured fallen asleep while guarding the luggage the result may have been different. But the insured took a positive decision to settle down and go to sleep, leaving his luggage unattended. The airport had a storage facility and his failure to use it amounted to a failure to take reasonable care.
But the panel ordered the company to compensate the man for the loss of$US350 in stolen cash as he was not regarded as having failed the test of reasonable care for keeping his money on him.
Pre-existing illness is another area which gives rise to many disputes. If you do not disclose an existing ailment to your insurer, you may well have any medical and dental claims knocked back.
“Pre-existing” is defined variously by insurers, with some taking a harsher view than others. It is usually defined as a known illness – either recurrent or one for which you have consulted a doctor for up to 90 days previously(pregnancy is treated as a pre-existing condition).
Insurers will generally cover pre-existing conditions for an additional premium once you have produced a doctor’s certificate showing you are fit to travel.
Most policies cover medical evacuations, but it is not enough for you to feel more comfortable being treated by a familiar person in Australia than the local doctor or hospital in your host country. The circumstances under which repatriation is carried out are limited by the terms of the policy, which are very tight and require the agreement of the insurer.
Similarly, while cancellation and additional expenses provisions offer peace of mind for emergency situations, such as a family member falling seriously ill or dying in Australia, there are exclusions that make such claims difficult to qualify for.
If the relative had a preexisting condition, for instance, it is likely you will not be compensated.
Another area to watch is high-risk sporting activities. While some insurers exclude these outright (or through waivers buried in the fine print), others are prepared to cover them. For instance, HCF will cover, at no extra cost, amateur snow skiing, water skiing, paragliding, parachuting and scuba diving, if you have an appropriate certificate. Cover-More will cover bungy jumping, ballooning, abseiling, parasailing, parachuting, paragliding and gliding at an additional premium.
Senior citizens are sometimes charged a loading. HCF charges 50 per cent more for travellers aged 70 to 74, and 100 per cent more for travellers over 74. Qantas, on the other hand, does not charge an extra premium if you arrange your trip through a Qantas Travel Centre, or you have a ticketed reservation on Qantas during the period of your cover. Some insurers will also ask for a certificate of good health from your doctor.
As was shown by Money’s survey of credit cards, some cards also offer free travel insurance. However, this is usually limited to accident insurance, with payouts ranging from $100,000 to $500,000, and so will meet only part of the needs of most travellers.