When should you buy travel insurance?
Guest blog: Steve Mickenbecker, Canstar
It’s no secret Aussies love to travel. In fact, according to government statistics, there were more than 10 million departures from our shores last financial year. Yet something we don’t always get right is travel insurance.
The recent travel interruptions caused by the Mt Agung eruptions in Bali left many people out of pocket after their plans were impacted, highlighting the importance of considering travel insurance. On top of this, some travellers who had taken out insurance after the level four warning had been announced were not covered for anything related to the volcanic activity. If they had taken out insurance prior to the warning they would have had a greater chance of being covered.
A recent survey by the Australian Government found two-thirds of people who took out travel insurance were not covered or were not sure if they were covered for natural disasters, and 40% were not covered or were not sure if they were covered for flight cancellations.
I have spoken to a lot of people who don’t think about insurance until closer to their actual departure date. The problem with this is it leaves the window open for cancellations to impact not only travel plans, but also your back pocket.
Many people may not realise you will likely pay the same for your travel insurance policy, whether you buy it the day you leave or six months prior. The difference? The earlier you buy it, the more likely your travel plans will be covered for unexpected cancellations. Essentially, you could be getting extra coverage, free of charge.
So when should you take out travel insurance? To put it simply - as soon as you put any money towards your travel!
What could cause a cancellation?
There are a number of factors that could lead to your travel plans being cancelled. Most policies cover you for circumstances outside of your control, however you should check the Product Disclosure Statement prior to purchasing your travel insurance to understand what circumstances are included. Some common reasons for cancellations are:
- A natural disaster, such as a volcanic eruption, or extreme weather conditions, leading to a ‘no travel’ government warning
- You or a close family member unexpectedly falling ill close to the travel date
- You losing your job with no prior warning
- Your home or business being impacted by a fire, storm or flood in the 48 hours leading up to your departure
- Your educational course being cancelled (if this was the main reason for your travel)
You are unlikely to be covered for cancellation that arises as a result of terrorism, so ensure you check government warnings on Smartraveller.gov.au before booking flights and accommodation.
What is covered prior to travel?
This depends on your insurance policy. In general, most policies will cover the cost of transport (such as flights), hotels, activities and tours, visas, cruise, etc. You will need to contact your airline, cruise company or activity planner to discuss refunds first and the expense can only be claimed on insurance if it is strictly non-refundable. Some businesses, especially airlines, will offer the opportunity to change the dates of the booking instead.
You should always check for government warnings prior to booking travel as a level four or ‘no-travel’ warning could mean you cannot get insurance for your trip, including for cancellations outside of your control.
Remember, you can adjust your cover
By taking out travel insurance from the time you pay for your trip, you are likely covering yourself for unexpected cancellations. I often hear about people being put off getting their travel insurance until they have finalised all their plans to ensure they get the right cover in case their plans change. What you may not realise is you can adjust your cover after purchasing. This means you can take advantage of the cancellation cover and then update your policy to suit your needs (which could involve paying a little more or possibly receiving a partial refund) – so that’s like having your foreign specialty cake and eating it too.
Take time to do your homework
Recent statistics on the Smartraveller.gov.au website showed 33% of travellers admitted to choosing the cheapest travel insurance quote without much consideration, and 44% didn’t use a comparison site. There are a lot of people taking a gamble on their travel insurance without understanding what they are covered for – including whether they are covered for the countries they are travelling to (87% were not certain). By choosing instead to take out travel insurance earlier on in the process, you will likely have more time to compare the products available to you and find one that best suits your needs.
About Steve Mickenbecker
Steve Mickenbecker is the Group Executive Financial Services at Australia’s biggest financial comparison site, Canstar. He has decades of experience in the finance sector, is a wine connoisseur and loves to travel – with insurance.