Free Travel Insurance … Is it Worth It?

What free travel insurance options are available in Australia and are you better off purchasing cover?

Looking for free travel insurance but want enough cover should the worst happen? While you may be eligible for free travel insurance with your credit card, its crucial to understand whether this free travel insurance is enough for your situation.

Many credit card travel insurance policies provide cover for things like overseas medical emergencies, lost deposits and cancellation fees, lost or delayed luggage, rental vehicle excess and much more. However, you’ll typically have to satisfy certain criteria in order to activate this cover – it’s  worth pointing out that standalone travel insurance usually offers more comprehensive financial protection. With this in mind, it’s critical to know exactly what you're covered for before you decide to use your credit card travel insurance and other steps you can take to save on your cover.

Free Credit Card Travel Insurance Vs. Standalone Travel Insurance?

Standalone travel insuranceCredit card travel insurance
Who is eligible?To take out cover for your pre-existing medical conditions, you’ll most likely have to pay an additional premium. Age loading fees also apply to many policies.There is usually no cover for pre-existing medical conditions under credit card travel insurance policies and many providers also have age cut-off limits. In addition, you’ll have to satisfy certain criteria to activate your cover before your holiday begins. For example, you may need to spend a minimum amount (e.g., $1,000) on your credit card to pay for flights or accommodation.
How much does it cost?Price varies depending on a range of factors, including where you’re travelling, how long you’re travelling for and the age of the travellers on your policy.Free with your credit card, but don’t forget that you’ll have to pay your card’s annual fee.
Maximum trip duration?Most standalone policies will cover trips a maximum of three months long. Some policies allow you to extend your cover but most do not.Credit card policies allow you to cover everything from short weekend getaways to journeys lasting up to 18 months.
How does medical cover compare?Many policies offer cover for unlimited overseas medical expenses, including ambulance, hospital and emergency dental costs.Many credit card travel insurance policies will cap their cover for medical expenses at around $500,000.
Are family members covered?You can take out cover for more than one person by purchasing a couples policy or family cover.These policies automatically offer cover for your spouse and any dependent children who are travelling with you.
Are dangerous sports covered?Any extreme sports and adventure activities are not covered. Some insurers will allow you to cover sports cover as an extra option.Some sports can be covered if you’re willing to pay an extra premium.
Valuable itemsWith a standalone travel insurance policy, you’re usually allowed higher cover limits and sub limits for valuable personal items. Many policies also provide the option of purchasing additional cover for your possessions.If valuable items kept in your luggage or damaged or broken, most credit card policies will not provide any cover.
What is the excess charged?The excess you have to pay when you make a claim is usually quite low.Excesses on credit card policies are usually much higher than those offered with standalone policies.
Is domestic travel covered?You can take our travel insurance cover for trips to a range of destinations throughout Australia.Many cards don’t offer any cover for domestic trips, but some do provide domestic inconvenience cover.
How flexible is the cover?With a standalone policy, you often have the ability to add optional extras to your policy so that you can tailor cover to suit your needs.Much less flexibility is available from credit card policies, with fewer optional extras offered.

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Some common traps to watch out for with complimentary travel insurance

  • Have to pay for some or all of trip. Most credit card travel insurance policies will require you to pay for all or some of your airline ticket with the credit card in order for cover to apply. Some cards will require you to pay for as much as 90% of the trips total cost on your card flights/accommodation/other prepaid itinerary items) in order for cover to apply.
  • Usually not covered for lost items in checked luggage. Many credit card travel insurance policies won't cover valuables that have been lost in luggage that has been checked in.
  • Limited cover on your policy. Credit card policies generally offer a much more limited amount of cover than standalone policies. Cover for your luggage and belongings is less than you can receive on a standalone policy but, more importantly, standalone policies offer much more comprehensive cover for overseas medical expenses.
  • Limited trip duration available. Some cards will impose a limit on the length of time they will provide cover for a trip, so check to see how long you will have cover in place. For most cards a maximum of 3 months is applied.
  • Failing to activate cover. Credit card insurance policies won’t automatically provide cover whenever you go away. Instead, you’ll need to check your provider’s conditions for activating cover, which may include things like booking a return trip or paying for a certain portion of your holiday expenses on your credit card.
  • May not offer domestic cover. The majority of credit card travel insurance policies do not offer you any financial protection for trips taken within Australia. Some will provide a limited amount of domestic inconvenience cover, but you’ll usually have to buy a standalone policy if you want domestic travel insurance.
  • High annual fees. Remember that the amount you pay for your annual fee has absolutely nothing to do with the quality of your travel insurance cover. Don’t assume that you’ll get better cover because you pay such a high credit card fee.
  • Higher excess charged than standalone policies. Another downside of free travel insurance is that you will need to pay higher excess when you make a claim than you would on a standalone policy. Some cards charge as much as $500 in excess per claim.
  • Less flexibility than standalone policies. Standalone policies offer much greater flexibility in terms of the optional extras you can add to your cover. Credit card policies are typically quite standardised and cannot be tailored as closely to suit your requirements.
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What other steps can I take to get cheap travel insurance?

  • Have you taken into consideration more than just the cost of the policy? Yes, price will obviously always be an important consideration when you’re looking for travel insurance, but it’s only one of the factors you need to look at when comparing policies. Consider the features and benefits a policy offers to determine whether you are getting value for money.
  • Have you considered all your cover needs? Determine exactly what you want your policy to cover before you go shopping. You can then find a policy that meets all your cover needs and doesn’t require you to pay for features you don’t want.
  • Can you afford to take out a lower level of cover? If you don’t need the high level of cover offered by a comprehensive policy, you’ll obviously be able to enjoy big savings by opting for a basic policy.
  • Have you looked for special offers and discounts? From promo codes and marketing campaigns to online and multi-policy discounts, there are countless ways you can find a cheap travel insurance policy.
  • Have you considered a multi-trip policy? If you’re a frequent traveller, instead of taking out a separate policy for every trip you may want to look at an annual multi-trip policy. These provide cover for all the journeys you undertake over a 12-month period.
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Can I get excess-free travel insurance?

Under a travel insurance policy, the excess is the amount you are required to pay when you make a claim. It’s basically your contribution to the cost of the claim, while your insurer will cover the remaining amount of your claim up to the insured limit.

A standard excess applies to all travel insurance policies, while you can often opt to pay an extra voluntary excess in order to enjoy reduced insurance premiums.

If you want to avoid paying excess charge altogether, some providers will offer a feature known as an excess eliminator. This allows you, for a small fee of around $15 to $25, to scrap the need to pay any excess when you make a claim.

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Do I get free cover from my health insurance?

Many people make the mistake of thinking they will be covered by their health insurance while they are overseas. Unfortunately, health insurance only provides cover for medical expenses incurred within Australia and in most cases you will be required to cover all medical expenses incurred overseas. That said, there are a number of countries in Australia that operate under a reciprocal healthcare agreement with Australia whereby you may be entitled to receive some assistance for essential medical treatment if you suffer a medical emergency.

What countries is part of the reciprocal health care agreement with Australia?

Australia has reciprocal health care agreements with the:

  • UK
  • Ireland
  • Sweden
  • The Netherlands
  • Finland
  • Italy
  • Malta
  • Slovenia
  • Norway
  • Belgium
  • New Zealand

How much will I be covered for?

Benefits will vary from country to country and there are limitations on the actual treatment you are eligible for and how long you can be covered for.

Do I still need to take out travel insurance if I’m visiting a country that is part of the agreement?

It is strongly advised that you still take out adequate travel insurance for your trip to ensure you are fully covered for any medical related losses that may arise on your trip.

Am I able to get complimentary cover for my family?

Is my spouse/travelling companion covered?

Most standalone travel insurance policies offer the option to take out Duo cover which will provide cover for both you and your spouse at a discounted rate. Both people on the policy will be entitled to the same comprehensive cover but it is not provided for free...just at a discounted rate.

What about my children?

Yes. Most travel insurance companies provide complimentary cover for dependent children under the age of 21 provided they are not engaged in full-time employment and are travelling with the policy owner (grandparent or parent) for the duration of the journey.

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William Eve

Will is a personal finance writer for specialising in content on insurance. While he cannot give personal advice to clients, Will enjoys explaining the intricacies of different types of protective cover to help individuals and businesses find affordable cover that won't leave them underinsured.

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