For most of us, the holidays are already over. For some of us, it was the break we needed. For others, well, they spent most of last week trapped in Thailand because of a massive storm. I’d hope they all had proper travel insurance.
And bad weather is only part of holidays from hell. In this article, I’m getting interviewed about the major ways you can be stranded by inadequate travel cover. It’s all about:
- Where you go
- What you do
- Who you bring.
So, let’s get into it…
1. Where you go – hazardous locations
Question: So Morgan, the first point you mention is ‘where you go’. What does that mean?
My answer: There are places your insurer is not keen on covering. Typically, they’re whole-of-country exclusions – usually conflict zones, places like Afghanistan and Iraq. Some policies request that you comply with DFAT recommendations – that’s the Smart Traveller site. Smart Traveller can be a bit Chicken Little though. You’d think Belgium would be as safe as it gets, but it currently has a high threat level due to a failed terrorist attack in June 2017.
Q: This could be tricky. Belgium is a tiny country in the Schengen zone: if you’re in a tour bus, the highway might go in one border and out the other half an hour later without you knowing.
My answer: Correct. You have to understand your policy and know if you’re going to have an excluded claim however you end up in a country. If you’re flying from Europe to Australia with a stopover in Abu Dhabi, that’s fine: most policies will not exclude transit locations. But if your stopover is diverted to Turkey, that’s a higher-risk location. Again, the point here is to understand your policy and how it will respond.
Q: So, what should you look for in your policies regarding hazardous locations?
My answer: Look out for any terms like ‘transit countries’ and ‘modes of transport’. Read all the conditions and policy wordings around those terms. If something doesn’t add up, call your insurer and get answers.
Q: Any real-life examples of travellers who’ve come into trouble through being in a hazardous location?
My answer: Happens all the time. Only the horrific cases grab headlines. There’s those Aussie surfers who tried to drive across a sketchy part of Mexico and there was that attempted machete carjacking in Kenya recently. Most of the time, it’s nothing like that. Usually, it’s like the woman who broke her ankle badly on a cruise ship in Indonesia. Her travel insurance policy gave her – amongst other benefits – unlimited medical cover. She chose to be airlifted off the cruise ship and taken to a reputable hospital rather than go to the nearest one in Indonesia, fearing the level of medical care would be substandard. Obviously, not all policies afford this level of choice. It’s another thing to look for in your policy wording.
Q: How can an insurance company even know what’s going on in these places?
My answer: They employ people specifically to monitor conditions on the ground and also use sites that pull intelligence reports from agencies around the world, including Interpol. For example, Chubb uses the WorldAware service, which has something like 150 intelligence analysts on staff.
2. What you do – risky activities
Q: Okay, so there are hazardous places, but can’t you get hurt anywhere?
My answer: Yes. You can be in a safe location, but still engaging in a risky activity. A classic is hiring a scooter in Bali: there’s probably very few travel insurance policies that cover driving a motorscooter by default. There are also lots of other activities not covered as standard: scuba diving, snowboarding, hang-gliding, parasailing, mountain biking, fishing, spearfishing etc.
Q: But those are exactly the kinds of things people do on holidays!
My answer: Correct, and that’s why you have to read your terms and conditions. Most people are buying these policies online or through a travel agent who is not versed on insurance. So, it’s up to you to read the exclusions. If you don’t understand something, seek help from an expert.
3. Who you bring – travelling with family, friends and kids
Q: How does travel cover work for people you’re travelling with? Where is the limit with spouses, kids, relatives and friends?
My answer: Some policies cover your whole family. Some policies will only cover you personally. Some will cover financial losses for your overall group. This actually happened to me: my wife and I were going snowboarding in New Zealand with another couple. We’d all booked together. The day before we were due to depart, I suffered a grade-3 tear to my calf muscle. Hello crutches, goodbye skiing trip. Because I’d been careful in buying our insurance, the whole group was reimbursed. In no way is that a given in every travel insurance policy.
Q: How many people does an off-the-shelf holiday policy usually cover?
My answer: It will usually say the ‘insured’ which is the policy-holder. Some policy wordings broaden the definition of the insured to include ‘spouse and dependents’. A dependent is someone who’s financially beholden to the policyholder. I have plenty of clients taking their retired mother on their trip as a babysitter for the kids. Both the mother and the kids are technically ‘dependents’ – depending on the policy wording.
Q: What about ‘spouse’, how is that defined? Marriage has changed over the past couple of years.
My answer: Yes. There is an increasing population of same-sex couples, so this is important. In a contract of insurance, if a word is not listed in the policy with a specific meaning, then typically it adopts the meaning in the normal English language. So, let’s look up ‘spouse’:
- Oxford Online Dictionary: ‘A husband or wife, considered in relation to their partner.’
- Wiktionary: ‘A person in a marriage or marital relationship.’
That’s pretty clear-cut then. Also, from an insurance point of view, it doesn’t usually matter if the place you’re visiting doesn’t recognise your marriage. It’s about the law where the policy was issued.
Getting good travel insurance is crucial
So, that’s a quick overview of my thoughts on travel insurance. Overall, I think travel insurance should be mandatory. I don’t just say that because I’m in the insurance industry.
I don’t want anyone to face the very stark choices of having a serious incident overseas and not having the insurance to match.
All this brings us to…
Q: Okay Morgan, final question: isn’t a tailor-made travel insurance policy more expensive than one from a comparison site?
My answer: No. Not always. A properly tailored policy can be more cost-effective than a standard online one because there’s more to coverage than the price.
- What is actually covered in your policy wording?
- How long does it take to get certain things included in your policy?
- Will you be able to get fast customer service when you’re in desperate need?
- How soon can your insurer settle a claim?
Every time you trade a lower price for compromises on those things, you edge away from cost-effectiveness.
Take my claim about the skiing trip. I got that through an online insurer. But, I have been in insurance for years and years. I was able to articulate the claim form in a way they would understand. I was able to provide the information they needed in order to pay my claim quickly. Because I know the industry, I was able to get a good, quick result from an insurer that didn’t have a call centre at all.
I know my usual sign-off is that the right insurance means you can Risk-Reward-Repeat – well, holidays are different. When you get the right travel insurance, you’ll know you’re covered no matter what. And that means you can Recline-Recharge-Relax. And that’s what I pray you’ve just been able to do.
But, if you’ve ever had a holiday from hell, let us know. I’m genuinely interested.