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Travel insurance

Travel insurance is different from health and life insurance because it usually offers a specific type of protection during travels.

The Australian government highly recommends purchasing travel insurance, especially for those who are considering a trip abroad, so much so that it considers it of equal importance to owning a passport.

Here we discuss why travellers should seriously consider taking out travel insurance cover for trips away from home, whether it be for business or pleasure.

Why it’s important to have travel insurance

The last thing any traveller wants to experience is a huge financial setback arising from unfortunate events, but these setbacks and unfortunate events can happen to anyone. Fortunately, travel insurance offers protection from some unexpected circumstances that tourists may experience.

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Theft, accidents, medical emergencies, natural disasters, lost or misdirected baggage, missed or delayed flights and emergency cancellations are common circumstances that happen to domestic and international travellers.

Some countries charge higher for medical and emergency services and Medicare does not cover Australians in foreign territories. The only option for an uninsured Australian in a foreign country is to cover expenses on their own.

However, those who opted to pay for travel insurance can have a worry-free holiday. A travel insurance policy can be an effective financial safety net.

How to select travel insurance

Travel insurance policies can be purchased on a long-term or per-trip basis, for domestic or international trips, and typically covers five different benefits.

Frequent travellers can opt for long-term travel insurance with a multi-trip coverage to ensure that all their travels are covered under one premium. Those who don’t always travel can simply purchase coverage for the duration of their trip from their travel or insurance agency or from the airlines during the booking process.

When selecting a travel insurance, consider both the destination(s) and types of activities in the itinerary for an appropriate coverage.

If in doubt, discuss activities in the itinerary and the coverage options with an insurance agent.

Some credit cards also offer travel insurance to cardholders. Make sure to understand how the insurance works and contact the card issuer to activate the policy prior to departure.

What does travel insurance cover?

Circumstances that travel insurance protects against depends on the needs of the traveller.

  • Accidents, medical emergencies and evacuation
  • Personal liability
  • Baggage and personal belongings
  • Travel cancellations
  • Coming home early and resuming travel

Accidents, medical emergencies and evacuation
Accidents and medical emergencies are always a possibility.

Travel insurance can include dental and medical cover as long as it is an emergency, as well as certain emergency procedures such as surgery due to accidents. There’s also cover for dismemberment and death, including flying the insured back to Australia and/or flying their relatives to the country where the insured is confined.

This also applies in case of death due to an accident or a serious medical condition.

Personal liability
In some cases, the insured could be held responsible for accidentally inflicting physical harm or damaging property. Travel insurance can also cover the insured for expenses in relation to the incident which they are held responsible for.

Baggage and personal belongings
Some travellers have experienced waiting for their checked-in luggage at the destination airport only to find out their belongings have either been lost, left behind or are in another part of the world.

Having travel insurance will provide the insured with financial assistance up to a certain amount if their baggage still has not arrived within a certain waiting period. Depending on the insurance, waiting periods may run up to 12 hours.

This can also include coverage for damaged electronic equipment or financial assistance for the loss of travel documents.

Travel cancellations
If the flight is cancelled by the operator or carrier due to bad weather, operational issues, natural disaster or any reason outside the policyholder’s control, travel insurance can cover additional expenses for the extended stay or rebooking.

Likewise, if the insured cancels their flight due to a sudden illness or hospitalisation prior to the trip, the insurance can cover cancellation costs.

Coming home early and resuming travel
If for any valid reason, the insured needs to cut your trip short and go home, travel insurance can cover expenses incurred for coming home early. It also covers expenses to resume the travel while the policy is still active.

How do travel insurance claims work

Most insurance companies have a hotline or online facilities for travel insurance claims for better accessibility.

The company’s website or policy’s product disclosure statement (PDS) usually provides information on how to make a claim and how long a case is assessed before the insured receives a response. However, it is best to provide all the necessary documents, reports and receipts relating to the incident to ensure a smooth process.

Generally, insurance claims follow the process below:

  1. Call, email or contact the insurance company and state your intention to make a claim
    Some companies are proactive when it comes to addressing the needs of its clients while abroad. If this is not the case, a policyholder needs to contact the company as soon as possible because of the time limit in making a claim (e.g., within 60, 90 or 120 days upon arrival).

  2. Answer questions with regard to the incident in your claim
    The insurance company needs to understand the claim to determine if the policyholder is truly insured against the incident. Answering some basic questions about the incident would help the company identify coverage and benefits.

    It is important to understand that purchasing a travel insurance policy doesn’t automatically mean that all expenses are covered or will be refunded. The insurance company still has to assess whether a claim is valid depending on what happened and the policyholder’s role in the incident.

  3. Provide the necessary documents (in most cases, the company will give a list)
    Provide all necessary documents to validate a claim as soon as a claim is made. The usual documents required are proof of travel, medical or police report (depending on the claim) and proof of ownership, purchase and valuation (receipts, etc.)

  4. Review your claim and submit
    Review your claim to ensure accuracy. If everything is in order, submit the claim and give the company some time to finish the assessment.

  5. Follow-up and/or complain
    If the agent or company is taking too much time with their assessment, is unresponsive or unfairly rejected a claim, policyholders can submit a written complaint to the company’s internal dispute resolution department.

    If the company’s decision after the complaint is still unacceptable, policyholders may file a complaint to the Financial Ombudsman Service (FOS) or seek legal advice.

A final word of advice

Travel insurance can protect from many unfortunate and unforeseen events, but it is still important to exercise caution when travelling overseas.

 

This information has been sourced from ASIC’s Moneysmart and Investopedia.

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