Do travel insurance companies pay claims?

But don't get too excited – the 11% denial rate for travel insurance is higher than almost every other category of insurance.

Let's look at why this might be, so that you can avoid being part of the percentage of Aussies whose claims have been denied.

Why are more travel insurance claims rejected?

The bottom line is that people are taking out travel insurance without knowing what's in it. Then they make a claim, thinking they are covered, and are later surprised when they find out they aren't covered at all or have disqualified themselves in some way.

As many as 36% of 18-29 year olds with travel insurance do not look at their policy documents at all, according to a DFAT study. For those over 30, it's a little better at just more than 21%.

That's a big chunk of people, and it's no surprise their claims are being denied – not because the insurers are stingy but because they may not have read the fine print.

Why can travel insurance claims be denied?

One of the reasons travel insurance claims may be disproportionately turned down is that people haven't understood what's covered (and what's not!) and travel insurance policies can be cheap enough that it doesn’t seem worth it. Very few people would dream of signing up for a life insurance policy without going through it in detail, but a lot more people are happy to do this with travel insurance.

These problems can be compounded by there being different types of travel cover available, including complimentary credit card travel insurance which carries additional eligibility requirements. Common reasons for rejection include:

Across both types of policy, the most common reason for rejected claims is that policyholders did not meet all requirements. In all cases, this top reason for rejected claims is explained in the insurance PDS.

• Not meeting the credit card activation criteria is the number one reason such policies are rejected, even though these criteria are typically fairly easy to meet and often involve nothing more than using the card to pay for a certain amount of holiday expenses.
• The excess was also an issue for many complimentary credit card travel insurance claims, as well as being a top cause of withdrawn claims with direct travel insurance. Claims are often turned down if the cost of the excess is more than the value of the claim.
• Failure to adequately prove ownership of lost or stolen items is an obstacle for many travel insurance claims. By going through the policy terms in detail beforehand, it’s easier to know what kind of proof of ownership is needed and easier to make sure it’s available.

Overall, the claims rejection rate is disproportionately high for travel insurance compared to other types of policy, but the vast majority, more than 90%, of claims are successful.

In many cases the reason for rejected claims comes down to the question of whether or not Australians really understand travel insurance.

Finder survey: How many Australians of different ages have made a travel insurance claim?

What are some errors people make when claiming?

Most denials happen because people don't know what's in their policy and end up making errors that can't always be fixed. Here are the reasons why claims are commonly denied:

• Not understanding what you're covered for. Not all travel insurance policies cover all events. For example, many providers of budget policies have stripped cover for trip cancellation from their policies just to make them cheaper. If you're not paying attention and get one of these policies, you won't be able to claim if external circumstances force you to cancel your trip.
• Not paying attention to exclusions. All policies have a list of reasons why they can deny your claim, but a full third of Australians ignore these. For example, you won't be covered for your stolen phone if you weren't watching it or didn't have it put away safely.
• Not supplying the correct information with your claim. Most claims require some bit of supporting evidence. If you're injured, you need a medical report. If you've been robbed, you need a police report. Unfortunately it's easy to forget to grab these things in the thick of your travels, but your claims will be denied without them.
• Not meeting activation requirements. If you are using the free travel insurance that comes with your credit card, it’s a good idea to make sure you're eligible. Some people have had their claims denied because they didn't trigger the cover by making the right number of purchases with the card.
• Not proving ownership of items. If you try to claim for lost or stolen items, especially expensive ones, your insurer will want to see evidence that you actually did own the item. If you can't find the receipts for the items you are travelling with, make sure to take pictures of yourself with them before you leave. This is often evidence enough.
• Not mentioning pre-existing conditions. Medical cover is a big part of international travel insurance, and your insurer will want to know if you have any medical conditions going in. If you end up claiming, your insurer will investigate and deny your claim if they find you've been lying or holding back info.

Are travellers shooting themselves in the foot when it comes to travel insurance?

The DFAT survey shows that a lot of Aussies are travelling without cover, and many do not understand some very important elements of travel.

One of the most glaring misconceptions was that more than half of young people surveyed thought the Australian government would arrange and pay for them to get home in the event of a medical emergency, or would pay for overseas medical bills. This is simply not true.

• People are not even looking at policies. More than a third (36%) of 18–29s do not look at their policy at all. Older groups aren’t much better, with 21% of people age 30+ likewise not even looking at the PDS. This can lead to a lot of unpleasant surprises in the event of a claim, especially when it involves risky activities which are often not covered, like playing sports or riding a motorcycle overseas.

• People are going without travel insurance. 15% of young Australians went without travel insurance on their last overseas trip, while only 6% of those over 30 did.

• Exclusions are being ignored. Only 31% of surveyed travellers considered the exclusions when selecting a travel insurance policy. Unsurprisingly this can lead to claims being rejected.

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What can I do if I feel my claim shouldn’t have been rejected?

Amidst all the justifiably turned-down claims it’s possible for valid claims to slip through the cracks too. When this happens you can turn to the Australian Financial Complaints Authority (AFCA) for an independent third party resolution.

Follow these three steps to take action against a rejected claim.

• Contact your insurer. They are required to provide a reason for their rejection in writing. Consider this in line with the policy and see if they have a point. If you’re not satisfied and still think they’ve made the wrong decision then you should contact their customer service team and explain the situation.
• Lodge a dispute with the Australian Financial Complaints Authority (AFCA). If the situation was not resolved you can lodge a dispute with the AFCA. They will then get in touch with the insurer for an explanation, and the insurer has a limited time to respond.
• Let the FOS handle it. If the situation is still unresolved, the FOS will begin reviewing the situation and working out what’s doable. They will be in touch with both you and the insurer, and can help work out resolutions that involve negotiation, conciliation or simply reaching a decision and siding with one party or the other.

It’s preferable not to contact the FOS at all if you can help it, but it can be an effective way to resolve disputes. The most effective way is to ensure that you look at the details of each policy when getting travel insurance quotes and comparing policies online.

Compare travel insurance quotes from different brands

Frequently Asked Questions

• What is a travel insurance excess and how does it affect my claim?

  Your excess is the amount you pay towards an approved claim. If your claim's value is less than this amount, your claim may be denied or withdrawn. Always check your policy's excess amount as it can significantly impact whether a small claim is worth pursuing.

• What documentation do I need to make a successful travel insurance claim?

  To support your claim, you generally need documents like police reports for theft, medical reports for illness or injury, original receipts for lost or damaged items, and booking confirmations for cancelled trips. Keep all relevant paperwork and digital copies handy when travelling.

• Does travel insurance cover pre-existing medical conditions?

  Standard travel insurance policies generally exclude pre-existing medical conditions unless you declare them to your insurer during the application process. Your insurer may then offer cover, sometimes for an additional premium, or specifically exclude those conditions from your policy.

• Will my travel insurance cover lost or stolen cash?

  Most travel insurance policies offer limited cover for lost or stolen cash. This amount is often much lower than cover for other items. Always check your policy's specific limits for cash and currency before you travel.

• What should I do if I have a medical emergency while travelling overseas?

  In a medical emergency, you should contact your insurer's emergency assistance line immediately. They can help arrange appropriate medical care, advise on hospitals and confirm your cover. Keep their emergency contact details handy at all times.

• Does travel insurance cover adventurous activities or sports?

  Many adventurous activities such as skiing, scuba diving or trekking may not be covered by standard travel insurance policies. You often need to purchase additional cover or a specific 'adventure pack' to be protected for these activities.

• Can I claim for a cancelled trip if I simply change my mind about travelling?

  Travel insurance typically does not cover trip cancellations due to a change of mind. Cover is generally for unforeseen circumstances outside your control such as illness, injury or natural disasters. You'll need to prove the reason for cancellation in your claim, with evidence like a medical certificate, death certificate or police report.

• What are common exclusions I should be aware of in my travel insurance policy?

  Common exclusions include claims arising from reckless behaviour, being under the influence of alcohol or non-prescribed drugs, undeclared pre-existing medical conditions and certain high-risk activities. Always read the Product Disclosure Statement to understand what is not covered.

• When should I notify my travel insurer about a potential claim?

  You should notify your travel insurer as soon as reasonably possible after an event that could lead to a claim. Some policies have specific timeframes for reporting incidents or submitting claims, so check your policy details.

• Does complimentary credit card travel insurance offer the same level of cover as a standalone policy?

  Complimentary credit card travel insurance often has stricter eligibility criteria, lower coverage limits and more exclusions compared to a comprehensive standalone travel insurance policy. It is crucial to read the PDS for your credit card policy carefully to understand its terms.

Written by

Jessica Prasida

Travel Insurance Expert

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Jessica Prasida brings a decade of experience in the travel industry, including over four years as a travel agent and branch manager at STA Travel. She holds a Bachelor of Business and a Master of Marketing from the University of Technology, Sydney, as well as a Tier 1 General Insurance qualification that complies with ASIC guidelines. An avid traveller herself, Jessica combines her professional expertise with a passion for ensuring safe and enjoyable journeys for all travellers. Jessica was a Travel Insurance Publisher at Finder from 2019 to 2024. See full bio