Adequate Travel Cover May Not Be On The Cards

Sun Herald

Sunday July 4, 2004

Lisa Bachelor

Assume nothing when it comes to insurance, writes Lisa Bachelor.

Q DO I need to take out separate travel insurance if I am already covered by my credit card? If so, how do I get the cheapest travel insurance policy with the best cover?

A Choosing a travel insurance policy might not be the most enjoyable aspect of booking a holiday, but it is one of the most important.

The Department of Foreign Affairs and Trade (DFAT) handles more than 20,000 cases a year involving Australians in difficulty overseas. This includes more than 700 hospitalisations, 600 deaths and 100 evacuations to another location for medical purposes. Unfortunately, not all the people involved in those cases had travel insurance, meaning that, in many cases, the cost to them was incredibly high.

Medical costs, in particular, can be very expensive. While you might think of taking out travel insurance to cover your luggage, 30 per cent of claims are medical-related but only 20 per cent are luggage-related, according to the Insurance Council of Australia.

DFAT said that daily hospitalisation costs in South-East Asia regularly exceeded $800, while the cost of medical evacuations from the United States ranged usually from $75,000 to $95,000, and sometimes up to $300,000.

Many credit cards offer some form of travel insurance as part of the package, saving you time and money on buying a separate policy.

While lots of cards offer adequate cover, however, it is still important to check the wording of the policy before you travel. Some cards only offer what's known as travel accident insurance. This will cover you if you are injured during a flight, for example, but not if you break a leg on the ski slopes.

A recent survey by Choice, the magazine of the Australian Consumers' Association, highlighted the problem.

"We're concerned that some people may confuse this cover with a normal travel insurance policy and find themselves not covered if they fall ill, have an accident or get robbed during their holiday," a spokesman for the magazine said.

Other cards, especially gold and platinum ones, often offer more comprehensive cover. But they are unlikely to cover you for an existing medical condition and may not offer adequate cover for medical expenses in the US. The Consumers' Association found that American Express Platinum did not score well for travel to the US and Europe because of cover limitations and restrictions.

The policy covers the first $1 million of medical costs in the US, but the Consumers' Association recommends unlimited medical cover given that a medical evacuation can cost up to $300,000.

You also need to check the conditions of use for any policy taken out with your card.

It is a condition of many cards that you pay for all, or part of the cost, of your holiday with the card for the insurance to be valid.

NAB Gold, for example, requires that at least 50 per cent of travel costs are paid for on the card, while the ANZ Gold card requires that a minimum of $250 of travel costs be put on the card.

If you do find that you need to take out a separate insurance policy, there are certain things worth looking for beyond the cheapest price.

A good policy should cover you if you need to cancel for unexpected reasons, such as the death of a close family member.

If you are carrying expensive items make sure your policy covers any loss or damage to them. Don't rely on cover from the airlines, as this can be minimal. But, if you are a backpacker and your luggage is worth next to nothing, you might be able to reduce your premium by looking for a policy tailored to you.

If you are going to be, or even think you might be, engaging in any extreme sports such as bungee jumping, scuba diving or rock climbing make sure these are covered.

Do you have any existing medical conditions? If you do, you need to look particularly carefully. Most standard insurance policies will not pay out if you suffer any expense as a result of this condition. Some insurers, however, will cover certain conditions on payment of a premium.

FINDING THE BEST INSURANCE

It is worthwhile spending a little time shopping around and the Consumers' Association recommends checking the wording and cost of at least three policies before you buy.

Websites such as www.travelinsurance.com.au will search the policies of a small number of lenders for you allowing you to compare cover and price. Alternatively, the Consumers' Association has a comprehensive policy database which picks out the best policies to suit your criteria and ranks them for you. It is available to subscribers only at www.choice.com.au.

You can also sometimes save money buying online, so if you do get a quote over the telephone check to see if this is any cheaper on the company's website before paying.

© 2004 Sun Herald

Back to News Index | Back to Home