Preparing for a holiday is usually when you start pinching pennies. As your departure date looms, you might be tempted to slash items from your ‘must-get’ list. Sometimes this will be a good call. Do you really need a $500 raincoat in the tropics? Or three brand new bathing suits? Other times, cutting corners will be a decidedly bad call. Case in point: travel insurance.
Travelling without insurance is a huge risk. Costs for cancellations, theft, accidents, injuries and illnesses can run into the tens of thousands of dollars. Travelling without adequate insurance is also a risk. When shopping around for different policies, be sure to take a magnifying glass to the small print.
Most travel insurance policies exclude pre-existing injury or illness. Broadly speaking, this means ‘an injury or illness for which you have received medical treatment or have taken medication in a specified period of time before the policy starts’. Warning: the definition of ‘pre-existing’ can differ between policies, as can the ‘period of time’; for some policies this means 21 days, for others six to 12 months.
In short: be sure to carefully check all definitions before signing on the dotted line and discuss your concerns with the insurer. Some policies will be able to cover certain pre-existing conditions, like diabetes, epilepsy and asthma. In these circumstances, the insurer might request information from your doctor to ensure the medical condition is well controlled. Other insurers might be willing to extend their cover for a higher premium.
Also be aware that many policies have a general exclusion for serious pre-existing conditions, like mental illness. However, a recent case — Ingram v QBE — has challenged this alleged discrimination.
Ingram v QBE Insurance
Student Ella Ingram was forced to pull out of a university trip when she experienced depression for the first time. When QBE denied her travel insurance claim on the basis of its mental health general exclusion, she challenged them in the Victorian Civil and Administrative Tribunal (VCAT) — and won.
QBE argued that the exception under the Equal Opportunity Act (that is, lawful discrimination) applied because it was supported by actuarial statistical data. However, when the company was unable to produce evidence of this data, VCAT ruled in favour of Ms Ingram.
Had Ms Ingram not taken out travel insurance, she would not have been able to make a claim in the first place, let alone challenge the decision at VCAT where she was awarded remuneration to cover her lost travel costs as well as compensation.
Some travel insurance policies exclude certain ‘high-risk’ activities, such as extreme sports, and/or activities in particular countries. For example, in Thailand or Indonesia your policy might not cover injuries caused by riding a motorbike.
Think about what type of activities you intend to participate in, and where, and check the small print for exclusions. You might need to pay a higher premium to cover that part of your trip.
Challenges and reviews
If your insurer denies your claim, you have the right to challenge their decision and ask for a review. The travel insurance industry is covered by the General Insurance Code of Practice, which gives access to a reasonably user-friendly review process.
If you do have cause to mount a challenge, it’s a good idea to seek independent legal advice, even if just for general guidance on how to manage the process.
The Australian Government's Smartraveller website has many cautionary tales about travellers with no insurance, inadequate insurance or who had insurance claims denied because they disregarded their policy’s terms and conditions, for example, drinking alcohol while under the legal age in their holiday destination.
Maurice Blackburn once acted for a client who suffered a collapsed lung while flying domestically in the USA. After hospital admission and surgery, the medical bill came to more than US$50,000. Fortunately, our client had travel insurance. When their insurer argued that a pre-existing condition had culminated in the collapsed lung, we were able to produce medical evidence to the contrary. As a result, the insurer paid the claim in full. Had our client not taken out travel insurance, the financial implications would have been dire.
Follow these steps to make sure you’re adequately covered and to avoid nasty travel surprises:
- do your research and shop around
- visit Choice to compare different policies
- read the small print with a careful eye on definitions, exclusions and all terms and conditions
- ask the insurer for clarification
- ask about higher premium options to get the cover you need.
A holiday should be the time of your life, not the cause of crippling financial loss. Skimping on travel insurance can result in significant costs that can run into the tens of thousands, or more. Protect yourself and your family. Spend a little now — and save a lot later.
Kim Shaw is a principal in Maurice Blackburn's Melbourne office.