by “Worrying” results from a survey this month by Australian government website Smarttraveller show one in six Australians traveled without any insurance on their last overseas trip. Even those who had insurance may not have been sufficiently covered, as more than 80% of travelers did not correctly read their policy’s product disclosure statement (PDS), an essential step in understanding what is and is not covered.
In a statement, Insurance Council of Australia chief executive Andrew Hall said these results mean “Australians are putting themselves at risk” and that “personal responsibility plays an important role in their travel plans and is important Read the details of your policy. , so you know you are covered.”
Related: ‘Even the smallest town has electricity’: How to plan a road trip through the Australian outback in an electric vehicle
But insurers don’t always make it easy for consumers to understand their coverage. There are often differences between the front line payment numbers in travel insurance sales documents and the exceptions, exclusions, caps and other icebergs submerged in the fine print of a PDS.
The Australian Securities and Investments Commission (Asic) identified exactly this issue last year, when Allianz and AWP pleaded guilty to making false claims about travel insurance between 2016 and 2018.
So whether you’re purchasing a policy for your next trip or already have one, it’s essential to read the PDS before you leave, no matter how many pages of mind-numbing legal jargon it contains.
Why PDS is important
Calling and asking questions to a potential insurer may not help. While reporting this story, Guardian Australia contacted several travel insurance company call centers for clarification on payment guidelines. On multiple occasions, call center staff gave inaccurate answers that exaggerated likely payments while also stating that any advice was general in nature and that only the PDS would be legally binding.
The consumer advocacy group Choice recommends specifically checking:
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A PDS benefits table, which summarizes your coverage.
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The coverage section of the policy, which is divided into “what we will pay” and “what we will not pay.”
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General exclusions.
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Pre-existing conditions.
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The word definition table.
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The paperwork you need for claims
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The Covid coverage section, and;
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24-hour emergency assistance information.
Please note connecting flight times.
Two in five Australians have experienced flight delays or cancellations in the past 12 months, making delays and missed connections a likely scenario for most travelers.
If the flight cancellation or delay is caused by an airline, then you will have to go to that airline for any compensation. Airlines will usually offer to rebook you on a later flight or give you credit. Travel insurance customers can only make claims if the cancellation or delay was due to circumstances beyond the airline’s control, such as bad weather or strikes.
But many airlines don’t give reasons for cancellations or delays. In these cases, you must provide details of your request to the airline and offer your insurer a reasonable explanation as to why this information was not provided, which may be impossible or at least onerous.
Insurers also differ in how they cover airline delays that are not caused by the airlines. Cover-More, for example, does not cover missed connecting flights if the scheduled transit time is less than 90 minutes, even if the airline itself scheduled a closer connection. World2Cover will only consider claims for flight delays of more than six hours.
Related: I was not notified when my 9am flight time changed to 6am. Can I get compensation?
If flight delays or cancellations prevent you from boarding a cruise, prepaid flight, or multi-night tour, most travel insurance will cover additional transportation and accommodation costs to allow you to make your pre-booked connection or catch up on your itinerary. less what the travel provider covers.
Beware of Stolen Baggage Exclusions (and Minimize Your Risk)
Be sure to read the meaning of “unattended” in the definitions of words in the PDS, specifically as it relates to luggage stolen from cars, stored in the baggage area of a train, or checked in at an airport. Different insurers also have different item limits for laptops, cameras, smartphones and tablets.
It is worth examining luggage stolen from cars in detail if you are going on holiday by car. With most policies, luggage must be stolen from a locked trunk or hidden storage compartment during daylight hours, there must be forced entry into the car, and you must file a police report if you want any chance of getting a payment. So if a theft occurs from an unlocked car, luggage was in plain sight, or was left in a car overnight, you will not be covered.
There may also be additional limits on luggage stolen from cars. Cover-More, for example, reduces the payment for stolen luggage to $2,000 By vehicle, minus the chosen excess. With all other payments for stolen luggage, your per person The payment ranges from $5,000 to $25,000, depending on the level of coverage chosen.
Travel insurance has a much lower loss ratio (claim payout as a percentage of total premiums) than other types of insurance, such as car or home contents insurance. A review by the European Insurance and Occupational Pensions Authority found that for every €100 spent on travel insurance, total payouts averaged just €14. The loss ratio for auto or home insurance is generally 60 to 75%.
While this can be partly explained by higher administration costs, limited underwriting and a large pool of commission-earning sellers (think Flight Centre, Qantas and state automotive associations), limits and exclusions for the most likely worst-case scenarios. They are also a factor.
Be careful with pre-existing conditions
Generally speaking, it is best to declare your pre-existing conditions when purchasing travel insurance, but keep in mind that this could increase your premiums or even hurt your ability to obtain insurance for those conditions. You may still be able to get coverage for lost luggage, delayed or canceled flights, and other mishaps.
This is a complicated and confusing area not only for older travelers, who may have more medical conditions, but also for pregnant women. Insurance companies vary in the number of weeks allowed in their coverage for pregnant travelers. In general, let’s assume that they are dedicated to limiting payments.
Basically, any health problem you know about or have ever received treatment for can count as a pre-existing condition. These will not be covered by travel insurance unless you declare those conditions for evaluation or they appear on the list of dozens of pre-existing conditions (including high cholesterol, bunions, asthma, and type 1 and 2 diabetes) that most Insurance companies cover it under their general policies. However, be careful with all conditions and always read the PDS.
If, for example, you don’t declare that you have a heart stent and you have a heart attack while traveling, you won’t be covered.
Some travel insurance policies will not cover people over 80 years of age. Others charge higher premiums, higher deductibles and offer restricted terms to “senior” travelers, which in some cases can be defined as young people up to 50 years old.
Some travel insurance companies also adjust their prices and coverage based on the traveler’s destination. For example, there is some reluctance to cover people with some pre-existing conditions if they travel to the United States, due to the exorbitant medical costs there, as well as many countries with poor medical facilities.
Related: An Australian airline canceled our flight and we want a refund. Can we do something?
Policies also differ regarding mental illness. According to Choice, many travel insurers do not offer coverage for hospitalization, medication or trip loss caused by mental illness. Others will provide coverage if you declare a mental illness as a pre-existing condition and pay a higher premium. Insurers are unlikely to pay a mental health-related claim if it was undisclosed and pre-existing.
If you have to delay or change plans due to an immediate family member’s illness, expect similar gibberish if your medical problems were caused by a pre-existing condition. Be sure to also check the definition of “immediate family member.”
See a doctor if you catch Covid (and prepare to pay more)
Cover-More was the first Australian travel insurance company to offer Covid cover. Today, the company adds an additional $500 deductible for refunds made when a traveler contracts Covid-19.
World2Cover offers Covid cover only with its most expensive policy. It covers unlimited medical and hospital costs abroad, as well as $3,500 per adult for additional Covid-related expenses.
No insurance company will provide cover if the country or countries you are traveling to are on lockdown due to Covid, nor will they pay for travel delays due to general pandemics of any kind.
To file a claim you must provide proof of a Covid diagnosis, made by a qualified doctor; a positive rat test will not be enough.
Again, it all comes down to reading the insurance company’s PDS, asking lots of questions, and keeping a detailed record of the answers you receive, in case you have to dispute a claim later. Like all insurance, if you buy it, just hope you don’t have to use it.
Who are you going to call?
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Travel insurance offered through Cover-More is also distributed through Medibank, Commonwealth Bank, NRMA, Flight Center and Travel Associates and is underwritten by Zurich Insurance Group. They have call centers based in Australia and overseas.
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Travel insurance offered through World2Cover is also offered through state motor associations, except NRMA, and is underwritten by Tokio Marine & Nichido Fire Insurance Co. Their call centers are based in Australia.
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Travel insurance offered through Qantas is underwritten by AIG Australia. Qantas travel insurance call centers are based in Australia. AIG’s call centers are abroad.
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Travel insurance offered through Westpac, New Zealand and NAB credit cards are backed by Allianz. Allianz’s call center is abroad.
