Alcohol and travel insurance: The catch Aussies need to know about

Most policies include alcohol exclusions, but you’ll need to read the fine print to find out how much is too much when it comes to alcohol and travel insurance.

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    While letting your hair down on holidays and having a drink is common, most travel insurance policies have an exclusion along the lines of:

    We will not pay for claims arising directly or indirectly from any conduct engaged in by you whilst under the influence of alcohol or drugs, unless prescribed by a doctor and taken in accordance with the doctor’s advice.

    This guide looks at how alcohol and travel insurance don't always mix well, and under what circumstances insurers will pay alcohol-related claims.

    Do any insurers cover alcohol-related claims?

    Almost all travel insurance policies include a general exclusion that rejects claims if alcohol was the root cause of the incident. The reasons for this are two-fold: to encourage you to be mindful of how much you're drinking, and to limit the risk for the insurer.

    The question of whether you're covered for drinking alcohol really comes down to how each insurance brand interprets its own exclusions.

    How does an insurer know if you were under the influence?

    Unless you're drug-tested or breathalysed, an insurer can't know for certain how much you had to drink.

    While some insurers have been accused of using the alcohol exclusion to outright deny claims, most are fair and reasonable and assess each claim on its own merits. Generally, it comes down to whether alcohol contributed or caused the incident, rather than simply whether alcohol was involved.

    Some use the yardstick that applies to all aspects of insurance: "Was the incident unexpected?" This simply means: would a reasonable person expect their actions, in this case drinking too much, to lead to an incident that could have negative outcome such as a claimable event? If the answer if yes, then the incident was not unexpected and would therefore not be covered.

    Good to know. Many insurance brands try to take the guess work out of what will and won't be covered in relation to alcohol by listing the claims conditions in their product disclosure statements (PDS).

    Some insurer-specific examples

    Whether you're covered for alcohol consumption when overseas depends very much on how your insurer interprets the exclusion. The following examples show how three separate insurance brands deal with claims involving alcohol:

    • Southern Cross Travel Insurance. The "reasonable person" test. SCTI cite having a few beers and then slipping over as an example of a reasonably unexpected event. Southern Cross contrast this with drinking all night and then jumping off a seawall, not realising the tide is out, as an example of an event that is not unexpected. Because a reasonable person could perceive an injury risk, no claim would be paid in this instance.
    • Cover-More. Cover-More takes a slightly different tact and determines whether a claim is payable IF alcohol contributed to the incident or not. This includes assessing the nature of the incident and deciding if it would have occurred if you had consumed alcohol or not.
    • Travel Insuranz. Travel Insuranz goes a step further and determines the extent of liability by the degree to which alcohol contributed to the incident. Rather than flatly denying the claim, Travel Insuranz will decide how much of the claim it will pay, based on how much the consumption of alcohol played a part in the event.

    Methanol poisoning and travel insurance

    Insurers tend to look at methanol related claims on a case-by-case basis. However, most travel insurance policies contain a blanket drugs and alcohol exclusion and it is up to the individual insurer to interpret this. Insurers have been known to refuse claims from people who've had their drinks spiked or suffered methanol poisoning from dodgy cocktails.

    What is methanol poisoning?

    Methanol poisoning occurs when someone consumes homemade alcohol containing methanol, a pure form of alcohol similar to ethanol. Not normally present in commercially produced spirits, methanol is converted by the body into a toxin called formic acid. This can build up in the blood and cause kidney failure, heart problems, liver damage, blindness, nerve and brain damage and ultimately death.

    Where can methanol poisoning happen?

    Methanol poisoning can happen anywhere, but travellers to South Eastasian holiday destinations such as Bali and Thailand are considered most at risk.. This is due to widespread home brewing of spirits and substitution of drinks by disreputable bar owners. Authorities warn that the best way to guard against methanol poisoning is to be wary of offers of free or discounted drinks and not to drink anything unless it comes from a sealed bottle or can.

    How is methanol poisoning treated?

    If you suspect that you've unknowingly drank methanol, you'll need to seek medical assistance as soon as possible. Medical professionals usually administer ethanol or fomepizole, both of which will prevent formic acid building up in the body.

    How does travel insurance work when it comes to drug use?

    Unless your drugs were prescribed by a medical professional, insurers won't pay out for a claim if the incident arose because you were under the influence of drugs.

    An example. If you smoked marijuana in Thailand, hopped behind the wheel of your hire car and were then involved in an accident, your travel insurer would not provide any cover for your medical expenses, legal liability or rental vehicle insurance excess costs.

    Good to know. The drug use exclusion can even apply to people who aren't travelling with you. If you are forced to cut your trip short and return home following the serious illness or death of a relative as a result of drug use, your insurer may not provide any cover for cancellation or curtailment costs

    Booze bust: Why alcohol and travel insurance don't mix

    Enjoying a drink is a normal part of any vacation. However, if you want to be covered by your travel insurance, you should understand the fine print in your policy. If you check your PDS and are still unsure about what exactly the exclusion covers, it may be worth speaking to a representative who can explain it more clearly.

    Compare how travel insurers treat alcohol use

    Picture: GettyImages

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