The big problem with your travel insurance

Many people assume it’s easy to buy travel insurance and leave it until the last minute before they go on holiday to get their cover. But when claim time comes, it pays to have put some forethought into the right sort of cover you need.

Travel insurance is one of those products about which most people think they can take a DIY approach. However, many Kiwi travellers experience a loss during an overseas trip that should be covered by a policy – yet only a fraction successfully make a claim. When you consider the average claim paid out by an insurer is $455, it’s worth ensuring the right cover is in place before taking a trip. Below are  four main issues people can face with travel insurance.

Voiding insurance by undertaking a risky activity

Due to the carefree nature people tend to adopt on holidays, many travellers don't consider the risky activity they're participating in could void their insurance policy. More than 80 per cent of people aged under 30 participate in risky behaviour when visiting South East Asia, compared to 70 per cent of 30 to 49 year olds, and 40 per cent of those who are over 50s. For example, 25 per cent of travellers participated in water sports, yet more than half did not know for certain whether they were covered. Worse, travellers sometimes don’t appreciate cover may not be extended if the policy holder engages in an activity that may be considered to have contributed to the insurance event. For instance in this example, a tourist suffered a brain haemorrhage in Bali, yet the insurer refused to pay out the claim as traces of alcohol were found in his blood.

Pre-existing medical conditions

Failing to declare a pre-existing medical condition to insurers can be another issue when it comes to getting the right travel insurance. In fact, between 16 per cent and 19 per cent of travellers either fail to declare their medical issue or don't bother checking to see if their travel insurance could cover it. Those who are least likely to check include female travellers (24 per cent) and those aged 30 to 49 (30 per cent). This is exactly what happened to one young woman living in Bali who failed to disclose to her insurer that she overcame melanoma in her 20s. When it was discovered years later she had brain tumours, her insurer declined to cover the cost of her expensive medical bills and her urgent return home, deeming her current diagnosis a pre-existing condition.

“While it might seem like a good idea to take out the cheapest option to cover the bare basics, that money you think you're saving could cost you a lot more in the long run if you face a medical emergency or serious theft”

Inadequate insurance cover

Many Kiwi travellers expose themselves to the risk of underinsurance. The main product disclosure statement (PDS) features travellers don't bother to consider, or think they don't have time to read, include exclusions (69 per cent), the amount of excess to be paid (64 per cent) and the terms and conditions (60 per cent).

Additionally, two in three travellers don't bother to research their chosen insurer's reputation, which can make a difference when it comes to claims being either accepted or denied.

It's critical that you consider cover for the appropriate level of risk to which you could be exposed. 

While it might seem like a good idea to take out the cheapest option to cover the bare basics, that money you think you're saving could cost you a lot more in the long run if you face either a medical emergency or serious theft. 

Don't purchase the wrong type of travel insurance for your needs

If you're heading overseas for a bit of well-deserved time off, Steadfast brokers in NZ  offer discounted travel insurance options with reputable insurers or you can arrange with the insurer online.