Getting Value For Money From Travel Insurance
Sydney Morning Herald
Wednesday November 11, 1992
BUDGETING for an overseas trip invariably follows the same pattern. No sooner have you taken a final ghastly tally when additional amounts insidiously appear from nowhere. It's usually something obvious, such as travel insurance.
It is understandable, too. There is nothing rewarding about pouring over a handful of policies each with its own long dreary clauses offering protection against goodness knows what; stolen baggage, broken limbs, missed planes, vanishing hotels, smashed teeth. The list goes on and on.
These policies confound any attempt at comparisons, with their differences buried in seriously long sentences that march on endlessly in small print.
None of this, of course, helps you while you are recovering from the remorse and humiliation of having smashed your dear little ones' piggy banks to pay for the policy. Besides, as with most travellers, you've probably left it to the last minute and time is rapidly running out (punishment, no doubt, for not having used a travel agent in the first place).
So, where do you begin if you want "value for money" and the best available protection in travel insurance?
Leaving Australia without adequate cover is foolhardy. The slightest medical problem in the United States, dare I say it, can cost an arm and a leg. Hospitals there generally will not admit you unless you can demonstrate ability to pay, and that's where travel insurance is crucial.
All insurers have a 24-hour contact number which assists in medical emergencies and guarantees payment to overseas doctors and hospitals.
Seasoned travellers also will vouch for the fact that there is some unwritten law which says it's obligatory for your luggage to travel in a direction opposite to yours, at times vanishing altogether into some as-yet-undiscovered world populated with missing luggage.
So what do these policies cover?
They all offer a core of basic benefits: emergency medical and dental care, but often excluding pre-existing conditions; refund of deposit and cancellation charges if the trip is cancelled due to unforeseen circumstances; additional travel and accommodation expenses that unexpectedly arise and are beyond your control; loss of baggage; accidental death; personal liability; hijacking. Some include extra benefits such as disability cover.
If the promotional material on the front of the policy pamphlet leaves you with a warm glow, its lengthy exclusions and conditions inside will rapidly extinguish it. Many policies carry a "last resort" clause. If you are entitled to compensation from another fund or insurer (Medicare, health fund, carrier, tour operator) you are obliged to claim from them first and prove that you have.
This can be made a very tight condition, as with HCF which states "if any loss, damage or expense is recoverable from any other source, we shall not be liable to pay except in respect of any sum beyond the amount for which would be payable by such other source, whether paid or not paid". There are numerous variations on this in other insurers' policies.
So, it's best to know from the outset, that it's not all plain sailing given the many exclusions and conditions that apply (so much for getting away from it all).
As indicated previously, coming to grips with the content of the policy is not always easy since many are written in a convoluted way but the NRMA, AFTA and HCF at least make some attempt at simplifying the language.
If you have any doubt about what the insurer means, obtain clarification in writing. That's, of course, if there's time enough to do it.
As the table shows, premiums vary widely. The cheapest, the NRMA, charges$260 for a family for 31 days for top cover, while HCF, the most expensive, charges $378 for 32 days (or $342 for members, making it the same as Jetset and Thomas Cook).
However, since the benefit levels and benefits themselves vary so widely, going on price alone is unwise. Ultimately, you need to work out what your priorities are and decide which insurer offers the widest coverage for the benefit you want most.
For example, if medical cover is most important, make sure the cover is generous and that it doesn't take an overly harsh approach to "pre-existing conditions".
Many insurers, such as the NRMA, define "pre-existing" as a disease, ailment, physical defect or health problem for which medical, or dental, treatment was required two months before departure and/or which has been diagnosed by a medical or dental practitioner as ongoing but in remission. How long before departure the condition is viewed as "pre-existing" varies.
Others, such as Sun Alliance, Cover-More and Flight Centres apply a 90-day period.
But if you inform them of the condition and get a medical certificate showing you are fit to travel, most will insure you at an additional cost -$50 to $75 for single travellers and $100 to $150 for a family.
Most premiums and benefits depend on the duration of your holiday and the destination you are travelling to. Medical expenses are highest in the USA so you are best advised to take out top cover for that destination. All insurers offer unlimited medical expenses on their highest cover.
Insurers frequently offer several levels of insurance and recommend them for specific geographic regions: top cover - the Americans, Japan and sometimes Europe (Europe may be an intermediate level); middle cover - Asia; lowest cover - the Pacific region. AFTA, Qantas, Flight Centres and Cover-More have three levels; Jetset, HCF and Sun Alliance four; the NRMA and Thomas Cook have two levels.
As an example of how these different benefit limits work we can look at Jetset.
It highest level of cover, Policy A+, costs $341, and has unlimited cover for loss of deposit and cancellation fees, medical costs and additional expenses and is recommended for the Americas, Japan and Africa.
The three lower levels have smaller benefit amounts: $750,000 for Policy A(continental Europe and Scandinavia) - cost, $281; $250,000 for Policy B(Asia) - $239; and $125,000 for Policy C (Pacific) - $189. For loss of baggage the benefit is $17,500, $9,000, $6,500 and $4,500 respectively.
Sun Alliance organises its benefits differently from the others. Although it has four different premiums for four different geographic areas it offers the same amount of cover. The premiums are $317 (USA, Canada and Japan); $286(Europe and the rest of the world); $245 (Asia, including China) and $198(Pacific including Bali).
Medical expenses, cancellation fees and additional expenses are unlimited, while loss of baggage is covered up to $10,000 everywhere (so if you lose your baggage in the Pacific and have lots of expensive things you are better off with Sun Alliance than anyone else in this survey).
Most family premiums cost about double single cover. Significantly, more insurers now allow a single parent with dependent children under 21 to pay a single premium but automatically cover the children as well. This represents a big saving, especially for sole parents. HCF extends this benefit to include grandparents.
Those that offer the benefit are HCF, Jetset, Qantas, Thomas Cook, Cover-More and Flight Centres. The last two allow for only two children.
MEDICAL EXPENSES
These include ambulance, medical, emergency dental, surgical, hospital, nursing home and pharmaceutical costs up to the limit specified in the policy
Not covered is suicide, depression, anxiety, sexually transmitted diseases, AIDS, AIDS-related conditions, the effects of alcohol or drugs, travelling against medical advice, travelling for the purpose of medical treatment.
Most policies include a cash allowance of about $50 a day if you are in hospital longer than 48 hours.
Your insurance also will cover you for emergency repatriation back to Australia and cover your pre-paid costs (transport, accommodation and tour bookings) for any unused portion of your holiday. This is especially valuable for tourists on package tours paid in advance.
Nearly all insurers cover the additional expense of a relative or friend flying out to help you during your illness and escort you home providing it is on the recommendation of a doctor.
PREGNANCY
Many policies will not pay claims arising from pregnancy or childbirth, most treating it as a pre-existing condition. If your doctor states you are fit to travel and you pay an extra premium, the policy will cover you. AFTA, Thomas Cook, Flight Centres and Cover-More insure you in the normal manner up to the 24th week of pregnancy.
AGE LOADING
Senior citizens will find many insurers load their premiums and demand a certificate of good health.
Jetset and HCF add 50 per cent to the premium if you are between 70 and 74 and double it if you are 75 or more. Cover-More adds 50 per cent for people over 70 while Flight Centres add 50 per cent for those over 75.
The NRMA requests a medical certificate of fitness if you are over 80.
Gratefully, two insurers, Qantas and Thomas Cook, do not make an issue of age.
CANCELLATION AND ADDITIONAL EXPENSES
If, at any point, you are forced to cancel your trip due to unforeseen circumstances the insurer will cover the unused non-refundable portion of your trip, including the deposit and cancellation fees.
Thus, it's very important to purchase insurance before making the final payment on your travel arrangements - in this way you are covered if misfortune strikes you even before you leave the country.
You also are paid additional travel and accommodation expenses under certain circumstances.
The following conditions must apply to claim for the above:
* Death, disablement or illness of you, your travelling companion, a relative or close business associate in Australia.
* Strikes, riots or civil commotion.
* Loss of passport, travel documents or credit cards.
* Innocent breach of quarantine regulations, or required to do jury service.
* Natural disaster, severe weather conditions.
* Transport accidents.
* Retrenchment from usual full-time employment.
* Sitting a supplementary exam.
* Your tour operator's insolvency.
OTHER BENEFITS
The more expensive policies in the survey tend to offer additional benefits:
Missed connection cover. In these cases, the policy will cover the additional expense of taking alternative transport if you need to get to a special event on time which cannot be delayed, such as a wedding. Policies which offer this are HCF, Jetset and Qantas.
Resumption of the journey. If you are required to return to Australia urgently due to the death of a relative, the insurer will assist you to complete your original travel arrangements. This is offered by HCF and Jetset
Airfare compensation. If you are forced to return home as a result of an injury or illness with more than 25 per cent of the insured duration of your journey still outstanding, the cost of your original ticket will be reimbursed by HCF, Qantas and Jetset. Cover-More, Flight Centres and Thomas Cook will do the same providing more than 50 per cent of your holiday is still outstanding
BAGGAGE AND EMERGENCY ALLOWANCE
Most policies have an emergency baggage allowance. If your baggage is delayed or misdirected by the carrier for 12 hours or more you are entitled to claim around $400 to $600 a family.
Under the top HCF cover (Maxi) family baggage is covered to a limit of$17,500 whereas at the other end of the spectrum, the NRMA covers family baggage to a limit of $6,000 on its top cover. If you make an emergency claim and your baggage is never found, that amount is deducted from your subsequent claim for lost baggage.
Most policies specify an individual item limit. If your video camera exceeds this, you will need to insure it separately (or be left out of pocket).
Insurers often will deduct wear and tear from the amount they owe you. Sun Alliance offers "new for old" for items up to a year old.
Finally, it's best to choose a company with a good overseas network so you can submit claims there and not be out of pocket for the rest of your trip. Most policies guarantee settlement within 10 to 14 days. You have between 14 to 30 days to make a claim when you return.
Travel insurance for a family for 31 days ($)
TOP MEDIUM LOWER
Policy and Americas,
underwriter Japan, Europe Asia Pacific region
Jetset* , 341 (Europe 281) 239 189
Sun Alliance 317 (Europe 286) 245 198
HCF* * * , QBE 378 (Europe 311) 264 209
AFTA, 302 269 217
Comm Union
Qantas* , 333 276 186
Cover-More, 337 282 217
Flight Centres
NRMA 260 200 200
T. Cook 342 306 306
* 32 days * * 10 per cent off.
© 1992 Sydney Morning Herald