Why You Need Travel Insurance

Australians are travelling more now than they ever have thanks to cheap airfares. But can you afford for something to go wrong in another country? Can you afford to not have travel insurance?

According to a survey released by Expedia earlier this year, the cost of an economy-class air ticket overseas has never been lower. Over the last three years, international air ticket prices have declined by 20%, and Australians have duly been taking advantage of this.

In March this year alone, 823,000 Australians travelled overseas, according to the Australian Bureau of Statistics. 9,935,700 – nearly 10 million – Aussies have gone abroad in the short term from February 2016 to February 2017.

With these massive numbers of travellers, travel insurance has become more important than ever. A common phrase in the industry goes; ‘if you can’t afford travel insurance then you can’t afford to travel’, yet nearly 30% of Australian adults are travelling outside Australia without travel insurance, according to a report by Smart Traveller.

It seems that many people are unaware of the benefits of travel insurance and the dangers of not having it. So why do you need travel insurance?

Why do you need travel insurance?

The Australian Government’s Smart Traveller website recommends travel insurance for anyone taking a trip away from home, especially to overseas destinations. If you don’t have travel insurance and you lose your luggage or have an unexpected accident, medical emergency or legal incident, you and your family may have to pay for all the costs on your own.

In the current travel climate, there are five key things you need to make sure you’re covered for:

  • Travel insurance for medical costs
  • Travel insurance for loss of luggage and documents
  • Travel insurance for trip disruptions
  • Travel insurance for terrorism
  • Travel insurance for ‘extreme’ activities, such as skiing and riding a motorbike

Travel insurance for medical costs

According to Southern Cross Travel Insurance (SCTI), around 50% of its travel insurance claims are medically related; these are also the most expensive, with medical bills easily running into the hundreds of thousands.

If you are uninsured, you or your family are personally responsible for covering any medical or other costs resulting from unexpected incidents or accidents. Insurers tell us medical travel is the number one reason they get for assistance, and medical costs vary greatly from country to country.

For example:

  • A wounded or sore knee in Greece can cost up to $4,899
  • Acute bronchitis in Montreal – $34,763
  • Going to the emergency room in the US could escalate to $73,696

In extreme cases, a medical evacuation from the United States can cost you up to $300,000 AUD! Medicare will not be able to reimburse you for these medical expenses incurred overseas, so make sure you’re covered for medical bills!

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Case study:

Wayne travelled to Las Vegas, USA to attend a convention when he was admitted to ICU after fainting at breakfast and sustaining a small brain bleed from hitting his head. Within 24 hours of being discharged from three days in hospital, Wayne collapsed and was readmitted.

Luckily, Wayne had travel insurance and they organised a medical escort back to Australia once he was fit to fly. This included a first-class flight for two back to Australia – all up, the cost was $90,000.

Source: Smart Traveller 

Travel insurance for loss of luggage and documents

You can end up significantly out of pocket if your luggage is stolen or lost overseas, and if you don’t have travel insurance, you will be responsible for replacing these items. This includes losing important documents like passports and ID, as well as expensive software like laptops and iPads.

For example, Canstar’s research from our 2017 Travel Insurance Awards shows that the average cost in AUD of losing an iPad in America is $978. For a 10-day trip to the states, you would be covered in full for a replacement iPad by paying just $214 in premiums.

Many people think that they won’t need travel insurance for their belongings, but if you don’t have it, then you can’t be reimbursed for your losses and expenses. Travel insurance for a loss or theft of your stuff can give you peace of mind while you holiday it up, and even covers you against airline and hotel blunders, which happen all too frequently!

Be warned though: most providers won’t cover you if it can be proven that you left your luggage unattended…

Travel insurance for trip disruptions

There is so much that is out of your control when it comes to travel, and your flights, bus journeys and even your accommodation can be disrupted or outright cancelled due to a number of reasons, such as weather, terrorism (which we’ll cover later), an illness or death in your family, or other unforeseen events.

The ability to claim cancellation refunds from pre-paid flights, accommodation and tours could mean the difference between being able to afford to re-book later on or missing out on your holiday completely. The majority of travel insurance providers will cover you for incidents such as these that are out of your control, so you don’t have to pay out of your own pocket if something goes wrong.

According to Smart Traveller, 165,658 (24%) Australians over the past year have suffered an insurable event without having travel insurance, and 7% of these experienced a cancelled flight or tour.

Travel insurance for terrorism

Unfortunately, terrorism is looking like must-have inclusion for travelling in today’s climate, particularly to country’s such as France, England and Indonesia, where there are high risks of terrorism. Canstar user data shows that terrorism is the most searched for inclusion on our comparison tables, with 37% of people looking for policies that offer it. For comparison, the next most desirable inclusion is for motorcycle cover at 20%.

A good terrorism cover policy should provide reimbursement for your or your family if you are injured or killed during a terrorist attack overseas or if you are forced to cancel your trip in advance due to terrorist activity. See our comparison table below for a snapshot of current travel insurance policies featuring terrorism cover. Please note that this table is formulated based on a couple under 70 years of age who are seeking cover for a trip to the USA. This table is sorted by star rating (highest first) with links direct to the providers website.

Given that there has been a nine-fold increase in the threat of a terrorist attack worldwide since 2000, you would be wise to seek out a policy that covers you, should the worst happen.

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Case study:

Dan and Sylvia had planned a visit to relatives in location?. At the time they made their travel plans, there were no reports of terror attacks–all was quiet.

However, as their travel dates got closer, several terrorist attacks were carried out in northern Spain, and they became worried. Their relatives were safe, but Dan and Sylvia didn’t feel comfortable with the risk, so they checked their travel insurance plan.

Terrorism was included as a covered reason for pre-trip cancellations if the event occurred within 30 days of their scheduled trip departure. After thinking it through carefully, they decided to cancel their trip and try another year.

Source: travelinsurancereview.net 

Travel insurance for ‘extreme’ activities

Aussies are adrenaline junkies by nature, and our Canstar database shows that a huge percentage of people visiting our travel insurance comparison pages are seeking cover for sport or vehicle activities, such as water sports, snow sports, rock climbing and riding a motorbike or scooter.

Many of these activities are not covered by default, but you’ll find that most policies will offer inclusions for these extracurricular hobbies if you plan on partaking in them. So, if you want to hit the slopes in Japan and do some skiing or snowboarding, then make sure you check with your provider.

Case study:

Alex was taking part in the annual Running of the Bulls event in Pamplona, Spain, but was gored in the back after falling under a bull. After emergency surgery, Alex spent three weeks in hospital and due to the injury to his lung, was not allowed to fly home for a further four months.

Alex’s hospital bill alone came to $32,000. Alex had travel insurance, but hadn’t told his insurer he would be taking part in the Running of the Bulls, so none of his medical bills or costs from his extended stay in Europe were covered by his policy.

Source: Smart Traveller  

Is travel insurance cheap?

This is a subjective question, but when you look at the cost of flights, accommodation and living expenses, you’ll generally find that travel insurance doesn’t cost all that much. And given that some unforeseen events can end up costing thousands of dollars, travel insurance looks like pocket change in comparison.

The infographic below shows what you can expect to pay for travel insurance in various countries, based on your destination and traveller’s profile. This information is based on research from Canstar’s 2017 Travel Insurance Awards.

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Travel insurance traps to lookout for

Travel insurance is a necessity when travelling, but that doesn’t mean you’re likely to find a policy that covers you for absolutely everything. There is a host of common exclusions that pull people up, so it’s crucial to know what you aren’t covered for, as well as what you are.

Some of the common exclusions include:

  • Pre-existing health issues: Don’t be tempted to lie or ‘forget’ about a health problem for fear of being knocked back for travel insurance. ‘Fess up and face it or you run the risk of ending up in so much debt you’ll never holiday again.
  • High-value belongings: Expensive belongings such as laptops or jewellery may not be covered unless you tell your insurer that you’re bringing it with you.
  • Illegal behaviour: This may include breaking any government prohibition or regulation, including visa requirements.
  • Behaviour under the influence of drugs or alcohol
  • Driving a motorbike without a helmet

Fortunately, travel insurance is not very expensive, and the market for travel insurance is extremely competitive, meaning you’re in no short supply of providers to choose from – Canstar researches and rates over 250!

No two providers are the same, so make sure you shop around to find one that suits your needs. A lot of policies are flexible, and you can find policies that meet any special circumstances you have as long as you are upfront with potential providers and are willing to pay a little extra.

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