What does travel insurance cover?

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2 November 2018 The travel insurance industry
by Craig Morrison

Overseas travel policies generally include several types of travel insurance cover - the most important of which is medical and emergency evacuation cover. While rare, and you may think that "it never happens to me!", bad luck and catastrophes do happen while on holiday.

For the cost of a travel insurance policy, you can protect against having to refinance your house or borrow from your family and friends, to pay an overseas hospital bill. In other words, you can protect yourself from potential financial ruin by simply buying a travel insurance policy.

Unfortunately it can happen to you – it can happen to anyone, just ask our team. Two out of six of us have been significantly affected by a close relative falling unexpectedly ill or being injured overseas, and we can tell you – it does make a difference if you have travel insurance cover!

    

Emergency medical and evacuation cover is the most important. But how bad can it be?

Let’s say you are badly injured in a car accident overseas. By the time the hospital bill is paid, your tickets have been upgraded to business class, and you’ve got a doctor or nurse escort to care for you during the long flight home, the costs will likely exceed $100,000. For serious injuries in the USA needing a hospital stay of a week or more, the hospital bill alone will easily be more than $100,000.

If you need an air ambulance home, even just from Fiji or Bali, the cost will be around $80,000 if not more. When it comes to medical evacuations, there’s no “2 for 1 deals” or “cheap Tuesday-evacs”.

Compared with the other types of cover within a travel insurance policy, it is the medical and evacuation cover to bring you home that is most important. In over 18 years in the industry, trust me, I’ve seen it happen way too often. In some countries, the hospital will retain your passport until the outstanding bills are paid!

“We didn’t buy travel insurance; can we just pay you the $150 premium now so you can pay our $300,000 overseas hospital bill?”

Yes, believe it or not I’ve been asked by people if they can buy a policy after they’ve had something bad happen to cover it. That’s not the way insurance works. You need to buy your insurance policy before you know you’ll need it.

How pre-existing conditions affect your medical cover.

Complicating medical cover is what we call “pre-existing conditions” or PECs. This is an often misunderstood and complex part of travel insurance. But at Holiday Rescue, we’ve simplified it for our customers with a few simple questions. We want everyone insured with us to have 100% certainty of what they are (or are not) covered for when it comes to their health and any medical conditions while on holiday.

In our online application we ask you some questions about your health, and if any of the answers are ‘yes’, in most cases, you can declare your conditions. If we can cover them, you’ll need to pay a small additional premium to cover them.

A doctor's stethoscope. Always declare pre-existing conditions for your travel insurance cover.
Always declare any pre-existing conditions when you buy travel insurance.

    

Warning: beware policies that don’t let you declare pre-existing conditions.

Watch out for policies that say “pre-existing conditions are not covered” and don’t offer a way to declare them. If you have a medical problem overseas related to any illness (i.e. not an accident), then your insurance company will delay cover for your problem until they’ve investigated your health history, including checking all your medical records with your GP. Delaying your treatment when you’re waiting for help is frustrating and can affect your recovery! It is one of the biggest complaints in the industry. So buy from a specialist travel insurance provider that requires you to declare your pre-existing conditions, so you know what you’re covered for. Never try to save money by ‘opting out’ of paying a bit extra to have your medical conditions covered – it’s NOT worth the risk!

    

Second-most important travel insurance cover is holiday cancellation or changes.

After medical cover, the second most important part of a travel insurance policy is cancellation cover. When you pay any non-refundable deposits, you should protect yourself against losing them if something were to prevent you from travelling – like breaking your leg or a hurricane that sweeps away your holiday destination.

Natural disaster causing flooding can disupt holiday plans, make sure you have good travel insurance cover.
Your travel insurance should offer you protection from natural disasters swamping your holiday plans.

        

Most common mistake: waiting too long to buy travel insurance!

A high quality travel insurance policy will cover your lost deposits if an unexpected event happens. You should buy it as soon as there is a non-refundable deposit to protect! That way if you can’t travel, you’re insured against losing your non-refundable deposits. Even a 3 day, 2 night trip to Australia is worth protecting, it can cost you $1,000 in airfares and another $500-1,000 in hotel bookings, all of which may be non-refundable. And the travel insurance premium is very inexpensive by comparison.

The above are the two most important parts of a travel insurance policy; most claims that come in relate to one or both of these types of cover.

    

Other types of cover you should look for in a travel insurance policy.

Personal items and luggage travel insurance cover.

If your bags are lost, stolen, or delayed, there is often some level of cover, but a lot depends on the circumstances of the loss. Was it the airline’s fault? Can you prove you owned it? Have you got receipts for anything? Was the loss truly unexpected? Leaving a bag unattended these days, anywhere in public, you risk not only losing your bag, but also getting arrested. Read the terms of your policy carefully if you expect cover for leaving your stuff behind. With our comprehensive policy, we cover your stuff if it’s stolen, but not if you forget it, lose it or drop it – and we cover some but not all jewellery.

Warning sign for pickpocket gangs.
Be sure to take precautions to protect your things from pickpockets as well!

       

When we do cover it, we’ll pay what it originally cost you – no matter how old it is.

Many insurers depreciate the amount paid out on a property claim. In other words, if you lost a smartphone, and you paid $1,000 for it four years ago, you may only get 25% of that back, because it wasn’t new when you lost it. And if the excess is $200 (pretty standard on many travel insurance policies), you may only get $50 back for your smartphone.

On the other hand, as long as your claim is approved, Holiday Rescue pays what you originally paid for the item, up to the maximum limits on your policy. Why? Because that seems fair to us.

If you travel with expensive stuff…

Some policies will let you ‘specify’ high value items, like jewellery, cameras, and watches. To do this, you need a current valuation and original receipts – you also need to pay more. When we designed our policies, we discussed this in detail. As our policies have been created to cater for holidays, we looked at what we actually take with us when we go on holiday with our partners and families. Interestingly, we found we don’t take much in the way of expensive items with us. After all when you’re going on holiday to relax and explore, why would you want to take your brand new laptop or heirloom jewellery – just to get sand in them?

If your ‘stuff’ is very important to you, carefully read the policy wording on property claims, what is and isn’t covered. We recommend travelling light; leave your valuables at home.

     

Travel insurance cover for cash and credit cards.

Generally policies have low cover levels and limit claims for lost cash, for obvious fraud-prevention reasons. You will at least need a police report to document the event resulting in the lost cash.

     

Cover for passports and travel documents.

Most policies cover the costs of getting a new passport or temporary travel documents issued. A lot depends on what country you are in, and whether there is a consulate nearby – so always check the policy wording.

      

Rental car excess cover with your travel insurance.

If you rent a car and it gets damaged, many travel insurance policies will cover your ‘excess’ on the vehicle for between $2,000 – $5,000. Check their excess is within your cover, and if so you can decline the daily insurance cover offered by the rental car company. Did you know they make more margin on their daily insurance fees than they do renting the car in the first place? That’s why they’re often so insistent you take it.

Quality travel insurance cover includes rental car insurance excess.
Hiring a car on holiday? Make sure your rental car insurance excess is covered by your travel insurance policy.

     

Then, if there is damage to the car, your travel insurance policy will reimburse you the costs to repair the damage up to the excess charged by the car company, (that’s why it’s worth checking your travel insurance policy cover is enough to meet their high excess fees). For your claim to be successful if the car was damaged while driving, you usually need to both be listed as a driver, and named on the travel insurance policy.

 

Travel insurance with personal liability cover.

While there are almost never any claims on this section, the limits are really high, usually $1 million or more, up to $2.5 or even $5 million. However it’s not necessarily the complete cover it seems to be when you first look at it. For instance, there’s no cover for liability if you’re driving a vehicle of any nature. There’s also no cover if you’re a rock star and trash your hotel room while high!

Little boy makes a mess with blue paint. Make sure you're covered in case your toddler gets up to mischief with personal liability included with your travel insurance cover.
Because you can’t always control what your toddler does…personal liability can be a great addition to your travel insurance policy.

    

One claim I recall was a small fire in a ski chalet in France, where an insured traveller left some clothes too close to a wood-burning stove, and part of the cabin burned. Where it may also come in handy, is if your kid spills a bottle of red wine and stains a hotel carpet, then the policy may cover this.

   

What matters most!

Remember, you won’t lose your house because your bag got stolen (or you left it behind!). Likewise, losing some cash and dings in your rental car are pretty minor inconveniences (and costs), when compared with the potentially catastrophic costs of an overseas medical problem that results in your being hospitalised.

Cover for emergency medical treatment and medical evacuation home are the most important types of cover you need in a travel insurance policy. Making sure you buy from a trusted provider that specialises in emergency assistance with a well-established network around the globe should be your highest priority.


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