Traveling wouldn’t be fun without surprises right? Unfortunately, the unexpected can also leave you hauled up in a hospital when you should be out exploring the jungle.
Theft, illnesses and even erupting volcanoes can ruin your dream trip. That’s where travel insurance can feel like a life-saver. Travel insurance is one of those things you hope you never need but are so glad you have it when something inevitably goes wrong.
1. Do I Really Need Cover?
In the event of serious injury or illness, insurance payouts can run into hundreds of thousands of dollars. An uninsured Australian injured on a ride at Disneyland will end up at the mercy of the expensive American healthcare system. Imagine being bitten by a rabid dog in Rwanda or breaking your leg while climbing in the Himalayas, the benefits of travel insurance far outweigh the small cost per day for peace of mind.
What about my credit card coverage?
Most premium credit cards include some degree of travel insurance these days. However, be sure to check the fine print as many require that you pay for most (if not all) of your travel on that specific card to be valid. Also check that the cover is sufficient for your needs, as this “free” insurance can sometimes be very basic.
One of the major drawbacks with credit card insurance is the emergency assistance. Some operate based on banking hours resulting in lengthy delays for weekend claims. Make sure any policy you take has 24-hour emergency assistance.
Reciprocal healthcare agreements
Some countries have reciprocal healthcare agreements with others, meaning that if you’re traveling in another participating country and injure yourself, you might be entitled subsidized public health care. Participating countries include (but are not limited to) Australia, New Zealand, the UK and Ireland; Sweden, Norway and Finland; Italy and The Netherlands.
If you’re an EU citizen, don’t forget to carry a European Health Insurance Card to entitle you to cut-price or free state-provided healthcare in EEA countries and Switzerland.
It is very important to note that any reciprocal coverage WILL NOT be at the same level as facilitated by travel insurance and is only applicable to basic medical.
2. Real World Claims
Scenario 1 – Cancelled trip
Name: Helen S.
Amount Lost: $2,450
I had booked and paid for my flights and a tour to Australia. Five days before I was due to fly out I started to feel sick. It turned out to be pneumonia and I was hospitalized for a week. Unfortunately I lost out on the cost of my flights and tour because I didn’t even think about taking travel insurance. Lesson learned!
Scenario 2 – Robbed on a bus
Name: Nick T.
Location: Buenos Aires
Amount Claimed: $856
While riding the bus in Buenos Aires someone stole my camera, wallet and tablet from my pack. Thankfully I was able to claim on all items and received a cheque in the mail on my return.
Scenario 3 – Serious car accident
Name: Tom V.
Location: Los Angeles
Amount Claimed: over $160,000
I was a passenger in a car when another car ran a red light and hit our car on my side. The doctors had to put me in an induced coma for 9 days. Without travel insurance, there is absolutely no way I would have been able to pay my medical bill.
3. What to Look for in a Policy
Choosing a travel insurance policy, like all insurances, can be a daunting experience. The language can be confusing and it can be difficult to know what cover you need and what you don’t. It’s essential to check what’s covered, what’s not covered and any conditions that apply before signing on the dotted line.
Look out for age limits and medical exclusions
Many policies, particularly the cheapest, will not insure anyone aged over 65, however, fit and active. Most standard policies will also not cover any pre-existing conditions. So, for example, if you are asthmatic and suffer an attack on holiday that requires medical treatment, your policy will not pay out.
This doesn’t necessarily exclude you from taking out a policy. Just be sure to tell your insurer about any ongoing medical conditions and answer all questions honestly. Some insurers may agree to cover certain conditions for a premium or, worst case, exclude that condition and cover everything unrelated.
Which countries will you be visiting?
Insurance prices are significantly determined by location and the cost of treatments etc. For that reason, you will want to ensure that you take a policy that will cover you for EVERY destination on your trip.
Thankfully you won’t need to buy a worldwide policy for much of north Africa: as Egypt, Morocco and Turkey come under Europe in most cases. But beware, some “worldwide” policies exclude the US and Canada.
This is the amount that you will pay towards any claim. For example, let’s say you are in an accident with your medical bills totalling $5,000 and the excess on your policy is $150. If your claim is successful, the insurer would pay out $4,850 and you would only pay $150 (the excess).
If you set the excess high, the policy will be cheaper but consider this – you will miss out on any small claims. Why you ask? If you accidentally sat on your sunglasses worth $100 and your excess was $150 you will not be entitled to a refund. Whereas if your excess was nil you most certainly would!
Lost Luggage and Personal Effects
Are your belongings covered?
Next, confirm how your luggage is covered, particularly for theft or damage. Are there individual item limits? What are they? Are electronic devices included? Is theft from inside a car excluded? What if your iPhone falls in the Trevi Fountain?
Beware of item limits! While the policy may state you are covered up to $2,000 for luggage, each item’s coverage may be as low as $100. Check this before signing up, especially if you have valuable items.
A quick note on electronics: most companies only cover a small amount, usually up to $500 USD as part of their basic coverage. You can often buy supplemental insurance to get a higher amount of coverage.
4. Types of Coverage
Single trip cover
This is the most common type of cover where you will pay a set premium based on the following: the duration of your trip, destinations you will visit, your age and any pre-existing medical conditions you have.
If you travel three times or more a year (or twice or more if one trip is to the US) then getting an annual policy that covers the entire year’s travel for one fee is likely to cost you less than buying separate single-trip policies.
There is a huge caveat here! Annual policies are great if you are taking lots of short trips and returning home after each. However, it won’t cover backpackers on extended trips. If you will be away for more than a month you will most likely need to take out a single trip policy.
Some insurers offer a bare bones policy that covers you in the event of cancellation. This is not something we suggest though. If you are going to take a policy, pay that little bit more to have your health and belongings covered too.
5. Making the Most Out of Your Policy
You have to buy the insurance early to make sure you get the full benefits. Typically, that means buying within a week or so of the time you make your first deposit and buying coverage for the total value of your non-refundable purchases.
If you wait, you’ll lose any-reason cancellation and the exemption for pre-existing medical conditions.
6. What is NOT Covered?
Knowing what isn’t covered is just as important, if not more important as knowing what is.
The medical portion of travel insurance is more about emergency care than being a replacement for your normal health care. A lot of people purchase insurance thinking it is, then get disappointed when they find out they can’t go get an annual physical with it. Travel insurance is accident insurance. It is there to protect you in case of emergency and, if need be, get you home in a hurry.
Most travel health and evacuation policies exclude pre-existing medical conditions as a “covered reason” for paying on a claim. A pre-existing condition means any injury, sickness or condition for which medical advice, diagnosis, care or treatment was recommended or received within a specified time period ending on your date of departure – typically 90 days or 180 days. Conditions are not considered pre-existing if the condition for which prescribed drugs or medicine is taken remains controlled without any change in the required prescription.
Whether or not a condition was pre-existing is a major bone of contention in benefits claims. Companies can deny a claim for as little as a doctor’s advice to “take two aspirin and call me in the morning.”
For example, if you have a heart condition and develop a problem on the road, you won’t be covered. If you have diabetes and need to buy more insulin, you won’t be covered.
** This includes pre-existing conditions for family members at home.
It is not a life insurance policy
Don’t go thinking that your policy will provide a payout to your family in the event you have a fatal accident. It will not! However, most policies will cover the cost to bring your body home.
Items left behind
While travel insurance is most certainly there to cover you if your gear is stolen or damaged, be very careful when reading the fine print about items that you leave behind. Many policies will not cover items left carelessly in a public space or unattended in a vehicle.
Some adventure activities
Many policies exclude “risky activities”, which can be horse riding, scuba diving, jet skiing or mountain climbing. If you are going on a skiing holiday make sure the policy includes comprehensive winter sports cover.
Most policies do not cover accidents sustained while participating in extreme adventure activities such as hang gliding, paragliding, or bungee jumping unless you pay extra.
Was your flight delayed and you missed your connecting flight? This situation is a pain that’s for sure but unfortunately, you are probably not going to cover you. If you are connecting flights are between the same airline you should be covered by the airline though.
Your work cancels your leave
Unfortunately, you will not be covered if you are called back to work unless you are in the military or emergency services.
If the loss occurred because of the following
Policies do not normally cover alcohol or drug-related incidents, or carelessness in handling your possessions and baggage. You won’t get reimbursed if the problem happened because you were reckless. Simply put, if a reasonable person wouldn’t partake in what caused your accident, you won’t be covered.
7. What to do When Something Goes Wrong?
Knowing what to do when something goes wrong is nearly as important as having the cover in the first place. We have heard of many people who have come home to make a claim only to be denied a refund due to insufficient evidence.
It is vitally important that you keep receipts for any items you are claiming for or out of pocket expenses, obtain a police report or incident report from your hotel etc and anything else you can to support your claim. Read our more comprehensive guide on making all types of travel claims here – When Things Go Wrong.
Making a claim back home is generally straightforward. If the claim is investigated and accepted, you should normally be reimbursed within a few weeks. If not, an appeals process is always available.
Luckily, some providers allow you to make a claim online. This is one of the reasons we partnered with World Nomads.
8. Final Tips
Never buy from a travel agent
Travel agents are notorious for making huge commissions on travel insurance. Anywhere from 40 – 60% in fact (Crazy but true!).
Keep a record of your valuables before you leave
Take photos of your valuable items and keep a record of receipts (including anything you purchase while away).
When traveling, keep the emergency number close
If you need medical help, seek treatment urgently. If you can’t call for help, someone will find the number on your person so make sure you keep a copy of your Certificate of Insurance on you, just in case. If your situation is not medical in nature, it’s always best to phone the provider anyway, and they’ll advise their protocol.