Travel insurance: Are you really covered?
Wed 16 February 2011 - 4:26 pmLegal | Tourism | Travel
When it comes to travel insurance, the devil is in the detail! Here are some expert tips and common traps when looking for a policy that will cover your business trips and honour your claims.
Buy online, and buy direct from the insurer
It’s reasonably well known that travel agents and airlines get staggeringly large commissions from insurers for selling policies but a lot of people still buy a policy from a travel agent because they trust the agent’s advice. This can be a costly mistake. For example, this fine print in Qantas’ QBE travel insurance makes clear just how much extra you’re paying to buy it via Qantas: “Qantas receives commission from QBE Insurance … the rate ranges up to 53% and is payable to Qantas by QBE Insurance for each policy issued.”
Don’t ignore Government warnings
A favourite trick used by travel insurers to get out of paying claims is to exclude coverage for countries where the Australian Government has issued a travel warning. For example, few travel insurance companies will cover you for travel to countries which the Australian Government has issued “do not travel” advice for on its Smart Traveller site: http://smartraveller.gov.au.
Read the insurance policy
Yes, we know this is a chore.Poring over page after page of fine print in insurance policies feels like punishment, which is why insurers would certainly prefer you to pay attention to the slick marketing write-up of the policy on their homepage. But when it comes to claiming on the policy and discovering what you’re not covered for, you certainly won’t be bored; more likely, you’ll be highly stressed.
Do read the entire insurance policy booklet carefully before signing up, because travel insurance policies are notorious for their endless exclusions and loopholes. For example, a policy may appear to have reasonably generous coverage for electronic goods but note that the insurer won’t pay for “scratching or breaking of fragile or brittle articles. This includes photographic equipment, spectacles, musical instruments, electronic equipment and display screens”.
Your travel insurance policy might offer you $10,000 worth of baggage cover, but don’t forget to check the per-item sub-limits, which are often hidden in fine print. Many insurers limit claims on frequently stolen electronic items (including laptops) to low amounts like $500 and after your excess is taken out, you might not see much more than $250 for your laptop worth several thousand dollars.
A much better way to insure your laptop and other expensive electronic goods is to contact your home contents insurer and get them insured as portable valuable goods. Generally, this costs about $5 per $1,000 insured, per month, and covers you worldwide for loss/theft/damage to the goods. Some insurers offer a lower claim excess (e.g. $100) for listed portable items too. When you do contact your home insurer, make sure the portable items coverage is worldwide, not just Australia and New Zealand. Some home contents insurers also offer unlisted portable items add-ons to their policies. For example, up to $4,000 coverage for any portable item, with a $1,000 per item limit. This can be a useful type of coverage for mobile phones and expensive electronic car keys when travelling.
Check the exclusions
Like all insurance, travel insurance is a game of risk; the insurers price their policies based on how likely things are to happen. As a result, to keep policy prices low, they exclude things that are more likely to happen. The trouble is, travelers often expect that they will be covered for the most likely things, and only discover they are not when they try to make a claim.
Insurers often exclude items such as severe weather conditions or natural disasters; acts of war, terrorism, uprising, civil commotion; and ‘acts of God’. These things all sound like pretty unlikely events, but when you consider a volcano is considered an ‘act of God (think millions of travelers stranded by Icelandic volcanic ash that could have gummed up jet engines), and a protest around an airport is a civil commotion or insurrection (think peaceful occupation of the Bangkok Airport by protestors in 2008) those exclusions can have very real impacts.
Obviously, choose a travel insurance policy with the least exclusions, and pay real attention to them when reading an insurance policy.
While many types of insurance (like home contents) will cover you for stuff you own but don’t have receipts for any more, travel insurers are well known for knocking back claims if you can’t stump up an original purchase receipt for the item you’re claiming. Most insurers make this clear in their policy, too. For example, one policy we looked at said: “Full particulars, original receipts, original accounts and reports, including your original passenger tickets, are required to support your claim. Proof of ownership and value of items claimed will be required. When purchasing items during your travel, you must keep receipts separate from goods purchased.”
So, if you’re taking anything valuable overseas, make sure you know where the original purchase receipt for it is, otherwise consider it uninsured. An insurer might accept a valuation certificate for jewellery or other items, but be sure to check in advance, and get it in writing from them.
They said on the phone…
Most travel insurers outsource their 24 hour helplines to third-party companies like Mondial Assistance. Although these outsourced centres can be easy to reach and helpful, they may not be able to make any decisions until they can get in touch with your insurer. If you get sick on Friday night Australian time, you may not get an answer about medical coverage until Monday morning or afternoon, Australian time. Meanwhile, you’ll have to find the money yourself to cover the cost of urgent medical treatment if you need it.
Despite this, some insurers say in their policies they will not reimburse medical claims over a certain amount if you have not got authorisation from them first. Another catch is that even if your insurer looks generous by accepting reverse charge calls from you while overseas, you might find that the high cost of these calls is deducted from the amount the insurer pays out in the end.
Cars, bikes and things with wheels
If you’re hiring a car in Australia or overseas, don’t just pay the extra fee that the car rental company charges to waive the outrageous excess on the car insurance (often $3,000-to-$6,000). The fee with most car rental companies is usually $20 a day to have the excess reduced to something reasonable or waived altogether but it’s almost always cheaper to buy travel insurance that will pay out the excess on the car rental insurance if you do damage the car.
That’s the positive aspect of travel insurance. Now for a “gotcha” relating to things on wheels. In many countries motorbike, scooter or “tuk-tuk” transport is common. However, don’t assume you’ll be medically covered if you have an accident on one of these. If the driver is not a licensed motorbike rider in their country, most insurers won’t cover you. If you ride one yourself, you won’t be covered, even if your policy specifically covers you for riding motorbikes, unless you have an Australian motorbike licence.
–Dan Warne is deputy editor of the Australian Business Traveller website.