Travel insurance just got more expensive for Aussies - here's how you can save

The one travel item you can’t afford to fly without just got more expensive

The cost of living crisis could be clipping the wings of many want-to-be holidaymakers and adding to their jet-setting woes is news that one travel necessity just got more expensive, according to new research from Canstar.

Canstar’s 2023 Travel Insurance Star Ratings research shows the cost of travel insurance is rising, with prices on average increasing by $38 or 11% from $337 per policy in 2022 to $375 in 2023.

Aussie families and seniors wanting to protect themselves and their belongings while overseas will be experiencing the biggest cost increase as policy prices rise on average by almost $50 compared to last year.

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Source: www.canstar.com.au. Based on a selection of policies rated in both of the Canstar 2022 and 2023 Travel Insurance Star Ratings & Awards (November 2022, November 2023). Premiums include quotes for a range of destinations and travel periods, with a target excess of $100.

Canstar’s travel insurance expert, Steve Mickenbecker says “the cost of overseas travel insurance is up for the second year running.”

“Australians returned to the air in 2022 to a scarier Covid world and insurers provided some protection but at a steeper cost to cover the higher risk. The more modest 11 percent premium hikes in 2023 reflect the increased cost of settling claims in an inflation-wracked world.

“Even though there are fewer insurers than in pre-Covid times, the market is a competitive one and the increased premiums are a signal to overseas travellers that the risks are real and that they should not leave home without adequate medical insurance at the least.”

How to save on average 32% on the cost of travel insurance

There is a way for holidaymakers to keep the cost of travel insurance affordable while still getting quality cover. Premiums for Canstar’s 5-Star Rated international travel policies are on average 32% cheaper than the rest of the market.

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Source: www.canstar.com.au. Based on policies rated in Canstar’s 2023 Travel Insurance Star Ratings & Awards (November 2023). Premiums include quotes for a range of destinations and travel periods, with a target excess of $200.

Canstar urges travellers to compare travel insurance prices just as they would for other holiday essentials such as flights and accommodation.

“When planning for a holiday, travellers always want to find the best deals when it comes to flights and hotels, and your insurance shouldn’t be any different. Getting quality cover for an affordable price is a win for any holidaymaker.”

“As is the case with most other products, the price of insurance varies widely, even when comparing like-for-like protection. Travellers who do not compare policies are likely to be paying way too much for their insurance. Premiums for Canstar five-star rated policies average $234, a saving of $104 when compared to other rated policies.

“Savings are possible by taking out a policy that has lower dollar limits on claims for loss of baggage or cancellation. Losses in these categories can be in the thousands of dollars but are not likely to cause lasting financial hurt. Travellers should not be skimping on insurance for overseas medical care where costs can be massive and can leave the family finances severely damaged.

“Travellers should read the policy when they are taking it out, and not wait until they are making a claim. No insurance comes without limitations and only finding out what these are when a claim is declined can be devastating.

“Policies lay out the events that can trigger a claim, the types of financial damage the insurer will pay out and the dollar limits on types of claims. Importantly they also detail the exclusions that apply and your obligations under the policy.

“If you are planning to participate in high-risk activities check the policy as there is a fair chance that they will be excluded. Off-piste skiing is usually not covered but some policies exclude all forms of skiing or require optional extra cover at a cost.

“Any pre-existing health issues should be disclosed to the insurer. A major medical claim will be investigated and if you left home when being treated for the condition it will likely not be covered. Often an extra premium will protect you at a small cost relative to covering the cost of covering the treatment from your life savings.”

Canstar conducted over 19,700 travel insurance quotes for 54 international and domestic insurance providers to determine those offering outstanding value to Australian travellers. The six 2023 Outstanding Value Award winners are:

• International: InsureandGo, Tick Travel Insurance and World2Cover

• Domestic: Qantas and Southern Cross Travel Insurance

• Seniors: InsureandGo and Southern Cross Travel Insurance

• Cruise: Go Insurance and Qantas

How drinking can impact your cover

Ahead of the peak holiday season around Christmas, Canstar has investigated whether holidaymakers will be covered if they consume alcohol during their overseas holiday and find they need to make a claim.

Reviewing the policies on offer through Canstar’s 2023 Outstanding Award winners and a selection of policies available through a range of travel insurance underwriters shows insurers typically exclude cover when a policyholder is under the influence of alcohol.

Mickenbecker explains, “No insurer will pay a major claim if intoxication is the cause of the accident or medical event or other loss. Shopping around will not find a policy that gives you that permission, but insurers deal with the question of intoxication in different ways.”

“Some set a blood alcohol limit and will not pay a claim if the traveller has exceeded that limit. The hospital may have taken a blood test, which will provide evidence either way. Other insurers may rely upon a bar bill, witnesses and experts to establish intoxication.

“Travelling is often in unfamiliar terrain with unknown customs, which already puts travellers at risk and alcohol will just heighten that. Travellers need to be aware that they could find themselves footing the bill if drinking in another country leads to a major medical event or any other form of loss.”

How insurers are treating Covid-19

Canstar introduced Covid-19 considerations into its review of travel insurance policies in 2022 and 5-Star Rated policies must allow Covid-19 claims, offering the comfort of quality cover at a competitive price.

However, when looking more broadly across the market, the research found of the 54 providers reviewed, 22% of providers don’t offer cover for Covid-19.

It’s also worth noting that not all providers with cover for Covid-19 include cover for overseas medical and cancellation, with just 85% or 46 of the 54 providers covering policyholders for both.

Canstar’s research shows that there is on average just over a $100 difference in cost between policies without cover for Covid-19 and policies that offer cover for both medical and cancellation.

“Covid is still with us and can still result in expensive medical costs or interruptions to travel and cancellation costs,” said Mickenbecker.

“Premiums are on average 40 percent higher for policies with comprehensive Covid cover, evidencing the risk. The good news is that almost four in five insurers provide cover for Covid and it has to be worth the extra $100 on average for the peace of mind that Covid treatment will be available if needed.

“Some insurers only provide Covid protection for medical treatment overseas only while others also cover cancellation and interruption of travel. On average premiums are only nominally higher to the more complete cover, so it is worth comparing.”

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Source: www.canstar.com.au. Based on policies rated in Canstar’s 2023 Travel Insurance Star Ratings & Awards (November 2023). Premiums include quotes for a range of destinations and travel periods, with a target excess of $200.

If you’re in the market for travel insurance, then you can compare travel insurance policies from over 50 providers with Canstar.

Cover image source: Tijana Simic/Shutterstock.com