How to protect yourself financially for your next holiday
Taking out travel insurance – even in the crazy world of COVID – can deliver Aussies holidaying domestically more savings than the cost of the policy. Here’s how.
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Travel insurance was in the bad books of holiday-makers earlier this year when many discovered their policies didn’t cover them for COVID-related cancellations and costs.
But protecting yourself financially from unexpected travel problems remains important, especially as Aussies set their sights on exploring at home in the year ahead.
New research suggests Australians are now more likely to sign up for domestic travel cover than they have been before.
Research group Canstar’s study found while just 15 per cent of people had used travel insurance for domestic trips in the past five years, the coronavirus and bushfires have prompted 26 per cent to say they will sign up for cover next time they travel domestically.
However, 46 per cent say they won’t buy travel insurance for future holidays at home or overseas, putting them at risk of big bills if they suffer non-COVID cancellations, delays, theft, damage, car hire problems and other issues.
THE COSTS
Cover isn’t too expensive, with Canstar finding a seven-day domestic policy costs $55 for a single and $105 for a family, while a 14-day policy costs $68 and $133 respectively.
Read the policy before you travel. Pandemic cover was an exclusion in many policies long before COVID-19 existed, and travellers can themselves doing risky holiday activities that their insurance doesn’t cover.
Canstar’s group executive financial services, Steve Mickenbecker, says “people are a lot more educated now”.
“Insuring early is critical,” he says.
“You insure the minute you pay money for travel, before any event can become a known event – once it’s a known event you’re out of luck.”
COVID is now a known event so you can’t get cover, but some insurers offer policy refunds if the virus or border closures affects your planned travel.
Mickenbecker is concerned about a sharp drop in insurers offering travel cover and hopes it will turn around. “In August 2019 we assessed 84 providers – now only 28 of those providers are selling travel insurance,” he says.
CAR HIRE SAVINGS
Using travel insurance to cover rental car excesses can deliver huge savings.
“If you look at those excesses, they are something like $5000 and the amount of money they want to bring it back down to $500 is massive – it’s more than the car rental,” Mickenbecker says.
Comparetravelinsurance.com.au director Natalie Ball says rental car companies charge between $25 and $45 per day to reduce the standard excess liability.
“A lot of people don’t realise that purchasing domestic travel insurance is usually cheaper than paying for excess reduction directly through a hire car company,” she says.
“If you’re hiring a car for more than two days, a travel insurance policy can be a real cost saver.”
Ball says one of the most common reasons for cancellation is family emergencies.
“There are many reasons that trips are cancelled such as a traveller or family member becoming seriously ill or injured, redundancy, severe weather or natural disasters,” she says.
Make sure your personal belongings – including phones and laptops – are covered. “While airlines may be held accountable for luggage lost or damaged in transit, if the loss happens elsewhere, travel insurance could be the answer,” Ball says.
BEST POLICY, BEST PRICE
• Shop around and use comparison websites because premiums can vary dramatically.
• Research the exclusions and excesses of different policies.
• Make sure the holiday activities you plan to do are actually covered.
• Check limits for individual items, as some insurers may only pay $1000 per item.
• If you have several trips planned, consider an annual multi-trip policy that may be cheaper.
• Be honest when answering questions about existing medical conditions.
Source: Canstar, Comparetravelinsurnace.com.au