If your credit card's travel insurance doesn't go far enough, you can take out a second policy.
In many cases, credit card travel insurance benefits are low, the excess is high and you can't get cover for pre-existing conditions.
If that's describes your card's insurance, there's nothing stopping you from getting an additional standalone policy, which will usually offer better cover and more flexibility.
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When would you want multiple travel insurance policies?
- If you buy standalone travel insurance, even though your credit card also provides free travel insurance.
- If you buy standalone travel insurance, even though your bank account offers travel insurance as part of your account package.
- If you buy standalone travel insurance, even though one of your other forms of insurance includes travel cover as an add-on.
- If you have an annual travel insurance policy in place but take out a single trip policy to cover specific losses not covered under the annual policy.
While it's possible to have multiple policies, it's not possible to receive a pay out from two policies for the same loss. Australian insurance law stipulates that if you hold two insurance policies with identical coverage, both insurers can share the cost of covering the claim, but are not required to pay out 100% of that claim.
The only exception to this is in relation to death or permanent disability cover, where insurers are required to pay out the benefit amount stated in their policies, regardless of what other insurers have paid.
Disclosing other insurance in the event of a claim
A common exclusion included in travel insurance policies relates to other sources of reimbursement. A typical travel insurance product disclosure statement (PDS) will state that if you are able to receive compensation from any other source for your loss, the insurer will only pay the difference between the benefit amount and the amount you receive from that other source.
This also applies to other insurers. If you have cover under more than one policy, you must inform your insurer of this and provide details of the other insurer and the policy. This is because if your insurer pays out your claim, they can then seek a contribution from the other insurer.
Vice versa, if you claim from the other insurer and they only provide you with a partial pay out, your insurer will pay you the difference between what you received and your insured benefit amount.
Case Study: Single Payout for Car Rental Excess Charge
David is a 35-year-old sales representative and makes regular trips each year to his company's offices in Tokyo and Seattle. David has an annual multi-trip policy in place with Worldcare Travel Insurance, which he renews each year so that he doesn't have to take out separate cover for each trip.
At the end of a week long business trip in Tokyo, David decided to his extend his trip with a two-week skiing vacation in Niseko. David decided to take out a separate travel insurance policy with skiinsurance.com.au to ensure he would be covered for ski-related losses such as loss/damage of equipment and piste closure.
Five days into his vacation, David backed his hire car into a telegraph pole when leaving his hotel causing damage to his taillight and left panel. David was shocked to receive a $4,000 excess bill from the car rental company but knew he was covered for car rental excess charges on both his policies.
Soon after returning to Australia David lodged a claim with both skiinsurance.com.au and Worldcare. When lodging with Worldcare, David was asked if he was eligible to receive payment from any other sources. David disclosed his claim with skiinsurance.com.au.
With the claim for skiinsurance.com.au successful, David was not eligible to receive payment from Worldcare as the full amount had already been covered.
What happens if I don’t disclose both policies?
If you don’t disclose your other forms of cover to your insurer, the penalties could be even more severe. Insurers investigate all claims thoroughly and share this information, so if you claim on two policies without declaring it’s likely one or both will find out.
Moreover, any purposely fraudulent statements regarding other policies could mean your cover will be voided, your policy cancelled and you’ll possibly wind up in court.
Travel Insurance Claims Disclosure Example
The section below is a conditions summary for disclosing other payments from travel insurance brand 1Cover (backed by Allianz):
- If you can claim from anyone else we will only make up the difference. If you are eligible to receive payment for the loss from another party, we will only pay the difference. You must pay from them first.
- Other insurance policies. If any loss, damage or liability covered under this policy is covered by other insurance, you must give us the details. If you make a claim with one insurance policy and are paid the full amount, you cannot claim under another policy.