Aeroplane wing

Add-on travel insurance

When you book a flight or holiday, travel websites from Air New Zealand to Webjet tout the convenience of buying their travel insurance at the same time. However, we found these products can cost more and offer less cover than policies sold separately.

For a one-week trip to Australia and a two-week holiday to Japan, we compared travel insurance policies offered by seven booking websites: Air New Zealand, BudgetAir, Expedia, Mix and Match, Travelgenio, Tripsta and Webjet.

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Minimal cover

When we booked our flights to Australia, Webjet offered its Plan E travel insurance for $37 so we could “travel with peace of mind”. However, the cover with this policy is minimal. You can only claim up to $1000 (minus $100 excess) if you need to cancel the trip or if you lose your luggage (see our Table).

The policy doesn’t provide cover for medical expenses or costs you might incur as a result of travel delays. This cover is included in Webjet’s separate comprehensive travel insurance policy, but we weren’t offered this option when we booked.

Travelgenio and Tripsta also offered products that wouldn’t cover you for medical costs or flight delays. The companies don’t promote their products as travel insurance, calling them “guarantees” or “protection”. But they cost about double the price of other policies and gave little bang for your buck.

Despite these shortcomings, Travelgenio’s website is persistent. If you don’t opt in to its guarantee, a pop-up box urges you to reconsider, asserting “you won’t be able to get your ticket price back if you can no longer travel”. But this isn’t true if you purchase comprehensive travel insurance, which covers you (under certain conditions) if you have to cancel your holiday unexpectedly.

Unpackaged deals

On the Air New Zealand, Expedia, Mix and Match, and Webjet websites, you can either book your travel insurance at the same time as your flights (the “add-on” price) or as a separate purchase.

You might expect the add-on price to be lower, as you are buying a package deal, but this wasn’t the case with Webjet and Mix and Match.

To entice customers, travel websites often tout cheaper fares than the airlines. Charging premium rates for travel insurance is one way they make up this price difference.

When booking our flights to Japan, Webjet offered its comprehensive insurance for $123.93 extra. But purchase the company’s cover without flights and it costs just $96.20 (same destination and dates).

When we booked flights to Australia with Mix and Match, we could opt in for a $49 insurance package covering the week-long trip. But go to another part of the Mix and Match site to arrange insurance separately and you’ll pay just $36 – plus the cover’s better.

Mix and Match says its two insurance policies – add-on and stand-alone – have different rules and coverage, and “strongly recommends” customers read these before purchase.

Air New Zealand charged a few dollars less when we bought our travel insurance as part of a package deal with flights. However, the add-on cover wasn’t as comprehensive.

The airline’s stand-alone policy pays up to $5000 if your trip is unexpectedly delayed, but its add-on insurance restricted this to $1000.

Not all websites do this – it was slightly cheaper to buy the same travel cover when booking a flight through Expedia. Across the seven websites, Expedia’s travel insurance was the least expensive, though it did have the highest excess.

Buying direct

Outside of travel websites, we were able to find better prices.

We compared the costs and cover offered by three separate insurers – 1Cover, Southern Cross and State – for our two holidays.

Of all packages, Southern Cross was the cheapest option for our Japan itinerary – and offered the most generous cover for medical emergencies and travel delays. It was less than half the cost of Air New Zealand’s and Mix and Match’s policies.

Southern Cross also offered the cheapest deal for our trans-Tasman trip, at $35 for the week. Purchased separately, Mix and Match’s insurance was $1 more and had similar cover.

Cancellation cop out

If you or a family member gets sick or hurt before your holiday, it’s reassuring to know you’re protected if you need to cancel or postpone.

But in a comparison of 16 providers’ comprehensive policies, we found they did not all cover you automatically. You’ll need to pay extra with Cover-More insurance, including policies sold by Flight Centre, State and Westpac.

To get up to $50,000 of cancellation cover (Southern Cross and 1Cover standard limit), it’ll cost a whopping $505 more with Cover-More and Flight Centre; $426 extra via State; and an additional $332 through Westpac. If you’re 60 or over, you could pay even more.

Cover-More says you’ll get better cover for the extra expense. For example, the company covers cancellations if an extended family member, such as an aunt or brother-in-law falls ill. Other insurers restrict this to immediate family.

The company says most people’s holidays cost less than $50,000. However, we think there’s a risk travellers could underestimate the level of cover they’ll need. Last-minute travel rearrangements don’t come cheap.

Cover-More says $5000 of cancellation cover will cost between $39 and $59 extra – an add-on bringing the total bill to about double that of Southern Cross in our survey.

You may choose to go with a policy where cancellation cover is standard, rather than guessing how much you’ll need – and it is necessary. According to Mix and Match, about a third of travel insurance claims are made before a traveller leaves the country.

Company vs. licensed insurer

Both Travelgenio’s and Tripsta’s guarantees are provided by the company, rather than a licensed insurer. We searched their terms and conditions to see if they belonged to an independent disputes scheme that you could complain to if you disagreed with how these companies handled your claim. There wasn’t one, so the company’s call is final.

Access to independent disputes resolution is a benefit of choosing travel insurance backed by a licensed insurer. The other travel websites’ policies are provided by Allianz (Expedia, Mix and Match and Webjet), AIG (BudgetAir) or Zurich (Air New Zealand).

Claims disputes can be heard by the disputes resolution service to which the companies belong.

Our advice

  • Buying insurance as part of a travel package can be the priciest option. If you’re offered travel insurance while booking a flight online, get a few quotes from other insurers before signing up. It could save you big bucks. Be sure to compare the level of cover too – and always check pre-departure cancellation and amendment costs are included.
  • If you go with another insurer, arrange insurance on the day you make your first booking. That way you’re covered if circumstances change and you need to alter your travel plans (though you’ll need to note any policy exclusions). If the ease of ticking a box when you book is too hard to resist, at least check the policy provides comprehensive cover.
  • Read the terms and conditions thoroughly, and be sure to declare all pre-existing medical conditions to the insurer. Print out a copy of the policy and emergency contact details to take with you.
  • Photograph your luggage (especially the valuables) before you go on holiday. If you make a large purchase overseas, check with your insurer that it will be covered.

Policies compared

Travel websites - restricted cover

Company Booking method Policy name Price - Australia ($) Price - Japan ($) Excess ($) Maximum cancellation cover ($) Maximum medical expenses cover ($) Maximum travel delay cover ($) Maximum lost luggage cover ($)
Travelgenio Add-on Cancellation Plus 75.41 130.14 0 85% of airline ticketA NA NA NA
Tripsta Add-on MoneyBack and Lost Luggage Compensation Guarantees 60.61 117.92 0 Airline ticketB NA NA 1350
Webjet Add-on Plan E Trip Cancellation and Luggage Protection 37.32 NA 100 1000 NA NA 1000

Travel websites - comprehensive cover

Company Booking method Policy name Price - Australia ($) Price - Japan ($) Excess ($) Maximum cancellation cover ($) Maximum medical expenses cover ($) Maximum travel delay cover ($) Maximum lost luggage cover ($)
Air New Zealand Add-on Travel and Medical Cover 50 193 50 (Australia); 100 (Japan) 20,000 Unlimited 1000 10,000
Air New Zealand Separate purchase International Comprehensive Single Trip 51 198 100 Unlimited Unlimited 5000 25,000
BudgetAir Add-on Gold Travel and Cancellation 99 130 100 15,000 Unlimited 1500 8000
Expedia Add-on Essentials C Cancellation & Protection 37 118 250 5000 5,000,000 1000 1500
Expedia Separate purchase Essentials C Cancellation & Protection 53 121 250 5000 5,000,000 1000 1500
Mix and Match Add-on Plan A Essentials Plus Comprehensive 49 178 150 10,000 Unlimited 300 5000
Mix and Match Separate purchase Comprehensive 36 175 100 Unlimited Unlimited 15,000 30,000
Webjet Add-on Comprehensive NA 123.93 100 Unlimited Unlimited 2000 5000
Webjet Separate purchase Comprehensive 47.31 96.20 100 Unlimited Unlimited 2000 5000

Separate insurers

Company Booking method Policy name Price - Australia ($) Price - Japan ($) Excess ($) Maximum cancellation cover ($) Maximum medical expenses cover ($) Maximum travel delay cover ($) Maximum lost luggage cover ($)
1Cover Buy direct Comprehensive 46.12 103.70 100 50,000 Unlimited 1000 15,000
Southern Cross Travel Insurance Buy direct TravelCare Single Journey 35 84.11 100 50,000 Unlimited 30,000 25,000
State Insurance Buy direct International Plan I 38 165 100 0C Unlimited 2000 25,000

GUIDE TO THE TABLE All information based on a single traveller. BOOKING METHOD Add-on indicates the travel insurance package offered to customers as an opt-in extra as they booked their flights. EXCESS may not apply to all claims. A Travelgenio’s Cancellation Plus policy says it will refund you 85% of the cost of your purchased flight if you cancel for any reason. BTripsta’s MoneyBack Guarantee says it will compensate you if you need to cancel the purchased flight only if an illness or injury affects you or a family member. Ccancellation cover can be purchased as an additional extra. NA = not applicable. Webjet offered comprehensive travel insurance as part of the Japan flight booking and restricted travel insurance as part of the Australia flight booking. Australia itinerary based on a seven-day trip in July and Japan a 16-day trip in October. As Flight Centre does not advertise its travel insurance to customers booking flights, it was not included in our price check.

By Olivia Wannan
Investigative Writer