Should I Take Out Travel Insurance?

When going on holiday, there are a lot of details to work out, including where you'll stay, how you'll get there, what activities you'll participate in, and more.

Travel insurance seems like an annoying expense that takes an additional chunk out of your holiday money without really delivering anything in return. This may be true, if you don't have cause to use it. However, if you do run into a problem, whether major or minor, and need to use your policy benefits, you'll find that the premium expense was nothing compared to the value of the assistance you'll receive.


What does travel insurance cover?

While policies vary from one company to the next, a good travel insurance policy will cover:

  • Medical expenses, including dental, hospitalisation, and medical evacuation back to Australia. Most policies offer unlimited cover with a small excess. If you're going to be participating in hazardous activities such as shark cage diving, heli-skiing and others, make sure you have coverage before something goes wrong. Many travel policies limit the cover for dangerous sports.
  • Personal belongings/luggage, to replace what your travel carrier might lose, or what may be stolen.
  • Replacement of cash and travel documents in the event of loss or theft.
  • Cancellation, to get your money back if you have to cancel a non-refundable trip.
  • Death, disability, and dismemberment cover, which is a minor payout, but better than nothing.
  • Legal expenses, in case you get into trouble.
  • Personal liability, usually offering cover of several million dollars.

When you purchase travel insurance, you can generally choose from three location coverage options. One usually covers Australia and New Zealand, though some companies also include Bali and the South Pacific islands. The second option is typically worldwide cover except for travel in the countries of Japan, Canada, and the United States. This is more expensive than the Australia region option, but the most expensive premium pays for the third option: worldwide cover including all countries.

Do I really need travel insurance where I'm going?

If you're traveling overseas the potential for financial ruin in the case of an emergency can sometimes be simply too high to take the risk, unless you happen to have assets in the millions of dollars. For the average person, a major difficulty on holiday can be devastating, especially if the difficulty is medical in nature. Your health insurance will typically not pay for care outside of Australia.

Each year the Australian Department of Foreign Affairs and Trade must step in to help with more than 20,000 situations of illness, assault, theft, injury, hospitalisation or death of Australians traveling outside the country. While the department can help arrange assistance for you in these cases, it does not pay for the expenses. That is left to you.

How expensive can medical care on a holiday really be?

If you are hospitalised in a foreign country, your costs can easily run higher than $800 per day. Surgical intervention can cost tens of thousands of dollars. If you require a medical evacuation to bring you back home to Australia, the costs are astronomical, from $50,000 or more from Southeast Asian countries to well over $80,000 to be brought out of the United States. The government has documented cases of medical evacuation totaling $300,000. Can you and your family afford such expenses?

Now, if you're taking a holiday in Australia and have an accident, are injured, or need medical care for whatever reason, you'll have your own health insurance to take care of the expense. That doesn't mean travel insurance is useless to you. There are still all of the many non-medical benefits that can keep your holiday from turning into a disaster due to theft of your cash and personal documents, accidentally missing a departure, or legal expenses if you're involved in a scuffle.

I'm going for a month-long holiday. Isn't my travel insurance going to be four times as expensive as what I spent for my week-long cruise last year?

Travel insurance actually becomes a much better bargain when you buy longer coverage. Some companies charge the same amount for a two-week policy as for a one-week policy, with a full month at only a slightly higher premium. Here's a tip: if you know you have several shorter excursions planned over a six-month period, for example, take out a six month travel insurance policy rather than a one week policy for each individual trip. Your premium will be much lower and you'll be covered in the event of sudden trips that come up during that time.

One last thing to keep in mind is this: if you go to a country that does not have an Australian consulate, or if you are unable to reach the consulate, and something goes wrong, you are completely on your own. With travel insurance, the insurance company is there for you no matter where you go. It will help you get in contact with your consulate, your next of kin, and make sure you get whatever help you need without emptying your wallet. In the end, it is up to you to decude if the premiums are worth the peace of mind you'll enjoy on your holiday, knowing you will have help if you need it.

You can get a free travel insurance quote from 1 Cover Travel Insurance if you are an Australian looking for travel insurance. 1cover offers a wide range of injuries and illnesses covered in your policy and can cover you for multiple trips at a discount rate.

1Cover's free quote form is available here. You are able to receive an online quote all in the matter of minutes.

Additional Reading:

3 Secrets To Getting The Right Travel Insurance

Why Insurance Is Important

10 Secrets to Saving Money When You Get Insurance