Why you should consider travel insurance for your next Aussie trip
Who wants to think about insurance when you've got a fun trip to plan? But even if your most strenuous activity is going to be laying on a beach, unexpected situations such as having your luggage stolen or your flight cancelled could ruin your trip. Getting domestic travel insurance can help give you peace of mind so you can relax knowing that you'll be covered when you hit the road for your all-Aussie adventure.
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Why do I need domestic travel insurance?
You’re planning a holiday here in Australia, a country where you speak the language, understand the culture, know how things work and may have lived your entire life – so why do you need travel insurance? After all, medical expenses – a critical cover feature on international travel insurance policies – are covered by Medicare or your private health fund, so what’s the point of taking out travel insurance for a trip within Australia?
Here are several reasons why you should consider domestic travel insurance before you hit the road:
- Cancellation costs. Sometimes life conspires against you to wreak havoc with your holiday plans. You might lose your job, a relative may die unexpectedly, or a serious injury or illness might leave you medically unfit to travel. When circumstances beyond your control turn your holiday plans upside down, travel insurance can cover any cancellation fees charged or any non-refundable pre-paid deposits.
- Luggage cover. Regardless of whether you’re in Frankston or Frankfurt, Newcastle or New York, airlines anywhere can lose your luggage. Your baggage and personal items could also be stolen or accidentally damaged, but domestic travel insurance can provide the protection you need.
- Theft. When you’re visiting popular tourist attractions or spending times in busy public areas like airports and train stations, theft is always a risk – especially if you’re unfamiliar with your surrounds. Happily, domestic travel insurance can protect you against any financial loss.
- Travel delay and cancellation. According to statistics from the Bureau of Infrastructure, Transport, and Regional Economics, 84.2% of domestic flights within Australia in 2016 arrived on time, while 1.7% of all flights were cancelled. Travel delays and the unexpected cancellation of flights are real risks when holidaying in Australia, but travel insurance guarantees that you won’t end up out of pocket if they happen to you.
- Rental vehicle excess. If your rental vehicle is crashed, stolen or maliciously damaged during your trip, the insurance excess charged by the rental company could be a few thousand dollars or more. This can leave a massive dent in your holiday spending money, which is why the cover provided by domestic travel insurance is well worth the investment.
10 things that could go wrong when you're travelling within Australia
|Possible mishaps||How would travel insurance help?|
|1. Flight cancellation||You'll be covered for cancellation fees and lost deposits for events outside of your control. This includes injuries, strikes, collisions, natural disasters, retrenchment etc.|
|2. Rental excess||When using a hire car, you'll be covered for the out-of-pocket excess for a lot less if vehicle is damaged or even stolen.|
|3. Lost or stolen items||You'll be covered for accidental loss, theft and damage to your personal possessions and even cash. Most policies also offer a daily allowance to buy essentials if your luggage is lost.|
|4. Additional expenses||Additional expense cover provides a benefit payment to reimburse the costs of any additional accommodation, food, telephone and travelling expenses if your trip is disrupted.|
|5. Travel delays||Travel delay cover pays for your accommodation and food expenses if your transport carrier delays you.|
|6. Special events||You'll be covered for the additional cost of transport to a wedding or conference if your trip is delayed.|
|7. Accidental death||In case the worst happens, your spouse or dependent children will receive a lumpsum payment. This cover includes loss as a result of an accident or terrorist attack, or due to the disappearance of transport carrier on your trip.|
|8. Accidental disability||This provides cover for accidents caused by violent, external and visible means that results in permanent loss of sight in one or two eyes and the use of one or more limbs within 12 months of the policy being taken out.|
|9. Travel service provider insolvency||This reimburses you for reasonable costs if your travel services provider financially defaults.|
|10. Hijacking||This provides your family members or dependents with financial cover for each day you are held captive.|
What does a domestic travel insurance policy normally cover?
Domestic travel insurance policies usually include the following benefits:
- Luggage and personal items. If your luggage or personal belongings are lost, stolen or damaged during your trip, you’ll be covered for the cost of their repair or replacement.
- Luggage delay. When your luggage is delayed or misplaced by an airline or other carrier, you’ll receive an emergency allowance to help you buy toiletries, clothes and other essentials.
- Cancellation fees. When unforeseen circumstances outside of your control (including involuntary unemployment, natural disaster, death of a relative etc) force you to cancel your trip, travel insurance provides cover for your cancellation fees and lost deposits.
- Travel delay. This benefit covers the cost of additional meals and accommodation when your pre-booked transport is delayed.
- Money. You’ll be covered for the theft of money from your person.
- Additional expenses. This benefit covers your additional accommodation and transport expenses when your trip is disrupted by an unexpected event, such as:
- If you suffer an injury or illness and are medically unfit to continue your journey
- If a relative or business partner falls ill and you must return home
- If your home is destroyed by fire, earthquake or flood
- If your scheduled transport is delayed due to riot, strike or civil commotion
- If a natural disaster occurs
- Loss of income. If you’re injured during your trip and unable to go back to work when you return home, domestic travel insurance can provide cover for your lost income.
- Personal liability. If you’re legally liable for causing accidental injury to someone else or damaging their policy, travel insurance can provide financial protection.
- Rental vehicle excess. This benefit provides cover for the insurance excess payable to a car rental company when your hire car is stolen, damaged or involved in a collision. NB: rental vehicle excess cover is only available as an extra-cost option on some policies.
- Disability. If you suffer an accidental injury during your trip that causes total and permanent disability, many policies provide a lump sum benefit.
- Accidental death. Your loved ones may be entitled to a lump sum benefit if you die as a result of an accidental injury sustained during your trip.
What additional options are available?
Many insurers will also allow you to add the following options to your policy for an additional premium:
- Snow sports cover. If you’re planning a skiing or snowboarding holiday, adding this optional extra to your policy ensures that you will be covered if you injure yourself while participating in snow-based activities. It also provides protection for stolen and damaged ski equipment, ski equipment hire, and unused lift passes when your trip is disrupted by circumstances beyond your control.
- Adventure sports cover. If you’re a thrill seeker planning to indulge in a few adrenaline-pumping adventure activities during your trip, you may need to add optional adventure sports cover to your policy to cover a wide range of sports and activities. It allows you to extend your cover to include activities like rock climbing, trekking, white water rafting, parasailing and more.
- Cruise cover. Planning a cruising holiday? If so, adding optional cruise travel insurance to your policy ensures you’re covered for medical expenses incurred onboard, medical evacuation to the nearest facility on dry land, and cabin confinement for medical reasons. It also covers missed shore excursions, lost or damaged formal cruise attire, trip cancellations and delays, and lost or delayed baggage.
- Increased item limits. If you’re taking expensive items (such as laptops, jewellery and cameras) with you on your journey, their value may exceed the maximum limit your insurer will cover for any one item. However, this extra-cost option allows you to increase the level of cover available for specified items, ensuring that they’re adequately protected on your trip.
- Increased rental car excess cover. This option allows you to increase the level of car rental excess cover provided by paying an additional premium.
What’s not covered by domestic travel insurance?
Before choosing a policy, make sure to check the list of general exclusions contained in the PDS. This lists the circumstances and events when your policy does not provide any cover, such as:
- If your claim arises due to a pre-existing medical condition which is not covered by your insurer
- If your claim is for costs incurred outside of Australia
- If you fail to take reasonable care of your luggage or personal items
- If you intentionally or recklessly put yourself in harm’s way
- If your claim arises due to detention, confiscation or destruction by customs or other officials or authorities
- If your claim arises because you committed an unlawful act
- If you travel against medical advice
- If your claim arises due to childbirth or the care of a newborn child
- If your claim arises due to the insolvency of a travel agent, tour operator, accommodation provider, airline or other carrier
- If your claim relates to any conduct while you were under the influence of alcohol or drugs
- If your claim is for consequential loss of any kind, for example, loss of enjoyment
- If you change your mind about travelling
Check out our guide to travel insurance exclusions for more details of when your policy will not provide any cover.
How to save money on domestic travel insurance
They say that if you can't afford travel insurance, you can't afford to travel. While the decision on what cover to take out should never be based purely on price, it is important to take the necessary steps to avoid overpaying for cover not tailored to your needs. Many people are surprised at how affordable domestic travel cover can be if they take the right steps to consider what they actually need cover for and weigh up the different options available.
There are several simple things you can do to reduce your domestic travel insurance premium, such as:
- Choose a lower level of cover. Some insurers offer budget domestic travel insurance policies that provide cover for cancellation costs and additional expenses when you’re forced to cut short your trip. These policies may be worth considering if you’re looking for affordable insurance but you still want cover against these potentially expensive risks.
- Choose a higher excess. You can reduce your premium by increasing your excess to a higher level. Just make sure that you’ll be able to afford the excess you choose should you have to make a claim.
- Look for discounts and deals. Keep an eye out for any special offers and deals to help you save money on cover. These could include special promotional offers, promo and coupon codes, discounts for buying cover online and discounts for customers who already hold another type of policy with the same insurer.
- Buy a joint policy. If you’re travelling with a family member or friend, you can both save yourself some money by purchasing a joint policy rather than individual cover.
- Don’t add options you don’t need. Extra-cost options can increase peace of mind when you travel and allow you to tailor a policy to suit your cover requirements. However, make sure you only add optional extras are essential for your holiday, as there’s no point in paying for cover you don’t need.
- Shop around. The final and also the most important thing you can do to save money on domestic travel insurance is shop around. Compare quotes from multiple insurers and take a close look at the features, limits and exclusions of each policy to find the best deal.
Is travel insurance worth it for domestic flights?
As Australia’s airlines offer increasingly discounted fares to compete for market share, you may be wondering whether the cancellation cover provided by domestic travel insurance is actually worth it. To find out, let’s take a look at a case study.
The day before Sarah is due to fly from Sydney to Perth for a two-week holiday exploring southwest WA, Sarah’s mother passes away unexpectedly. Sarah is forced to cancel her trip, which would ordinarily mean the $560 she has paid for her non-refundable airfares ($280 each way) would be lost.
However, when Sarah booked her holiday she also purchased a domestic travel insurance policy for $79.40, the average cost of cover for a two-week Australian trip. Compared to the $560 she would have lost after cancelling her flights, spending less than $80 on travel insurance seems well worth it.
To top it off, Sarah’s policy also covers cancellation fees and lost deposits for:
- Pre-booked accommodation
- Rental car hire
- Pre-booked tours
How much will domestic travel insurance cost me?
Cost of domestic travel insurance is an average based on policies for a one-week trip, for a 32 year old traveller. Cost of the flight is based on the average online cost of a return flight from Sydney to Melbourne on 28 October 2015.
How does domestic travel insurance compare to cover offered by my airline?
You may be aware of the fact that when you book flights for your holiday, you also have the option of purchasing travel insurance from your airline. However, airline travel insurance policies typically tend to offer a much lower level of cover than policies purchased direct from insurers. Check out the graph and table below to see just how airline cover compares with standalone travel insurance.
Airlines do have the option to purchase travel insurance through them. However, it's easy to see that the level of coverage is noticeably different when taking out an independent domestic travel insurance policy. The following chart highlights how airline cover sizes up against standalone travel insurance.
Jetstar vs Tiger vs Domestic Travel Insurance
|Feature||Jetstar||Tiger||Domestic Travel Insurance|
|Cancellation of ticket||$5,000||$4,500||$10,000|
|Car rental excess||$0||$0||$5,000|
|Resumption of journey||$750||$700||$6,000|
Note: Cover amounts last checked 2016. Domestic travel insurance cover amounts are for illustrative purposes only and is not representative of all products in the market.
What will I actually be paid for my trip cancellation?
Domestic travel insurance offers a cancellation cover to cover a range of pre-booked expenses in the event that you need to cancel your trip due to unforeseen circumstances.
What cancellations will you usually be covered for?
- Travel expenses
- Accommodation expenses
- Pre-paid meal expenses
- Cancellation for flights and accommodation
- Unforeseeable death, injury or illness of relative that resides in Australia
- You have to go to court or have jury duty
- Accident in vehicle you were planning to use on a self-drive trip a week before you planned to travel
- You are a member of the armed forces, police, fire, nursing or ambulance services and are required for duty
- You are made redundant, provided you are eligible for redundancy payments as defined under current law
- You need to stay home due to flood, fire, storm or burglary in your place of residence a certain period of time before you planned to leave
Traps to watch out for when choosing a domestic policy
Every year there are stories of people left devastated after learning their domestic travel insurance policy was unable to provide a benefit for their claim because it fell outside of what was covered in their policy. Be wary of these traps and pitfalls when searching for domestic travel insurance to cover your next Australian holiday:
- Underinsurance. Cost is always a consideration when buying travel insurance but looking to cut costs at every turn can lead you into trouble. Underinsurance could have significant financial consequences if something goes wrong on your trip, so make sure any policy you choose provides sufficient cover.
- Choosing the cheapest policy. While it is important to find a competitively priced policy, basing your purchase purely on price may leave you drastically under-protected. Research the policy features on offer and know what you are covered for. Cheaper cover will often have higher excess charges and greatly reduced benefit levels.
- Buying cover from an airline or travel agent. Buying travel insurance through an airline or travel agent when you book your holiday may be convenient, but it’s also usually unnecessarily expensive. Many airlines and travel agents add substantial commissions on top of the policy price, so you can save a lot of money if you buy cover directly from an insurer instead.
- Not reading the fine print. A travel insurance PDS is not what you’d call an entertaining read, but it is something you should examine closely before buying a policy. Look at the benefits, cover limits and exclusions to ensure that you know exactly what your policy does and does not cover.
- Per-item limits. It is crucial to know the conditions for payments for lost luggage and expensive items. While the policy may state "up to $5,000 cover for lost items", there may only be a benefit of $600 per item provided. These sub-limits are often applied to expensive items.
- Cover for the activities you plan to do on your trip. If you are participating in particular sports or activities on your trip it is important to find out whether or not they will be covered.
I travel often - should I get an annual multi-trip policy?
Searching for annual travel insurance to cover your trips within Australia? If you’re a frequent traveller, purchasing an annual multi-trip policy can be much more cost-effective than buying a separate policy for each trip you take.
Annual multi-trip domestic travel insurance provides cover for all the holidays you embark upon within Australia across a 12-month period. There’s usually a maximum limit on the length of each individual trip, but otherwise these policies provide all the benefits you would expect in an ordinary travel insurance policy.
- What are the benefits of taking out an annual policy? An annual policy can offer both convenience and great savings, as you will only need to apply for cover once and have the peace of mind that you are covered for all domestic journeys you take in any 12-month period. This option can be much more economical than applying for multiple policies over the course of a year.
- Who should consider an annual domestic travel insurance policy? An annual policy is only really suitable for people that travel 3 or more times per year. If you only need cover for 1-2 trips, it is probably more cost-effective for you to take out a single-trip policy. Most insurers will not provide annual policies to travellers over 60 years of age, as they need to assess any health risks that they may present. Annual policies are also a great option for people that need to travel last minute for business.
- Can I get an annual [policy to cover both international and domestic trips? Yes, it is possible to get an annual policy that will cover both trips within Australia and trips overseas. This could be a good option if you're looking to take a cruise trip but stopping off at Australian ports, your work sees you regularly travel both interstate and abroad or if you just love to get away both within Australia and overseas. It is important to note that not all insurers will cover both domestic and international trips so make sure you check the terms and conditions.
How can I get insurance for my caravan holiday?
Planning an Aussie holiday with your caravan in tow? If so, you obviously won’t need the cover for flight cancellation costs provided by domestic travel insurance, so is it worth your while purchasing a policy?
The answer really depends on what you have planned for your holiday. If you’ve pre-booked a lot of your holiday expenses – caravan sites, tours, ferry tickets (eg Spirit of Tasmania) etc – cancellation cover can still be useful. Other benefits, such as cover for theft, stolen or damaged personal items and trip disruption costs, could also come in handy, so it’s up to you to decide whether you need cover.
At the time of writing, there are no Australian insurers that offer a custom caravan holiday insurance product. Because of this, it’s also important to examine the cover provided by your caravan insurance policy. Comprehensive caravan insurance covers loss or damage caused by accidents, fire, storm, theft, malicious damage and more, so it’s worth reviewing your cover before hitting the road.
How to choose domestic travel insurance
How can you find the right domestic travel insurance policy at the right price? Follow a few simple steps:
- Think about the cover you need. Do you want cover for the essentials only or ultimate peace of mind? Do you need to add any optional extras, such as cover for adventure sports or high-value personal items?
- Consider your budget. How much do you want to pay for cover? Can you vary your excess to lower your premium, or take advantage of any other discounts available?
- Get quotes. Once you have a better idea about the level of cover you want, obtain quotes from multiple insurers. This will help you work out how much cover costs and which insurers can help you save money.
- Compare policies. Take a closer look at the benefits, limits and exclusions of any policy you are considering. This will allow you to work out which policy provides the best value for money and is the best choice for your Australian holiday.