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Travel Insurance Explained Before Your First Overseas Trip
Travel insurance pays for some things that go wrong overseas, up to the limits in the policy and after an excess you pay yourself. The Product Disclosure Statement sets out exactly what's covered, so read it for your own trip before you buy, and declare your health conditions and plans upfront.
By MarnixPublished Sources
The flights are booked, and somewhere between choosing a seat and paying, you were offered travel insurance. On a first trip overseas it's hard to tell what that box actually buys, or whether a card in your wallet already covers it.
Medical care is a key reason to take out a policy. Most countries charge Australians full price for treatment, and the Australian Government can't pay the bill for you. The rest of a policy, from a stolen bag to a cancelled flight, is worth understanding before you need it.
The policy document is the one that counts
Every policy comes with a Product Disclosure Statement, or PDS. It's the full document behind the price: what's covered, what isn't, how the insurer defines its words, how claims work and what help you get in an emergency. What you're covered for is set there, not in the summary beside the buy button.
Your own trip gives you a place to start in a long PDS. Check those benefits, then the general exclusions, definitions and claim conditions that apply to them. Meet Maya, a made-up 23-year-old planning three weeks in Thailand and Vietnam with a stopover in Singapore.
The countries matter because a policy only covers the places it names, and stopovers count. A single-trip policy covers set dates. An annual policy covers several trips in a year and becomes a yearly cost to plan for, but it can cap how long each trip lasts.
Look up the travel advice for each destination too. If the advice for a place is "Do not travel", a policy usually won't cover you there. Check whether you'd be covered for cancelling if the advice changes after you've booked.
Check what you might already have
Some credit cards include travel insurance, but it usually only applies once you've paid for part of the trip with that card, such as the return flights, and it may cover only the cardholder. Confirm with the bank how it's activated, and read its PDS like any other policy. Clova, our budgeting app, shows all your accounts from every bank in one view, so it's quick to check which card the flights actually went on.
Medicare doesn't travel with you, apart from a limited exception. Australia has reciprocal health care agreements with 11 countries, including New Zealand, the UK and Ireland, which give some urgent care, usually with a co-payment. They aren't a substitute for insurance and they don't cover a medical evacuation.
Tell the insurer about your health and your plans
When you buy, you may need to tell the insurer about any physical or mental health condition you already have. The insurer then decides whether to cover it, charge more for it or leave it out. Get that answer in writing before you rely on it. Declaring everything upfront matters, because a condition you didn't declare is rarely covered and leaving things out can void the policy.
Activities work the same way. Plenty of ordinary holiday plans, like skiing, scuba diving or riding a motorbike, sit outside a standard policy unless you pay for extra cover. Scooter cover needs a careful check. Riding without the right licence or without a helmet can count as breaking the law, and a claim from that moment is likely to be refused.
How you behave on the day counts as well. An insurer can decline a claim for something the policy covers, like a broken leg, if you were drunk, affected by drugs or doing something illegal when it happened. Belongings left unattended are rarely covered either, and each insurer defines "unattended" in its own way.
Know what you'd still pay yourself
The premium is what the policy costs to buy, and it belongs in your holiday budget alongside the flights. The excess is the amount you pay towards a claim yourself, and each benefit also has a limit, the most the policy pays for it, often with a lower limit for any single item.
Say Maya's bag is stolen and the insurer accepts $900 of loss, within all its limits. Her policy has a $200 excess.
Made-up claim, inside every limit, with one excess.
The PDS says how often the excess applies, so check it rather than assuming it's charged once per trip. If you're travelling light, compare it with what you're carrying. On many policies the excess is more than the belongings you'd ever claim for, and some let you pay more upfront for a lower one.
Budget for the excess as part of the trip and save it like any other goal, kept apart from the money you're travelling on.
If something goes wrong on the trip
Before you leave, save the policy number, the insurer's emergency assistance number and a copy of the PDS somewhere you can reach without an internet connection. Hospitals in some countries won't treat you until they see insurance details or payment. Photograph your expensive items and note their serial numbers, which helps prove they're yours.
If something does happen, get help first, then contact the insurer as soon as it's safe. Register the claim quickly, because some insurers want to hear about an incident within 24 hours. A claim usually needs:
- proof of travel, like flight and hotel bookings
- a doctor's report if you were sick or hurt
- a police report for anything stolen, or if you were the victim of a crime
- receipts or valuations showing what a lost item cost
Tell the insurer plainly what happened and include any refund an airline or hotel has already given you. Keep the claim number and every written decision. Some costs will still fall outside the policy, so travel with some emergency money you can reach from anywhere.
You don't need to know insurance inside out to travel well. An evening with the PDS, matched against your own trip, means you'll know what happens if the bag goes missing, and you can get back to planning the parts you're looking forward to.
A note from us
A good trip includes knowing what a bad day would cost you. Clova can build the excess up as a savings goal from each pay, so it's ready before you'd ever need to claim.