How to get the best holiday insurance

bina brown

Everyone wants to save a buck on travel costs, and travel insurance is no exception. Platinum credit card holders may get the best money saving deal through free cover, but they may pay for it later if they make a claim.

Review all your options

Discount sites such as Travel Insurance Direct or Insure and Go have a range of options where you basically pay for what you choose. That means making decisions about what may happen before you go and while you are away.

The most expensive insurance is through your travel agent, but there may be some peace of mind in knowing they may help with any claim processing.

On the face of it, there are no major differences between what’s on offer to cardholders and those who go direct or through the travel agent. Comprehensive policies generally all cover the same thing from medical and dental expenses to lost luggage and accidental death.

But underneath the gloss of the insurance brochure there could be differences that matter.

For example, cheaper policies may exclude cancellation cover (which gives you protection if an unforeseen event prevents you from travelling), benefits paid for any days you are in hospital up to a certain limit, and the cost of replacing a lost or stolen passport.

The amount paid for any lost or stolen luggage will almost certainly be lower.

Within the lost luggage allowance, there will be sub-limits on some items such as laptops and cameras, with the amount varying from $2000 to $4000 an item depending on the policy.

Read the fine print

John Price, the lead ombudsman in general insurance with the Financial Ombudsman Service, says unattended luggage is one of three main areas where disputes regularly occur.

Other key areas of dispute are pre-existing medical conditions and proving loss or theft.

Unattended luggage can mean luggage left unsupervised in a public place, but it can also mean luggage left in an unattended, locked car. It depends how the policy reads and the detail it gives.

Disputes are known to occur over luggage stolen at an airport or taken while getting into a taxi, even with a police report.

Exceptions may exist in some policies for unattended luggage.

One policy highlights an exception where “the items were taken from a locked boot or locked concealed luggage compartment of a station wagon, hatchback, van or motor home between sunrise and sunset local time and there is evidence of damage or forced entry which is confirmed by a police report”.

This suggests that had the item been taken at night, there would be no cover.

Excess baggage

Like most insurance, there is an excess deducted from any successful claim. One way to reduce the premium is to reduce the excess.

In the case of insurance offered by Flight Centre, which is underwritten by Munich RE, policies can be adjusted between no excess to $100 and $250 with the premium rising as the excess is reduced.

Travel Insurance Direct, which is underwritten by Lloyds, increases the premium on a policy covering Asia by $25 if the excess is reduced from $100 to zero.

The excess on the insurance attached to a credit card is not as flexible and tends to be at the higher end. The insurance policy offered through the ANZ Frequent Flyer Visa Platinum card, for example, has a policy excess of nil for some items like lost travel documents but $200 for medical expense or luggage claims. Amex platinum card holders pay $250 excess for some items.

Price says when relying on travel insurance that is a benefit of a credit card, it is important to understand what activates the insurance cover so you know if you are covered.

One condition will be that you use the relevant credit card to buy the pre-booked transport, but the amount of expenditure may vary from $250 to the entire cost.

He says it is important to be aware that you’re a third party beneficiary to the insurance, with the contract being between the bank or credit card provider and the underwriter.

One area where credit card travel insurance does offer flexibility is location.

Unlike regular travel insurance where you nominate a region of travel, you can move around the world and be covered.

“Make sure you get a copy of the wording from your bank or credit provider and understand the cover, to ensure it meets your needs before you book your travel,’’ he says.

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