Travel insurance for Australians: what to check first

Travel insurance for Australians should be bought before you pay for the trip, and it should be read before you pay for it. The cover has limits, and many things you might expect are left out. This checklist shows what to look for in a policy, and what to do if you need to claim.

Sources for this section: Insurance Council of Australia, Travel Insurance: Guide for Travellers (hosted on the Smartraveller site); Department of Foreign Affairs and Trade, Smartraveller, Travel insurance.

Why cover matters before you leave

The Department of Foreign Affairs and Trade runs the Smartraveller website. It says its officers handle more than 20,000 cases a year involving Australians in difficulty overseas. That includes over 700 hospitalisations, 600 deaths and 100 medical evacuations. It also says only 0.6 per cent of Australians who travel overseas run into difficulty each year.

The costs can be large. The department says a day in hospital in South-East Asia often tops $800. Returning a person's remains from Europe can cost more than $10,000. A medical evacuation from the United States often costs $75,000 to $95,000. Its short rule is: "if you can't afford travel insurance, you can't afford to travel."

Travellers without cover are personally liable for these costs. The department has seen families sell assets to pay them.

Sources for this section: Department of Foreign Affairs and Trade, Smartraveller, Travel insurance.

Read the product disclosure statement

Every policy comes with a product disclosure statement, or PDS. This public document sets out what the policy covers and what it does not. The Insurance Council of Australia says to read it before you buy, and to read the full policy wording too. Policies differ from one insurer to the next, so it pays to compare more than one.

Check these points in the PDS:

• Medical limit. Medical bills can be extremely high in North America, Europe, Africa and parts of Asia. The Council advises taking the maximum medical cover on offer.
• Overall limits and item limits. Cover for luggage is capped in total and often per item. Cameras, laptops and jewellery may need extra cover.
• Excess. This is the amount you pay when you claim. Some insurers let you pay a higher premium to remove it.
• Length of stay and destination. The price depends on cover type, age, destination, trip length and any existing medical conditions.

Sources for this section: Insurance Council of Australia, Travel Insurance: Guide for Travellers.

Know the common exclusions

Most policies list general exclusions. The Council gives these examples: war and terrorism, self-inflicted injury, unattended luggage, loss of cash, and medical conditions that existed before you left.

Risky activities are often excluded too. Rock climbing, bungee jumping, hunting, racing and diving with breathing gear appear on the Council's list of examples. Some activities can be added for an extra premium. Smartraveller tells travellers to make sure the policy covers any activity they plan to do, including adventure sports.

Cancellation has a catch as well. The Council says most policies do not pay if the government bans travel to a place or changes its travel advice. Smartraveller also warns that some policies will not cover claims in countries where the department advises against travel. Check the travel advice for your destination before you book.

Sources for this section: Insurance Council of Australia, Travel Insurance: Guide for Travellers; Department of Foreign Affairs and Trade, Smartraveller, Top 10 travel tips and Travel insurance.

Existing conditions and credit card cover

Tell your insurer about any medical condition you already have. Not telling them is one of the mistakes the Council lists. Most policies do not pay for conditions that existed before travel. Some insurers may cover a known condition for an extra premium. If you have a known condition, talk to your doctor and your insurer first. This is general information, not medical advice.

Some credit cards come with travel insurance. The Council says to read your card provider's policy wording to see what is covered and whether you must meet conditions to be eligible.

Sources for this section: Insurance Council of Australia, Travel Insurance: Guide for Travellers; Department of Foreign Affairs and Trade, Smartraveller, Travel insurance.

Buy early, keep records and know how to claim

Buy cover when you buy your airfares. The Council says doing so covers you for any cancellation costs that come up before you leave. Taking out cover that does not match your trip length, or the place you will spend most time, is another common error.

Before you go:

• List your belongings and keep the list at home, with your original receipts.
• Make two copies of your policy. Carry one apart from the original and leave one with someone at home.
• Save the insurer's 24-hour assistance number. Most policies include one.

If a dispute with your insurer comes up, first ask for a decision through the insurer's internal dispute resolution process. If you are still unhappy, you can go to the Insurance Ombudsman Service, which resolves general insurance disputes. Contact it within three months of the insurer's decision. The industry's General Insurance Code of Practice says insurers will deal with customers in an open, fair and honest way.

Sources for this section: Insurance Council of Australia, Travel Insurance: Guide for Travellers; Department of Foreign Affairs and Trade, Smartraveller, Top 10 travel tips.

Sources

1. Insurance Council of Australia, Travel Insurance: Guide for Travellers, placed on Smartraveller by the Department of Foreign Affairs and Trade: smartraveller.gov.au
2. Department of Foreign Affairs and Trade, Smartraveller, Travel insurance: smartraveller.gov.au
3. Department of Foreign Affairs and Trade, Smartraveller, Top 10 travel tips: smartraveller.gov.au