Travel insurance

The different levels of cover

Comprehensive policies are more expensive than budget options but have higher cover limits and provide cover for a broader range of circumstances. For example, a budget policy may have a limit of $500 for a missed connection, while a comprehensive policy could cover up to $15,000.

Budget policies: If you can only afford a budget policy, make sure it covers medical expenses and personal liability in case you accidentally injure someone or damage something.

Single- or multi-trip insurance policies: Most of us will be best serviced by a single-trip policy. However, if you have multiple trips planned within a 12-month period, a multi-trip insurance policy may work best. Generally, multi-trip policies have a cap on how long each individual journey is, for example, 60 days.

Buying insurance from a travel agent

Travel agents generally on-sell an insurer’s policy rather than offer their own policies. 

The two travel agencies that appeared in our travel insurance satisfaction survey have partnered with insurers to sell the insurance companies’ policies. For House of Travel, it’s Allianz, while Flight Centre is with Mitsui Sumitomo Insurance. 

Our survey respondents scored House of Travel significantly below average for price and value for money. They also thought its policy was hard to read. Flight Centre fared better but was still below average overall. 

While it may be easier to buy your insurance from a travel agent, we recommend shopping around online to make sure you’re getting the best deal.

Using the travel insurance that comes with credit cards

Some credit cards include a built-in insurance.

You’ll need to activate the insurance with the credit card’s bank and pay for some of your trip with the credit card. Some cards will stipulate how much you need to spend to activate the insurance.  

There will also be limits on the length of journey the insurance will cover; anywhere from 35 to 120 days for the cards we looked at. However, the policies are likely to cover an accompanying spouse and children.

There may also be an age limit on the policy, which may mean you have to complete an eligibility check.

Our surveying has found people are satisfied with their credit cards’ travel insurance. It appears the main reason for this is because the insurance is complimentary with their credit card.

When to buy travel insurance

You can buy travel insurance at any stage before your trip, but the earlier you buy it, the better. If you leave it and something happens in the country you’re heading to – say riots or a volcanic eruption – you’re unlikely to get cover for any cancellation and could lose the cost of your flights and anything else you’ve already paid for. 

You could also be out of pocket if you’re not yet insured and need to cancel your trip before departure because of an unforeseen event, such as a serious injury.

Compare policy details

It always pays to check the cover. What’s standard cover in one policy may be an optional benefit in another – or may not be covered at all.

It’s especially important to check the medical coverage, along with personal liability and what happens if your belongings get stolen.

Rental car excess may also be handy if you’re hiring a car on your trip. For the full details, check our travel insurance policy comparison.

Travel insurance policy cost

We asked 12 insurers about how much their premiums cost for a comprehensive policy for two travellers making two journeys each to four different destinations: a 45-year-old and a 70-year-old both heading to Australia, the United States, France and Japan. One journey to each destination was for a week, while the second was for a month.

Based on the median price we were quoted, for all the journeys, travel insurance for the USA was the most expensive, while, perhaps not surprisingly, heading across the ditch was the cheapest. 

While cost is important, it’s best to check it against the policy details to make sure you’re getting value for money. Check our travel insurance price and policy comparison.

Why you should pay for your trip by credit card

In the fine print of most travel insurance policies, you’re likely to find an exclusion from cover if the airline, tour operator or travel agent you’ve booked with goes bust.

The only way you’re likely to get your money back in these situations is if you paid for the flights (or trip or tour) on your credit card. Then, if you don’t get the service, you can apply for a chargeback. Be aware there are time limits for applying for a chargeback. Generally, you have up to 120 days from the date of the transaction.

Comprehensive travel insurance cover

Comprehensive travel insurance covers:

• belongings
• bookings
• medical expenses
• personal liability
• rental vehicle excess.

Belongings

Travel insurance covers your belongings up to a limit. With some insurers, that limit is as much as $30,000, while with others, it can be $8,000 or less, so it’s important to check you have enough cover.

Most policies will also have set limit amounts for laptops and smartphones and the theft of any cash.

Bookings

Most comprehensive policies provide built-in cover for non-refundable travel and accommodation costs if you have to cancel or cut short your trip due to an unforeseen event (such as illness).

You won’t be covered if you cancel just because you’ve changed your mind.

Travel insurance can also help if you miss a connecting flight due to circumstances beyond your control. Comprehensive policies cover alternative transport to get you to your destination – and most will pay extra to get you to a special event (such as a wedding) on time. They may also provide allowances for extra costs, such as accommodation if your trip is interrupted after a certain stage.

But you won’t be covered if you turn up late or didn’t get the right visas for your trip. Or, if you knew that your trip might be shortened before you took out cover.

You’re also out of luck if your transport or tour provider goes bust. The only way you’re likely to get your money back in this situation is if you paid for the flights (or trip or tour) on your credit card. Then, if you don’t get the service, you can apply for a chargeback. Be aware there are time limits for applying for a chargeback. Generally, you have up to 120 days from the date of the transaction.

If you’re planning on using Airbnb or a similar holiday home service, double-check your insurance will cover it should the worst happen.

Typically, travel insurance will cover you for any damage you cause to a hotel. However, while some insurers treat all temporary accommodation similarly, other insurers make an exception for peer-to-peer rentals, that is, situations where consumers rent items from other consumers, for example Airbnb. Under Airbnb's terms, guests are legally responsible for all damage caused to the host's home, even if the host has home and contents insurance. Check with your insurer to confirm you have cover.

Medical expenses

If you fall sick, travel insurance covers the cost of treatment at a doctor’s clinic or hospital overseas. If a doctor says you’re too sick to continue your trip, your insurer can help organise and pay for you to get home.

However, you may not be covered if your injury or illness was caused by a medical condition you had at home before you travelled.

Likewise, injuries as a result of being on drugs or drunk are excluded. Medical tourism (that is travelling to another country for a medical or dental procedure) is also excluded, as are complications late in pregnancy.

Some policies have limited cover for emergency dentistry.

Personal liability

Personal liability covers you for damages or legal expenses that you are responsible for while overseas. Cover limits for personal liability range from $1 up to $5 million.

But your travel insurer won’t cover your legal liability if you crash any motorised vehicle into someone or something.

If you’re renting a vehicle, you’ll be relying on the insurance offered by the rental company. It pays to check you have cover before you drive off rather than assume it’s automatically included in the rental costs.

Your personal liability may not be covered if:

• you recklessly or purposefully cause damage (for instance, while you’re drunk)
• you’re required to pay an enforced fine rather than compensation for something you damaged.

Rental vehicle excess

Some travel insurers include cover for rental vehicle excess within their policies.

Rental vehicle excess is the amount the rental company will charge you if you make a claim. This excess can run into thousands of dollars, and the rental company will give you the option of reducing it for a fee. However, you don’t have to pay this fee if your travel insurance already covers the excess.

Some insurers only offer this cover as an optional extra, so if you plan on hiring a car overseas, double-check with the insurer that you’re covered for the excess.

Going on a cruise

Some travel insurers include cruise cover in their comprehensive policy, while others have it as an optional extra. If you are taking to ship life for your holiday, double-check cruise cover is included in your insurance. You don’t want to be lumbered with a massive bill for being helicoptered off the ship should the worst happen.

What’s excluded from most travel insurance policies?

Pre-existing health conditions

Pre-existing health conditions are health issues you had before taking out insurance. Typically, insurers won’t cover a pre-existing illness or injury (or any problem linked to them) unless you discuss it with them first.    Some insurers have a list of health conditions (for example, coeliac disease, epilepsy and hypertension) that they automatically cover, provided the condition is well controlled. Even if your health condition is not on the “accepted” list, you might be able to get cover if you pay extra. If cover for your pre-existing condition is available, don’t travel without it. A massive overseas medical bill isn’t the souvenir you want to bring home.

Some holiday activities

Riding on a scooter or motorbike that has an engine bigger than 200CC, whether as a passenger or the driver, is likely to be excluded from your travel insurance cover. 

Other action sports and thrill-seeking activities – think snowboarding, bungy jumping or hot air ballooning – are also likely to be excluded. 

Check the fine print of your policy if you’re planning any daredevil activities. You can add activities onto your policy, but it may make the policy more expensive.

Civil unrest

Many insurers exclude civil unrest and rioting from their cover. 

If you’re in a country when unrest breaks out, get in touch with your insurer as soon as you can. If you’re still in Aotearoa when the unrest takes place, get in touch with your insurer and airline to discuss your options. 

If you’ve already paid for your tickets and accommodation but haven’t bought travel insurance before the unrest breaks out, it’s extremely unlikely you’ll get cover for that destination, and if it’s no longer safe to travel there, you could find yourself out of pocket.

Before you book anything, you might want to check the travel advice provided by the government on the Ministry of Foreign Affairs and Trade’s SafeTravel website.

The travel insurance excess

If you make a claim on your travel insurance, you’ll normally have to contribute some money towards covering your loss. The amount you have to pay is called the excess.

If you’re happy to cover smaller losses yourself, some insurers will allow you to increase the excess in exchange for a lower premium. Others will let you choose a lower (or nil) excess, but you’ll pay more in your premium.

In our premium survey, the excess was between $100 and $200.

Insurers with the best customer service

AA Travel Insurance, BNZ Bank, and Southern Cross took out the top spot, with 56% of their customers very satisfied with their services.

At the other end of the scale, House of Travel performed the worst with just 35% of its customers very satisfied. Three things let it down: its value for money, price and a policy document that was hard for customers to understand.

Find out how the rest performance in our customer satisfaction survey.

Making a travel insurance claim

If you hit a snag on your holiday, contact your travel insurer as soon as you can to confirm what cover it will provide. This is particularly important for big expenses, like hospital bills.

You’ll also need to start gathering evidence to back up your claim.

Here are our tips for collecting evidence for particular claims.

Medical: Collect medical or dental reports from your overseas medical practitioner. You may also need to hand over an itemised list and receipts to prove the cost of your treatment.

If you’re injured or fall sick, you may have to pay medical expenses upfront and claim compensation from your insurer afterwards. Insurers can provide payment guarantees to hospitals if necessary.

Belongings: Notify the local police within 24 hours if your belongings have been stolen. Contact your travel provider within 24 hours if your luggage is damaged or missing. Get a written statement to show you reported the incident. You may also need to provide your insurer with receipts or other documents to prove you owned the items in question.

Take photos of your bags and their contents before you leave. The photos may come in handy if your luggage goes AWOL.

Rental vehicle excess: Provide copies of the rental agreement, incident report and repair invoice if you want to claim back the rental vehicle excess after damaging a rental vehicle.

And again, take your own photos of the damage to the vehicle.

Delayed luggage or transport: You need to claim compensation from the travel provider in the first instance if your transport is cancelled or your luggage is lost or delayed. You can then turn to your insurer if you’re still out of pocket, but you’ll need to supply paperwork from the travel provider detailing the compensation you’ve already received.

Disputes with travel insurers

If you’ve made a claim but it’s been rejected, your first port of call is the insurer’s formal complaints process, which will be outlined in your policy.

If you and your insurer can’t settle a dispute, you can complain to your insurer’s independent dispute resolution service. The main one used in Aotearoa is the Insurance and Financial Services Ombudsman Scheme.