Stuff you need to know about a holiday essential!

February 2013

Travelling? Here’s some stuff you need to know about a holiday essential!

CANSTAR releases annual travel insurance star ratings and awards report today.

We’re an adventurous lot; in the twelve months to December 2012, New Zealanders took a total of 2.17 million overseas trips. Australia is our most popular destination and the USA, the UK and Fiji also rank highly. Asian destinations are popular and you could run into a Kiwi in India, Korea, Thailand or Vietnam.

Travelling abroad can refresh your mind, body and soul – but without the right travel insurance it can also drain your wallet! Our external dispute resolution (EDR) schemes receive thousands of travel insurance-related complaints each year, only accepting a small proportion for investigation. The devil, it would seem, is in the detail of the contracts.

“Travel insurance was the financial product most frequently complained about in the cases investigated this year. Complainants who have made a claim under their travel insurance policy are often disappointed to find that the amount and scope of cover under the policy wording is less than they expected…”

Financial Services Complaints Ltd, 2011/12 annual report.

“Travel insurance policies are long, dry documents with many pages and small print,” says CANSTAR General Manager – New Zealand, Derek Bonnar. “The risk of not reading all the conditions before you sign, though, is that your trip could end up costing you ten times the original price!”

While we have all heard the accident and emergency stories it’s often what happens at home before you leave that can sting your hip pocket. “A common travel-related complaint that the EDR schemes receive is in relation to policy exclusions for loss due to pre-existing medical conditions,” says Mr Bonnar. “It doesn’t even need to be a medical condition that you have been diagnosed with as yet – you may have sought treatment for general symptoms. So it’s vital that you tell your insurer about any symptoms or conditions you’ve sought treatment for, even if it seems irrelevant to you.”

Another common reason for complaint is in relation to unattended baggage. “Turning your back on a suitcase for a minute or two while looking for a trolley can see a claim for loss rejected, says Mr Bonnar.

“Leaving your towel and phone on the beach when you go for a swim, dropping your wallet in a taxi, putting your handbag on the ground and moving away – these actions can all leave you out of pocket. Some insurers require that lost or stolen items be reported within 24 hours of discovery in order to be covered, so ensure that you get on the phone to your insurer as soon as possible. Also, if you have any spur-of-the-moment ideas while you’re away – hiring a moped, for example, or parasailing – phone your insurer first! Many of them have 24 hour helplines.”

There are a host of other exclusions to trip up the unwary traveler (see list below) and with insurance being offered by a multitude of providers it can be difficult for would-be travelers to narrow the field, let alone select a product that will suit their needs.

Travelling across the ditch – while it is one the safer places to travel – doesn’t mean you should forget about travel insurance, says Bonnar.

“New Zealanders automatically get a Special Category Visa when they arrive in Australia provided they meet certain security, character and health requirements. This entitles them to staying and working in Australia indefinitely – provided they behave themselves – as well as free emergency hospital treatment.”

This, combined with the overall general safety of Australia, could lull some travellers into a sense of complacency. “My message is that travel insurance is a must-have, even if you are just crossing the ditch. Stay alert! A family crisis back home, theft or a motor vehicle accident are just a few of the things that could leave you very much out of pocket if you don’t have insurance cover.”

New Zealanders can also get stung by failing to understand the limitations of the Reciprocal Health Care Agreement – in particular the fact that it only covers medically necessary treatment at a public hospital.

CANSTAR has helped to take the hard work out of the choice with the release today of their annual travel insurance star ratings and awards report. The report assesses 23 travel insurance brands encompassing the best-value policies for singles, couples and families across eight of the most popular destinations for New Zealand travelers. The overall winner for international travel value and trans-Tasman travel: Southern Cross Travel Insurance.

“On average, Southern Cross has a premium which is approximately thirty-three per cent less than the average across all profiles,” says Mr Bonnar. “There are also some solid features, including the ability to claim online and an unlimited cover for cancellations, medical costs and repatriation. There are also generous claim limits on other items.”

Ultimately it’s important to realise that no travel policy will cover you for every single thing that might happen on your holiday. “Most travelers will have a good idea of what they plan on doing overseas,” observes Mr Bonnar.

“So it’s a case of working out what the likely risks could be and making sure that you choose a policy that will cover them.”

Travellers can download the travel insurance star rating report at www.canstar.co.nz.

Case Studies:

C arranged travel insurance with P for travel to Russia. The following month, C arrived at Vladivostok international airport by taxi. C left 3 items of luggage next to the taxi and one bag, containing clothing valued at $17,000, on the back seat while he went to get a trolley. C returned with the trolley approximately one minute later and found that the taxi had left, with the bag.

C made a claim to P for the bag. P declined the claim, because it believed that given the value of contents in the bag (approximately $17,000), C failed to take reasonable care of it. The Insurance and Savings Ombudsman agreed with the insurer and did not uphold the complaint.

Source: Insurance & Savings Ombudsman

***

In July, C arranged travel insurance with P for his journey to the United States of America, which he was taking with his sister, B.

In August, C cancelled his journey, because B had been diagnosed with bowel cancer and was unable to fly. C made a claim to P for cancellation costs.

After considering the medical evidence, P declined the claim on the basis of the policy’s pre-existing condition exclusion. This was because B had visited her doctor and been referred to a specialist for symptoms of bowel cancer, prior to the policy’s issue date. The Insurance and Savings Ombudsman upheld the insurer’s decision.

Source: Insurance & Savings Ombudsman

C arranged travel insurance with P for her holiday to Australia.

When in Australia, C injured her left wrist as she was crossing a pedestrian crossing and immediately went to a private hospital to have her wrist examined. The doctor referred her to a radiology centre and the next day, C had her wrist x-rayed at the centre. The x-ray confirmed a fracture to her left wrist and C was subsequently sent to a private hospital. The doctor provided pain relief and applied a temporary cast. A C.A.T scan was ordered, which confirmed that surgery was necessary. The following day, C was operated on.

C made a claim to P for the cost of the treatment however P declined the claim, as the cost of private health care in Australia was excluded under the policy, when free or reduced-cost care was available.

Source: casestudies.co.nz

Most popular destinations…

Country*

Number of trips per year

Average travel insurance premium (couples)

Australia

989,880

$88.29

China

66,040

$305.44

Cook Islands

71,960

$173.02

Fiji

104,720

$170.44

France

14,500

$301.93

Thailand

41,100

$263.76

UK

95,560

$263.83

USA

121,620

$366.88

Source: Statistics New Zealand

* Please note that while India and Samoa are also popular tourist destinations they have been excluded from this report due to the relatively low number of tourists who take insurance cover for these destinations.

Some common exclusions…..

· Hazardous pursuits. Activities such as motorcycling, skiing, scuba diving, bungy-jumping and hang-gliding may be excluded from the standard policy. These can often be added for an additional premium.

· High risk countries. It’s important to check the government’s Safe Travel website for the travel advisory status of your destination. Countries and areas deemed extreme risk may not be covered.

· Pre-existing medical conditions. Even conditions which have been undiagnosed but for which you have experienced symptoms are often not covered. It’s also important to disclose the pre-existing conditions of your close relatives, if this may impact on your travel.

· High-value items. Many policies will have a dollar limit claimable for each item; this dollar limit may not cover the replacement cost.

· Loss of items left unattended. Be aware of the definition of “unattended” in your policy of choice.

· Cancellation cover is only available if the travel insurance is purchased at the same time as the tickets.

· Notification period. A policy may specify that an insured event needs to be notified to them within a specified timeframe (for example 24 hours). It’s important to be aware of the notification period and stick to it

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