Travel insurance

You can buy travel insurance online or over the phone from travel agents, banks, and individual insurers. There are common questions you’ll encounter when taking out an insurance policy.

Where are you going?

Insurers ask about your destination as the chances of you making a claim (or the cost of claims) are greater in some countries. When shopping for policies, you may discover some insurers lump destinations together in regions such as the Pacific, Europe and “Worldwide”. You may need worldwide cover if you’re stopping off in multiple regions or travelling to certain countries (often the US and Canada).

How long are you going for?

The duration of your journey is a major factor in how much your insurance costs. The longer you’re away, the more you’ll pay. Most of your policy’s benefits, such as cover for your belongings, are triggered on the day you depart. But cover for your prepaid expenses begins when your policy is issued. So it pays to take out insurance as soon as you’ve booked your trip.

How old are you?

Older travellers are charged a higher price as the likelihood of making a claim increases with age. Some insurers require older travellers to complete a medical assessment; others won’t cover travellers over a certain age. “Dependent children” (the definition varies depending on your policy) may be covered for free when they travel with an insured adult.

Do you want a high or low excess?

If you make a claim, you may have to contribute some money towards covering your loss. This is called the excess. A typical excess is $100. Some insurers let you increase your excess in exchange for a lower premium or vice versa.

What are you going to do on your trip?

Insurers won’t necessarily cover your participation in sports events or adventure activities such as rock climbing. Some charge extra to cover ski trips. Check your policy to ensure your pursuit is covered. Claims relating to mopeds or motorcycles may also be rejected if the bike has an engine over a certain capacity – often 200cc – or you don’t have a helmet, or valid motorcycle licence for the country in which you’re travelling.

Do you have any pre-existing medical conditions?

A pre-existing condition is a health issue you had before taking out insurance. By default, most policies won’t cover a pre-existing condition or any associated problems. For example, a traveller with diabetes may not be covered for a heart attack, as the conditions are related. There are exceptions – some insurers have a list of conditions in their policies that are automatically covered. For a higher premium, they may also be willing to cover your condition. You'll have to update your insurer if your health changes (even for minor matters, such as your doctor switching your medication) after buying insurance.

Note: It’s important to tell your insurer about any medical conditions you have when you arrange insurance – and any ailments that develop before your departure. This information is important to insurers, even if you’re willing to forego cover for the ailment. You also have a duty to disclose other factors that might influence either an insurer’s decision to cover you or the terms of your cover. For instance, you should tell your insurer about insurance claims you’ve made in the past (including claims that were declined).

Pre-existing conditions

A pre-existing condition is a health issue you suffered before taking out insurance. Typically, insurers won’t cover pre-existing illnesses or injuries (or any problems linked to them) unless you clear it with them first. Some policies, such as Tower’s Cover4Travel, won’t cover any pre-existing conditions at all.

Some insurers had a list of conditions – such as coeliac disease, epilepsy and hypertension – that they automatically covered provided everything’s well controlled (for instance, you haven’t required hospital treatment in the past year). Even if your condition’s not on the list, you might be able to get cover if you pay extra. If cover for your pre-existing condition is available, don’t travel without it. A massive overseas medical bill isn’t the souvenir you want to bring home.

Departure date

Out of the 15 insurers in our survey, Southern Cross charge a higher premium if you book months in advance compared to just before departure. The further ahead you purchase a policy, the higher the chance of you cancelling or postponing your trip.

Activities

Insurers won’t necessarily cover your participation in adventure activities, such as scuba diving and rock climbing. Some charge extra to cover ski or snowboarding trips. When you’re booking, check the policy to see which pursuits are automatically covered, which you must pay extra for and which are always excluded.

Valuable items

All the policies we looked at cap cover for individual items. Although you may have paid $5000 for a top-of-the-range laptop, your insurer may only fork over its maximum of $1500 if the device goes walkabout. You can usually upgrade your cover for individual items, but you’ll pay extra for the privilege.

Excess

If you make a claim, you’ll normally have to contribute some money towards covering your loss. This is called the excess. If you’re happy to cover the small losses yourself, some insurers allow you to increase the excess in exchange for a lower premium. Others let you choose a lower (or $0) excess, but you’ll pay more.

Policy type

You’ll usually choose between comprehensive or budget travel insurance. Comprehensive policies are more expensive, but have higher limits and often provide cover in circumstances where budget policies won’t pick up the cheque.

Six of the 15 insurers we surveyed also offer multi-trip policies, which cover all overseas trips within a year (provided each journey doesn’t exceed a certain length). These policies cost more initially, but are worth considering if you have a busy year of travel planned.

Destination

In some countries, the chances of you making a claim – and the cost of claims – are greater. Some insurers group countries into three regions: Australia and the Pacific Islands; Worldwide – low claim (excluding places such as Antarctica, Belgium, Canada, China, Denmark, Finland, France, Germany, Greece, Iceland, Italy, Japan, Netherlands, Norway, Portugal, Singapore, Spain, Sweden, Switzerland and the US) and Worldwide – high claim (including those places).

You need to inform your insurer of all the countries you’re intending to visit, even if it’s just for a brief stopover. If you forget to do so while booking or extend your travel plans, give your insurer a ring.

Insurers sell different policy options, such as comprehensive or budget cover. Some premium credit cards also come with built-in travel insurance. So which should you choose?

Comprehensive vs budget travel insurance

Most insurers offer comprehensive and budget travel insurance. Comprehensive policies are more expensive, but they have higher cover limits and provide cover in circumstances where budget policies don’t. If you can only afford a budget policy, make sure it covers medical expenses and personal liability (in case you accidentally injure someone or damage something). Here’s how one insurer’s comprehensive policy compares with its basic policy.

Single- vs multi-trip travel insurance

Most travellers heading overseas will be well served by a single-trip policy. But if you’ve got multiple trips planned in the year ahead, you may save money with a multi-trip policy. These provide cover for unlimited trips within a 12-month period. Drawbacks? Each trip is restricted to a maximum period – for instance, 60 days.

Credit card travel insurance

Some premium credit cards (think gold or platinum) have built-in travel insurance. Credit card travel insurance has similar benefits and limitations to comprehensive policies. There are additional fish-hooks to watch for:

• You must activate credit card travel insurance before departing. Each provider has different activation requirements. You may need to use your card to pay for your flights or a percentage of your trip’s expenses. You won’t be covered if you don’t meet these requirements.
• Your card’s insurance only covers your trip up to a maximum length – for example, 40 days. Most insurers will extend the period of cover for a fee. If you book travel well in advance, be aware some cards only cover you for a maximum of six months before you depart.
  
• Credit card insurance policies tend to exclude pre-existing medical conditions by default – unlike some comprehensive policies, which list automatically covered conditions. However, the insurer may agree to cover your health conditions if you complete a health assessment and pay an additional amount.
• You may have to pay a higher excess when making a claim. Where most other policies have an excess of $100, credit card policies often have a fixed excess of $200 or more.

Medical expenses

If you’re injured or fall sick, travel insurance covers the cost of treatment at a doctor’s clinic or hospital overseas. If the medical adviser determines you’re too sick to continue your trip, your insurer can help organise and pay for you to get home.

Comprehensive policies provide benefits on top of basic medical care. These include:

• Costs for transporting you to the hospital, via ambulance or airlift.
• Additional accommodation and travel expenses if you’re told to rest before continuing your trip.
• A small daily allowance for extras, such as phone calls and magazines, if you’re laid up in hospital.
• Airfares and/or accommodation expenses for a companion to travel to you (or remain with you) if you’re in really bad shape. If the worst happens, your policy should cover reasonable expenses associated with returning your remains to New Zealand or cremating you overseas.

You may not be covered if:

• You're taken to a private hospital instead of a public one (so check your policy).
• Your injury or illness was caused by a medical condition you suffered from before you travelled (see Common questions).
• You injure yourself while drunk or on drugs.
• You wait until you’re back in New Zealand to treat an injury or illness suffered on your trip (unless that's what your insurer advises).
• You suffer a complication late in your pregnancy, which requires you to cancel your trip or seek overseas medical treatment.
• The purpose of your trip is getting medical or dental treatment (“medical tourism”).

Dental care

Most travel insurance policies only provide limited cover for dental care. Some basic policies don’t cover dental care at all. Cover is usually restricted to repairs or pain relief for previously healthy teeth. Don’t expect compensation if you need treatment for a lost filling or toothache caused by chronic decay.

Belongings

Travel insurance covers your belongings up to a limit. Some comprehensive policies pay as little as $5000 whereas others pay up to $50,000 if all your luggage goes missing.

If an item is lost, stolen or damaged, your insurer can usually choose to replace it, repair it or pay you its value in cash. You may not receive the item’s original purchase price as insurers often factor in depreciation when settling a claim.

As well as luggage, your policy may provide limited compensation if your credit card is used fraudulently or your passport goes walkabout.

There are lower limits for individual items. For instance, your laptop may only be covered up to a maximum of $2000, even if it cost you $3000.

Some policies also cover:

• Cash if you’re pickpocketed.
• Emergency purchases, such as a toothbrush and a change of clothes, if your bags are delayed beyond a certain point.

You may not be covered if:

• You leave your luggage unattended in a public place, such as an airport terminal or hotel lobby.
• You stow valuable items, such as jewellery, in the cargo hold of a plane, train, bus or ship.
• You store luggage overnight in your rental car or fail to lock it in a secure compartment, such as the car’s boot.

Valuable items: When taking out insurance, you can ask your insurer to increase the cover limit for valuable items, such as jewellery or camera equipment, in exchange for a higher premium.

Bookings

Most comprehensive policies provide built-in cover for non-refundable travel and accommodation costs if you have to cancel or cut short your trip due to an unforeseen event (such as illness). You won’t be covered if you cancel just because you’ve changed your mind.

Travel insurance can also help if you miss a connecting flight due to an unavoidable delay. Comprehensive policies cover alternative transport to get you to your destination – and most will pay extra to get you to a special event (such as a wedding) on time. What’s more, they provide allowances for extra costs such as accommodation if your trip is interrupted beyond a certain point.

You may not be covered if:

• You fail to check in at the scheduled departure time or obtain the necessary visas for your trip.
• You knew of a specific risk that might cause your journey to be cancelled, abandoned or shortened before you took out cover.
• Your tour is cancelled because not enough people signed up.
• Your transport or tour provider goes bankrupt.

Travel advice: Before you book your trip, check out the latest travel advice for your destination at the Ministry of Foreign Affairs and Trade’s website safetravel.govt.nz. Your insurer won’t cover you if the Ministry has advised against travelling to the destination. When you take out a policy, check if the insurer has placed any limits on cover due to events such as a natural disaster or an act of terrorism in the country you’re visiting.

Personal liability

Comprehensive policies provide cover if you become liable for damages or legal expenses incurred while overseas. Cover limits for personal liability range from $500,000 up to $5 million.

But your travel insurer won’t cover your legal liability if you crash a vehicle into someone or something. This applies to all motorised vehicles.

If you’re renting a vehicle, you’ll be relying on the insurance offered by the rental company. It pays to check you have cover before you drive off, rather than assume it’s automatically included in the rental costs.

Your personal liability may not be covered if:

• You recklessly or purposefully cause damage (for instance, while you’re drunk).
• You’re being made to pay an enforced fine rather than compensation.

Rental vehicle excess cover: Some travel insurers include cover for rental vehicle excess within their policies. The excess is the amount the rental company charges if you make a claim. As the excess can run into thousands of dollars, the rental company will give you the option of reducing it for a fee. You don’t have to pay this fee if the excess is already covered by your travel insurance.

Note: Planning to use Airbnb for accommodation? Check your travel insurer gives you the same protections for temporary rentals, such as Airbnb or HomeAway, as it does for a hotel room. Typically, travel insurance will cover you for any damage you cause to a hotel, up to a limit of between $500,000 and $5 million. However, while some insurers treat all temporary accommodation similarly, other insurers make an exception for peer-to-peer rentals. Under Airbnb's terms, guests are legally responsible for all damage caused to the host's home, even if the host has home and contents insurance. If you want to be sure you're protected, speak to your insurer.

Case studies

Bicycle accident in Germany
Liz and John were cycling from Copenhagen to Barcelona on a six-week tour. But in Oelde, Germany, disaster struck. Liz took a spill, breaking her shoulder, elbow and pelvis. "It was just a silly little accident, really. I fell awkwardly. On another day, I might've walked away."

When the ambulance arrived, the medical crew wanted to know if Liz could afford treatment before taking her to hospital. John called the insurer, which promptly agreed to cover the costs.

At hospital, Liz had an operation to put a plate in her elbow. Liz's insurer rang every day to check on her progress. After two weeks, Liz was fit enough to leave hospital, but she had to spend another two weeks recuperating with relatives in the Netherlands before she could fly home. Liz estimates the insurer paid more than $25,000 to cover medical bills and business class airfares. It also reimbursed Liz and John for other expenses, such as the unused portion of their tour.

Scooter crash in Thailand
Paul (PJ) was on a two-week holiday in Thailand. Like many travellers, he rented a scooter to get around Phuket. But disaster struck. Despite wearing a helmet, PJ suffered serious head injuries in a crash. He was rushed to a local hospital.

While PJ had various insurance policies back home, he hadn’t taken out travel insurance for his trip. PJ’s brother Joe says “for the sake of a $150 travel insurance policy, PJ was left hanging”. The family paid $50,000 to airlift PJ from the basic hospital in Phuket to a high-care facility in Bangkok. He was admitted for an indefinite period at a cost of about $6000 per day.

Faced with mounting medical bills, the family created a Givealittle page to collect donations. They received more than $170,000 from 1700 donors. Thankfully, PJ stabilised after about four weeks. The family used the donations to cover PJ’s expenses, including the cost of hospital admission and a medical escort for the flight home. Joe says PJ is recovering well.

Broken vertebra before departure
Robert and his wife were planning a trip to the US. They'd booked flights, hotels, tickets to a show and a Mississippi River cruise. But a month before their departure, it all turned to custard. Robert didn't realise he had osteoporosis – until he fractured a vertebra while simultaneously coughing and twisting to fetch a folder from his desk.

Thankfully, Robert had already activated the travel insurance bundled with his credit card. The insurer would cover the couple's non-refundable expenses, provided Robert could prove he had no history of osteoporosis before arranging insurance. "The claim forms were comprehensive," Robert says. "They required my GP to complete some sections and provide my medical history."

Robert contacted the online travel agent, cruise line and show venue to request refunds. While some companies reimbursed the couple all or part of their costs, they were still about $12,000 out of pocket. So Robert filed the claim form and, a few days later, the insurer approved the claim, less a $250 excess. "It was a happy ending to an unfortunate situation," Robert says. "We missed out on the trip of a lifetime, but at least it wasn’t thousands of dollars down the drain.”

The cost of your premium is based on the likelihood you’ll make a claim – factors include the duration of your trip and your age. Other key determinants are below.

Tip: You can sometimes get a discount, typically 5-20%, if you already have other business with an insurer. There’s usually a prompt on the website as you make your booking.

Tip: Southern Cross travel insurance used to offer up to $50,000 of cover if you were forced to cancel your trip, but the default is now $2500. You’ll have to pay extra to increase this limit. Similarly, Cover-More, Flight Centre and Westpac policies by default don’t have any pre-departure cancellation cover unless you select it while booking – and pay an additional premium.