Insurance: don't leave home without it

There’s nothing like fine print and legal language to put a dampener on a spontaneous adventure, but many argue that if you can’t afford travel insurance, you can’t afford to travel. They have a point, even though finding the best policy isn’t always easy. Travel insurance exists to protect a traveller’s investment in their journey and ensure they don’t lose out, and get medical help, if things go wrong. Whether you lose your luggage or have it stolen, get Delhi belly or tick-borne encephalitis, you need to know you can get help (without a stiff medical bill at the end of it). And that's where insurers come in.

Choosing a suitable policy will give you peace of mind. At best, it could save your life. So when considering which policy is right for you, it pays to look at the details.

What could it cost me to travel uninsured?

In the event of serious injury or illness, insurance payouts can run into hundreds of thousands of US dollars. An uninsured Australian injured in Alabama will end up at the mercy of the expensive American healthcare system. If you consider a Canadian bitten by a rabid dog in Rwanda or British backpacker needing an airlift out of the Himalaya, the benefits of travel insurance are clear.

High prices don’t always mean the best coverage. List what aspects of a policy are important to you. It’s pointless paying a premium to reduce car rental excess if you can’t drive, or covering your luggage when all you have is a backpack full of dirty socks and a dodgy mp3 player. Removing options or lessening limits often reduces the premium you pay.

What needs to be covered by my travel insurance?

We believe emergency medical coverage is most important. Insurance policies vary, so read the fine print carefully to see exactly what is covered. Certain pre-existing medical conditions that increase the likelihood of a claim may be excluded. If you have a heart condition or terminal illness, you may need to provide additional information before you can be offered a policy. Sporty people, off-piste skiers and bungee jumpers should check if their activities are covered. And injuries occurring during professional sports are generally not covered.

Insurance premiums are calculated based on your origin, age, destination and duration of travel, with the world divided into different zones. When travelling to countries like the USA, where health insurance is a multi-billion dollar industry, or to less developed countries with a lower standard of healthcare to which you’re accustomed, look for a policy with a high level of cover. Some providers will offer ‘unlimited’ medical coverage for a higher premium, while a cheaper policy might cover up to US$10 million. The highest claims paid globally run into millions of dollars, but are very unlikely to run into the tens of millions.

Other things to consider

Will a provider airlift you home? Do they have doctors on the staff of their emergency hotline? Will they pay to fly your family to you if you’re unable to be moved? Read the fine print and choose what suits your needs.

Reciprocal healthcare agreements

Some countries have reciprocal healthcare agreements with others, meaning that if you’re from a participating country and travelling in another, you’ll be entitled to free or subsidised public healthcare to the same standard enjoyed by residents. Participating countries include (but are not limited to) Australia, New Zealand, the UK and Ireland; Sweden, Norway and Finland; Italy and The Netherlands. Refer to your government’s traveller information homepage for details, noting that any reciprocal coverage will not be at the same level as facilitated by travel insurance. And if you're an EU citizen, don't forget to carry a European Health Insurance Card to entitle you to cut-price or free state-provided healthcare in EEA countries and Switzerland.

Are your belongings covered?

Next, confirm how your luggage is covered, particularly for theft or damage. Are there individual item limits? What are they? Are electronic devices included? Is theft from inside a car excluded? What if your iPod falls in the Trevi Fountain? If anything is unclear, phone your provider – insurers are legally obliged to unravel the fine print in simple terms.

Important inclusions for your policy

The other essential heavyweight inclusions to investigate are:

• Cancellation. You can often nominate the amount of coverage in the event that something prevents you from travelling - this should equal the full cost of your trip and any extras, but the higher the amount, the more expensive the policy becomes.

• Travel delay. Count on at least US$250 per day, and look for exclusions relating to strikes, natural disasters, war and terrorism. But don't expect to be showered with cash for a couple of hours spent sweating on a grounded aircraft: you are unlikely to be covered for delays less than 24 hours if it's the airline's fault.

• Airline and end supplier insolvency. If the people who took your money go bust, ensured you're covered by US$10,000 and then some. This is a relatively new addition to some policies, so you might have to shop around for this one.

• Personal liability. In case someone trips on your carelessly placed luggage, injures themselves and sues you for damages, you'll need to be covered. Look for policies that offer somewhere up to US$2 million in cover. Remember you are up for compensation of medical bills and ongoing treatment, not to mention any medical bills.

• Car rental. Travel insurance usually won’t cover the full cost if you’re in an accident in a rental car, even if it’s not your fault.  It can help with the excess (the amount you’re liable to pay), but you will need to take out the compulsory insurances provided by the car rental company too.  Look out for the excess and if you can reduce it (US$5,000), damage (US$50,000-plus) and liability (US$1 million) in the rental insurance and compare this with the limits and what’s covered under your travel insurance policy so you won’t be out of pocket. Something to keep in mind – the travel insurance cover for personal liability usually excludes motor vehicle usage, so make sure you’ve got the right cover with your car rental company for third party liability.

If accidents happen

When travelling, keep the emergency number close. If you need medical help, seek treatment urgently. If you can’t call for help, someone will find the number on your person so make sure you keep a copy of your Certificate of Insurance on you, just in case. If your situation is not medical in nature, it’s always best to phone the provider anyway, and they’ll advise their protocol.

Making a claim back home is generally straightforward - you’ll need to submit some forms, so keep receipts, get police reports, evidence - everything you can to support your claim. If the claim is investigated and accepted, you should normally be reimbursed within a few weeks. If not, an appeals process is always available.

With some careful investigation, travel insurance doesn’t need to cost the earth. Shop around, get insured, keep your details close at hand, and hopefully you'll never need them. But if you twist your ankle in a Barcelona ballroom or get bitten by a Bornean snake, you'll be very glad to be covered.

This article was first published in November 2011 and was republished in August 2013.