Travel insurance: Why you should always read the fine print

Travel insurance policy terms and conditions are immensely boring reading until you try to make a claim. So what would James Bond do?

By Michael Gebicki

James Bond probably doesn’t have travel insurance. Suppose, however, that he does.

He’s in Istanbul, leaps out of his hotel bed when he hears the distant clicking of the Sultanahmet tram that he mistakes for the cocking of a Beretta M9 pistol, trips over the empty bottle of Krug left lying on the floor, knocks himself out and then misses his flight to London.

Is he eligible to claim against his insurance for additional expenses caused by the delay? Quite possibly not.

Dangerous travel liaisons

In the wake of recent terror attacks and civil unrest, Istanbul is regarded as a less than safe destination.

Smartraveller, the travel advice website run by Australia’s Department of Foreign Affairs and Trade (DFAT), currently applies the warning “reconsider your need to travel” to Istanbul. This is the second-highest caution on Smartraveller’s advice ladder.

Apart from the threat of a terrorist attack, the Smartraveller website warns “Check that your travel insurer will cover you” – and there lies the rub.

“Mere presence in a location deemed unsafe could scupper any hopes of making a claim.”

Insurers take a dim view of claimants who do not act prudently to keep themselves out of harm’s way. Notwithstanding Bond’s mishap with the Krug – which could happen anywhere – his mere presence in a location deemed unsafe could scupper any hopes of making a claim against his travel insurer. 

NRMA Travel Insurance spells it out in its Product Disclosure Statement, explaining that the insurer will not pay claims resulting from “you not following advice in the mass media or any government or other official body’s warning and you did not take appropriate action to avoid or minimise any potential claim under your policy”.

Other travel insurance policies include similar injunctions. If you put yourself in the danger zone, it’s your lookout.

When did you buy your travel insurance?

Travel insurance has a number of twists and turns, just like any other insurance. One factor that few travellers take into account is timing. If you buy your travel insurance before an unexpected event unfolds, you’re generally covered for claims that might arise as a result of that event.

When Java’s Mount Raung started belching smoke in mid-2015, and later that year when Mount Rinjani on Lombok blew its stack, flights were grounded. 

Thousands of travellers were left stranded, either in Bali or unable to get there. Major insurance underwriters such as Allianz and Lloyds of London applied a cut-off date. Anyone who had bought their travel insurance before the eruption and suffered a delay to their travel plans was covered, but policies purchased after that date would no longer provide cover for claims for delays resulting from the ash cloud. The rationale was that travel insurance is there to protect against unforeseen events. 

Since the ash cloud was in the sky and could possibly affect flights, delays caused by cancelled flights were no longer deemed to be an unforeseen event.

Credit card complimentary travel cover

Business travellers who use a gold-, platinum- or diamond-level credit card to pay for tickets are often eligible for travel insurance from their card provider at no cost. 

To take advantage of this free travel insurance that comes with many elite level credit cards, a card holder must charge all or part of their travels above a specified amount to the card. There might also be a minimum spend.

In most cases, the travel insurance policy is activated automatically; on some, such as CommBank’s Gold, Platinum and Diamond credit cards, you need to activate coverage online.

Medical cover is the big-ticket item and most credit card travel insurance policies provide unlimited cover for accidents, injuries and medical repatriations. The excess for any claim is generally higher for a credit card policy, usually in the range of A$200-$500.

For a standalone retail policy, the lower figure is typically about A$100 for most claim items. Cover for theft or damage to your goods and chattels is often more generous with a free credit card policy. The same goes for thefts of cash: you’re usually better off with a credit card policy. 

“Cover for theft or damage is often more generous with a free credit card policy.”

In all but the US (where the renter may be liable for the full replacement cost of a vehicle they damage), a credit card insurance policy gives you adequate cover for the excess on a car rental agreement.

For example, ANZ Premium Cards cover you for the insurance excess on rental vehicles (within Australia) to the tune of A$5000; in the case of Citibank Rewards cards, the figure is A$2250 (within Australia) and A$2750 (for international travel). 

Australians who are not heading for Syria, Libya or anywhere else that carries a “Do Not Travel” advisory from Australia’s DFAT will be covered. However, they might not be covered for travel within Australia. If it’s a family trip, only you and your partner might be eligible for the full cover provided under the policy, with reduced cover for other family members.

Read the fine print in your travel insurance policy

Credit card travel insurance policies come with the usual ifs and buts, available as a PDF on the provider’s website, and they matter. For example, there’s a “gotcha” in the travel insurance provided by one major credit card provider.

Under the terms and conditions, the policy document states “We will not pay medical costs over $1500 without prior authorisation.” If you’re semi-conscious in a hospital bed this might be difficult.

Insurance T&Cs are possibly one of the most boring documents ever written, but you shouldn’t set foot outside without a thorough read.

“I didn’t know …” is a threadbare position if you fail to read the terms and conditions and you leave empty champagne bottles lying around in your hotel room.

Read next: The 11-point checklist to de-hassle your travel

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