The benefits of using travel insurance brokers

Travel insurance is designed to protect you against many of the hazards you face on trips, both within Australia and abroad. They potentially cover a wide range of incidents and carry many optional extras to tailor the policy to your journey.
 
The sheer breadth of options can be overwhelming, and depending on the purpose for and timing of your travel, you may need a particular policy. A travel insurance broker can help you select a policy that has everything you need, while largely avoiding the options that are unnecessary.

How can travel insurance brokers help?

A travel insurance broker’s services can help you when you’re at the planning stage as well as after you’ve left.

• They help you find a suitable travel insurance policy.
• They handle claims from your country of residence, as well as when you’re abroad.
• They look out for exclusions or conditions which might mean a policy is unsuitable for your needs.
• They have access to a wider variety of products, meaning they are often able to find policies that you cannot.
• They are able to dedicate more time to selecting and managing an insurance policy than you can, particularly while travelling.
• Whether your travel insurance needs are for business or pleasure, it can be possible to find an insurance broker who is a specialist in the type of cover you need.
• They can liaise with the insurer wherever necessary.
• Brokers can go over the fine print, explain policies to you in plain language and answer any questions you might have.

How are travel insurance brokers paid?

Depending on the travel insurance broker you end up going with, they will be paid in one of two ways:

• The insurance companies might pay them a commission for every new customer. This has the advantage of providing you an inexpensive service, but it means the broker might not be considering all of the options available.
• You might be paying them a fee, which could be a flat rate, a portion of your premium, or a combination of both. This means their service is costing you more, but they do not necessarily have an incentive to steer you towards policies that may not be ideal for your requirements.

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Travel insurance brokers and pre-existing conditions

Travel insurance brokers may be particularly suitable if you are trying to take out a travel insurance policy with pre-existing medical conditions.

This is because many insurers will make special exclusions for pre-existing conditions like heart disease or having survived cancer. Insurance policies typically mean they are liable for emergency medical expenses incurred while travelling, so in order to minimise risk levels they will generally try to exclude particularly high-risk events wherever they can. In other cases, the insurer may add a special loading, in the form of increased premiums, for these conditions.

Travel insurance brokers are able to go over each policy in detail to inform you about how pre-existing conditions are treated, and negotiate with the insurer to get you a suitable policy. If you are a senior looking for travel insurance then it is particularly important to be mindful of this.

Depending on the insurer, the policy and your broker, you may be provided several options for accommodating pre-existing conditions.

• The insurer will refuse to cover it. In other words, they will specify it as an exclusion.
• The insurer will agree to cover the eventuality of needing to pay out for pre-existing conditions, but only at the cost of an increased premium.
• They might agree to cover it anyway, at the normal cost and with a standard policy.

Depending on how likely it is for a pre-existing condition to impact your travel plans, your travel insurance broker may be able to negotiate a more preferable option from the three above.

What can travel insurance policies cover?

Travel insurance policies can cover almost everything from health to possessions to liability. Some of the popular options to look out for in policies include:

• Personal liability cover. If you are responsible for property damage, injury or death to a third party then travel insurance can cover it up to a certain limit, such as $5 million.
• Medical costs. If you end up in hospital overseas, need to call an ambulance or experience a dental emergency, many policies can effectively cover the costs incurred.
• Specified activity cover. If you are going on an adventure holiday, or plan on enjoying potentially risky activities like skiing or abseiling while travelling, then many policies offer cover for this. The list of activities covered is usually prominently shown in the relevant travel insurance PDS. In some cases, you may have the option of adjusting cover to also include benefits like cover for lost or stolen equipment.
• Accommodation and travel benefits in the event of unforeseen events like airport worker strikes, cancellation of nonrefundable travel or accommodation arrangements, or needing to cut your trip short and return home, you may be covered.

By sharing detailed information about your planned travel with your insurance broker, they are better able to find a policy with the benefits that are right for you.

What conditions and exclusions should you watch out for?

You will generally find a number of exclusions in any travel insurance policy, as well as additional details that greatly affect the level of cover you have. Some of the things to look out for include:

• Important details in the fine print. For example, some policies might claim to cover “hijacking”. You might assume that it covers death benefits, medical costs and losses sustained during a hijacking attempt; in fact, this might only refer to the cost of rebooking flights back home if you decide to cancel all further travel plans.
• Sub-limits. These are limits that apply in addition to total limits. For example, you might have a policy that purports to cover $15,000 of damaged, lost or stolen belongings, but has sub-limits of $1,000 per item, meaning that is the most you can claim for any one thing.
• Exchange rates and specified currency. If you take out a travel insurance policy in Australia then the benefit schedules are usually in Australian dollars. This may be worth considering when thinking about how much cover you need in your destination, as exchange rates may differ.
• Excesses. Like many other types of policy, travel insurance will typically include excesses, which are a fee that must be paid when you make a claim. This amount may be more than the benefits claimable from an incident. It can be a good idea to compare the excess with the benefits payable.

A travel insurance broker is able to watch out for these pitfalls and enumerate the actual benefits and downsides of a policy as revealed in the fine print.

How do I find a good travel insurance broker?

Just like when selecting an insurance policy, it can be worth spending some time and effort on comparing and selecting a broker that suits your needs. Look for some of these qualities:

• Transparency: They should disclose fees and payment structures upfront.
• Knowledgeability: They should be able to answer any questions you might have and explain things with ease.
• Licensing: Registered brokers must hold an Australian Financial Services (AFS) licence at a minimum. More experienced brokers may also hold qualifications such as a Diploma of Insurance Broking, or designations like Qualified Practising Insurance Broker (QPIB).

Don’t be afraid to ask about your travel insurance broker’s qualifications and anything else you might want to know. Selecting a broker can be difficult and questioning them thoroughly can help you make the right decision.

What are some of the downsides of using a travel insurance broker?

While travel insurance brokers can bring many benefits, there are also some clear downsides to watch out for. Be aware of these things when comparing options:

• They may cost more overall. Insurance brokers have differing payment and fee schedules, and you may not be receiving good value for money from their services. It can be difficult to tell when this is the case and you may wish to ask them for a payment breakdown in order to determine exactly how much they cost.
• Travel insurance brokers will not always offer more or better options. Some of them might only work for a single insurer and will only compare policies from that provider. Others might work with only a handful of different insurance brands and have similar downsides. When you compare travel insurance policies directly, you have a better idea of whether or not you’ve explored all the options.
• They may have ongoing fees for services you don’t use. You might be paying a broker for managing a policy, providing advice and making claims on your behalf, but with travel insurance, there is a good chance you will never need to take advantage of these services. Just like comparing travel insurance policies, it can be a good idea to be choosy with brokers and only select options you are likely to use.
• You need to depend on them while travelling. It is possible that requesting a travel insurance broker to manage claims and communicate with the insurer on your behalf isn't a good course of action. If something has happened to you overseas, it's important that you are able to depend on and trust your broker.
• If you have a dispute, you will most likely not be able to resolve it until you return home and contact the Australian Financial Complaints Authority (AFCA). If you are dependent on travel insurance in the event of mishaps and cannot pay out-of-pocket for things like emergency travel or accommodation, this might pose a serious risk.
• You might spend more time finding a travel insurance broker and comparing options than you would have carefully selecting a policy from direct brands. At the end of the day it might be simpler to just cut out the middleman and do it yourself.

Alleviate the potential risks of hiring a travel insurance broker by familiarising yourself with their legal requirements, and what they are and are not allowed to do.

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What are brokers legally required to do?

Insurance brokers are bound by legislation that requires them to maintain a certain level of service.

Licensed travel insurance brokers in Australia are legally required to:

• Act in your best interests
• Provide appropriate advice, and warn you when they are giving advice based on incomplete or inaccurate information
• Prioritise your interests over their own, and over the interests of any other involved third party, in the event of a conflict
• Document any financial advice they provide in an official, written statement

In the event of a conflict with your travel insurance broker, you can refer the case to the Australian Financial Complaints Authority (AFCA) for a third-party decision.

Written by

Jessica Prasida

Publisher

Jessica Prasida is a travel insurance expert for Finder. She lives and breathes travel, having worked as a travel agent and branch manager at STA Travel for over 4 years, then writing about travel insurance with Finder for another 5 years. Jess has a Bachelor of Business from the University of Technology, Sydney and a Tier 1 General Insurance qualification. See full bio