When do I need travel insurance?
Travel insurance coverage can minimize the considerable financial risks of traveling: accidents, illness, missed flights, cancelled tours, lost baggage, theft, terrorism, travel-company bankruptcies, emergency evacuation, and getting your body home if you die.
Travel insurance is typically made up of several different elements
- cover for medical costs - extremely important when travelling to places where a reciprocal health agreement doesn’t exist - especially the United States, where healthcare can be prohibitively expensive;
- repatriation - covers the cost of a flight home if you have to return home quickly due to an emergency;
- reimbursement for non-refundable travel and accommodation costs if you have to cancel the trip or return home early, due to an unforeseen event (e.g. illness);
- cover for the cost of replacing stolen or lost luggage;
- liability cover in case you cause injury to people and/or damage their property.
Most people buying travel insurance for an overseas holiday will get a policy that covers them for travel over specified period of time, until they return to New Zealand. If you are leaving New Zealand to live in another country, you will need a one-way travel insurance policy.
It pays to read the policy carefully so you can be sure what events are included or excluded, how much you can claim for different events, how much the excess is, and so on.
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Where can I get travel insurance from?
There are many ways of getting travel insurance:
- If you book your travel through a travel agent, the agent can usually arrange your travel insurance as well.
- Your existing vehicle or home insurer can probably offer you a travel insurance policy
- An insurance broker can provide advice and select a policy from a range of providers, based on your travel itinerary.
- Your credit card may provide you with travel insurance at no additional cost (see the next question).
- You can buy travel insurance online – some websites compare prices for similar types of cover from different providers
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How good is the travel insurance cover that comes with my credit card?
Some credit cards (normally those with “gold” or “platinum” in the name) provide travel insurance for no extra cost - usually you need to have used the card to pay a proportion of your travel costs (e.g. for your flights).
However you’ll need to check the policy document to make sure that you’ll have sufficient cover. For example, your credit card’s travel insurance policy may exclude claims resulting from pre-existing medical conditions, acts of terrorism, travelling to a location designated as ‘extreme risk’, or adventure activities.
You’ll also want to check the maximum travel period of your cover, whether there’s an excess on any claims you make, and whether it will cover any family members travelling with you.
You can read more about credit card travel insurance, along with a list of credit cards that offer this, on the CANSTAR website.
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What do I need to consider when choosing a travel insurance policy?
When you are deciding on which type of travel insurance to get, you need to consider:
- how many people are to be covered by the policy (e.g. is your whole family going, or just you?) , and the ages of the travellers (older travellers may be charged a higher premium and / or be asked to get a medical certificate);
- which countries you will visit (including whether there are safety concerns about them);
- how long you will be away (the cost of the insurance increases with the length of time covered by the policy);
- how much cover you want;
- what kinds of activities you expect to take part in while you are away (e.g. if you expect to participate in adventure activities like bungy-jumping);
- whether you expect to take expensive belongings with you, or buy expensive items while you are away;
- how much excess you are willing to pay if you have to make a claim, as you may be able to lower your premium by agreeing to a lower excess;
- whether you want to be able to claim on the costs of returning home early - or cancelling your trip, for example, if a family member becomes seriously ill or dies, or if you become ill in a country where you are not confident about the quality of the local health care;
- whether you or any other people to be covered by the policy have pre-existing medical conditions (a policy may automatically cover some pre-existing conditions, specifically exclude some pre-existing conditions or include cover for some pre-existing conditions but with a higher premium) - see How does my medical history affect my travel insurance?
Read the policy document carefully before choosing - don’t just rely on what the travel agent tells you about a particular policy - so that you know what you are covered for and what conditions are placed on the cover (for example, your policy may not cover you for property that is stolen while left unattended).
If you are travelling on a budget you might want to choose policy that gives you less cover but has a lower premium. At the minimum your insurance cover should include medical expenses and personal liability.
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How does my medical history affect my travel insurance?
When you apply for travel insurance, the insurer will ask for information about any pre-existing conditions, to assess the risk you present and decide whether to offer you cover for them.
Under the rules of Utmost Good Faith and Duty of Disclosure, you must tell your insurance company about any risks that may make you more likely to claim on your insurance policy. The insurer may decide to exclude cover for the pre-existing conditions, or offer cover with an additional premium.
This information is usually obtained in the form of a questionnaire asking you about your medical history, but may also include giving them access to your medical history or a full medical examination by a doctor of their choice. Each insurer will treat pre-existing conditions differently.
Also, you generally need to disclose conditions that develop after you apply for cover, but before departure.
If you do not tell your insurer about pre-existing medical conditions which could affect your health while you are travelling, and later make a claim, the claim is likely to be declined.
If your policy covers you for repatriation or cancellation of travel in case of emergency, you may be required to disclose information about any family illnesses which could increase the risk that you’ll have to cancel your trip or return home prematurely.
Read your policy carefully to determine what the insurer considers to be a pre-existing condition and how the policy treats pre-existing conditions.
For more information check this fact sheet from the Insurance & Financial Services Ombudsman.
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I put in a claim to my travel insurer but they won’t pay out. What can I do?
Start by reading your policy carefully to check whether your claim was valid. If you believe your travel insurer has not acted fairly regarding your claim, you can make a complaint using their complaints process.
If the dispute is not resolved this way, you can complain to the appropriate financial services disputes resolution scheme. Read more about this on our General Insurance Issues page.