Many hesitate to add another expense to their travel budget and might justifiably question whether travel insurance is worth the while.

Nonetheless, travel insurance offers peace of mind if anything goes wrong. Some countries even require travellers to have travel insurance.

Pros of travel insurance

If you’re gravely ill or injured overseas, you’re liable for hospital bills and the cost of flying home if required. Sometimes, these costs can be between thousands and hundreds of thousands of dollars.

Travel insurance reduces any financial losses due to unforeseen health or travel misfortunes. Typically, travel insurance covers:

• Medical expenses and emergencies.
• 24/7 assistance with urgent issues including finding a doctor in a medical emergency, replacing a lost passport, booking emergency transportation home, leaving a dangerous situation etc… It’s important to keep the insurer’s 24-hour emergency assistance contact number handy.
• Protection against losses or theft, including luggage, depending on the policy.

Cons of travel insurance

Despite the reassurance it provides, travel insurance has its downsides.

• It can be expensive: the more a policy covers, the more it costs.
• It doesn’t completely cover every situation. Some circumstances may be excluded, including epidemics and pandemics, natural and weather disasters, booking errors, and personal items in your checked-in luggage.
• It may not cover pre-existing health conditions that could impact a trip. However, it may cover declared pre-existing conditions with travel clearance from a doctor. If you have a chronic condition, it may be excluded from your travel cover, but the insurer may cover you for other, unexpected events (such as catching the flu overseas).
• As with any insurance product, you pay for travel insurance whether you file a claim or not.

Research is key

Before you set off, think about what you might need from an insurance policy and what would happen if something went wrong overseas. Here are some other considerations.

• You might benefit from travel insurance if there are circumstances possibly preventing you from travelling, including children or elderly under your care.
• Review your risk tolerance as a traveller and whether you could afford to pay for any trip interruption costs.
• Some policies might not provide coverage for high-risk travel to destinations considered unsafe or high-risk activities like skydiving, abseiling, or riding a motorbike or moped. Visit the Australian Government’s Smartraveller website for updated travel advice.
• Some travel insurers may have restrictions for adventure sports and multi-night cruises, hence read the product disclosure statement thoroughly.
• Travel insurance may not be worthwhile if you’re booking domestic trips.
• Travel insurance should be purchased before your departure and comes into effect from the day of purchase, thus covering you for any trip cancellations prior to departure.
• Cover for valuable items like cameras or laptops mean a higher premium. Instead, you might want to look at worldwide portable valuables cover to your home insurance policy.
• Always check the excess you must pay if you file a claim.
• Some insurers require you to inform them of any incidents within 24 hours. Depending on the circumstances, you will need proof of travel, doctor’s or police report and valuations or proof of purchase for any items that were lost or stolen.
• Take your Medicare card with you on your travels, as some countries have reciprocal healthcare agreements with Australia.

The cost of travel insurance depends on your destination, age of travellers, your health and the number of people to be covered by the policy. Most insurers provide quotes on their website, making it easy to shop around.

Finally, always read the details in your policy before purchasing it.

Like every article on this website, this is not personal financial advice.