By Ed Charles
COVER STORY
It pays to read the fine print of your travel insurance policy carefully, Ed Charles writes
THE air tickets are paid for. The boutique hotel and spa resort is booked. And the designer label luggage is packed. But have you bothered to check whether you have the right level of cover for that once-in-a-lifetime holiday?
The likelihood is not, as illustrated by the number of complaints going before the Insurance Ombudsman, Sam Parrino. He says travel insurance is punching above its weight when it comes to disputes.
In the ombudsman’s 2005 report travel insurance accounted for 15 per cent of all disputes.
In the upcoming 2006 report it will account for about 20 per cent of disputes. And most decisions rule in favour of insurance companies because people simply haven’t read their policies properly.
“The situation is that people consider travel insurance to a great degree to be a grudge purchase,” Parrino says.
“They save furiously for that holiday and that’s where the big bucks go … and the last moment they decide to take out some insurance and there is less attention paid to the insurance policy”.
As Graham Kingaby, insurance director of World Nomads, recommended by Lonely Planet, says: “A lot of people buy travel insurance as they buy most insurance and the only time they really do look at the documentation is after claims occur.
“Just spend five minutes having a look at it, it really is worth it. And anything that should seriously affect you personally — serious exclusions — are usually fairly big and bold these days.”
The same message goes for travel insurance available on many premium credit and charge cards.
Cards offer vastly different levels of cover that really need to be understood (see separate story).
“People have a feeling that because they have got insurance, that insurance is the be all and end all, it covers all situations. As you know you pay for what you get,” Parrino says.
Travel agents receive a 45 per cent commission for selling travel insurance, meaning that policies can be bought cheaper online.
Many health insurers also give members a 10 per cent discount for travel insurance. Corners should not be cut for the sake of cost alone.
“I personally believe that the strongest reason for buying travel insurance is the medical repatriation service,” Kingaby says.
For grey nomads and older travellers special attention needs to be paid to pre-existing medical conditions.
Each insurer has a different definition of what a pre-existing medical condition is.
It ranges from a doctor’s visit within 30 days of taking out a policy, as with Tour Safe, to a specialist or in-patients appointment within six months for American Express’s charge cards.
World Nomads targets the under-65s because of the complications of underwriting older people.
“A 75-year-old going to New York for a year is a very bad risk for a travel insurer,” Kingaby says.
If a 75-year-old breaks a leg in America, once all the hospital tests are run the costs can be three or four times as much for a 21-year-old. A heart attack and a stay in intensive care can easily cost $500,000.
Edip Okur, national product underwriting manager for CGU Insurance says: “If you are going somewhere like Southeast Asia, the medical costs are relatively cheap compared to other things. But when you go to those places there’s other types of things that do come up.
“A lot of people do tend to get ill on smaller types of issues when travelling in those locations. You don’t need the high-end cover.” He says the costs of dealing with these issues might be $1000. In the US it would be 10 times as much. Prestige travel company Abercrombie & Kent finds that Tour Safe insurance works well for its clients. This is because it has a policy designed for mature-aged people up to 84 years of age.
The company says that often people over 70 can have difficulty getting insurance with other companies.
It offers unlimited overseas medical and hospital expenses and repatriation to Australia. This is common with many policies, including those available on cards, and cheaper policies do limit medical expenses. Importantly, Tour Safe has unlimited cancellation insurance, which is ideal for expensive holiday packages such as those offered by Abercrombie & Kent.
Bill Giffin, executive director of insurance broker Compusure, which developed the Tour Safe policy, says that you need to start thinking about a special policy for anyone over 69 years of age. The premiums are different and there are caps in the lengths of time travelling.
“For example, for a 74-year-old going to the States the maximum we will issue one of our policies for is for eight weeks,” Giffin says. “If they want a period over that they have to apply to us personally and supply us their health details.”
The premiums vary depending on age and pre-existing conditions in the age groups 70 to 74, 75 to 79 and 80 to 84, Giffin says. “Anybody over the age of 84 has to apply. We don’t publish a rate for that or a duration. We define a pre-existing condition as something that has happened in the 30 days before buying the policy. Such as if you have taken medication for a condition in the 30 days prior to the policy. Some policies go back forever and a day.
“Ours is just 30 days. If something has happened to you in the 30 days and you’ve been to the doctor for something you have to tell us about it — if you want cover.”
One of the biggest sources of grief is unattended luggage being stolen or lost. When people start travelling with expensive items such as rolex watches, laptop computers and MP3s there is a high risk of loss.
Many policies will insure these items but not necessarily on a new-for-old replacement basis and with a limit.
“The best place for high values items is on your house insurance or office insurance policies where you can get new for old,” Kingaby says. “But often they have limits when they are outside of the home or outside of the office, 30 days or 60 days.”
Sporting equipment is excluded when in use. But if your golf clubs are stolen, some policies will allow you to hire another set.
Some policies, including those provided on cards, offer hire car excess waivers. “If you are going to a place like the US … if you are to hire a car, being from an overseas country, it could be up to $1000 to $1500 for an excess,” Okur says. “It’s really a cost that you don’t really want to have to pay while travelling.”
Ombudsman Parrino’s says to ask questions. People can ring the insurance ombudsman service on its toll-free number — 1300780808 — and ask experts what the wording actually means in policy documents.
“When in doubt ask. Never assume a anything,” Parrino says. “People must not be too trusting or accepting of what people say. Put them to the test.
“It’s your money. If you are buying the product, you deserve the best. And make the people selling the product, who are going to make the profit, make them work for your dollar. Make them do the research for you.”
ON COURSE: CREDIT CARD TRAVEL INSURANCE
Issuer ……………………. Card ………………………………… Insurer ……………………………. Medical expenses ………………………………………………………. lost luggage, personal effects …………………….. valuables and electrical equipment …………………………………………………………………………………………………. Requirements ……………………………………….. Annual fee
American Express ……. Platinum …………………………… Zurich …………………………….. Unlimited. Not more than $1,500 without prior authorisation ….. $30,000 ………………………………………………… $5,000 maximum for any item including laptops ……………………………………………. $100 paid for on card for accomodation/travel … $900
……………………………… Gold ………………………………… Zurich ……………………………. $2.5 million. Not more than $1,500 without prior authorisation … $10,000 in total. ……………………………………… $1,000 maximum per item. $250 for mobile phone. $2,500 for laptop ………… Overseas ticket bought with credit card ……………………………… $130
ANZ ………………………. Frequent Flyer Visa Platinum … CGU ……………………………… Reasonable medical expenses approved by treating doctor ……. $12,000 or $24,000 for more than one person … $1,000 maximum per item. $4,000 for electronic equipment including laptops …………………………………………… $250 of trip on card. Return ticket ………………. $140
……………………………… Gold ………………………………… CGU ……………………………… Reasonable medical expenses approved by treating doctor …… $12,000 or $24,000 for more than one person …. $1,000 maximum per item. $4,000 for electronic equipment including laptops …………………………………………… $250 of trip on card. Return ticket ………………. $87
Commonwealth Bank … Platinum …………………………… Zurich …………………………….. Unlimited ………………………………………………………………….. $20,000 or $30,000 for more than one person … $5,000 an item including electrical equipment and computers ……………………………………………………………….. Overseas ticket bought with credit card ……….. $200
……………………………… Gold ………………………………… Zurich ……………………………. Unlimited ………………………………………………………………….. $10,000 or $15,000 for more than one person …. $3,000 an item including electrical equipment and computers ………………………………………………………………. Overseas ticket bought with credit card. ……….. $113
nab ……………………….. Gold ………………………………… American Home Assurance … Unlimited ………………………………………………………………….. $10,000 or $20,000 for more than one person …. $2,000 per item. Laptops $6,000. ………………………………………………………………………………………………….. 50% or more of trip paid for on card …………….. $88
Westpac ………………… Altitude Platinum ………………… Zurich ……………………………. Unlimited ………………………………………………………………….. $20,000 or $30,000 for more than one person …. $3,500 an item. $5,500 for a laptop computer. ………………………………………………………………………………….. Overseas ticket bought with credit card ………… $295
……………………………… 55 day Gold ………………………. Zurich …………………………….. Unlimited ………………………………………………………………….. Up to $15,000 …………………….. $3,000 an item. $5,500 for a laptop computer. ……………………………………………………………………………… Overseas ticket bought ……………………………. $90
Source: Issuer websites, financial services guides and policy documents
—————————————————————–
Fine print in travel cover delivers credit where it’s due
AS a travel insurance product, credit and charge cards get a bad rap. But there are good deals to be had among the premium cards.
The important thing, as with any travel insurance policy, is to read the policy terms and conditions so you understand exactly what you are getting.
Mark Rayner, vice-president of consumer cards at American Express, says: “I think there are a lot of credit cards out there with travel insurance, but people are unsure as to the level of cover.
“They are unsure how positive the claims experience will be, so they tend not to trust it and then they take an additional, per-trip insurance policy, or they buy an additional annual policy from another insurer, which we would recommend our customers not to do.”
Insurance ombudsman Sam Parrino says he gets a fair number of complaints on credit card insurance because a lot of people are now relying on it.
“There’s nothing wrong with credit card insurance as long as you understand the extent of cover,” he says.
“People are paying for their trip on the credit card and the credit card says it will cover you for this, this and this. You’ve got to be careful.
“It’s like you buy a suit off the rack, or you have one made for you. You know which one is going to fit you better.”
Rayner claims that American Express Gold and Platinum charge cards offer “pretty exhaustive” coverage.
“And if you line it up against a pay-per-trip, or an annual policy, they stack up pretty well.”
Graham Kingaby, insurance director at World Nomads, says the problem with some credit card insurance cover is that it is bought in bulk by the issuer for very little.
Sometimes, to keep their margins, the issuers cut certain covers.
“As a result, there can be some interesting terms and conditions in them. I don’t particularly like credit card insurance.”
But he concedes: “The more premium cards tend to have better levels of cover.” He says American Express Gold Card is one of the better policies from cards: “To be honest, it is not a particularly bad travel insurance.”
One of the most extensive covers is offered by the American Express Platinum charge card. The downside is that the annual card fee is $900.
“I’m a Platinum card holder and I don’t buy any additional insurance. I have two children and a wife and we travel a lot,” Rayner says. He says the Gold card offers good cover but there are some limitations.
“For the average person, I think it is a very adequate cover.
“One of the things we may look at in the future is the ability for customers to top up their insurance for particular trips — extreme sports and things like that.”
For example, skiing is covered by the gold card but not off piste, which is classified as an extreme sport.
Riding a motorcycle abroad isn’t covered by many policies unless you have an Australian motorcycle licence (even if it is not a requirement of the country in which you are travelling). Edip Okur, national product underwriting manager at CGU, says that the cover available on cards is often different from that of a separately bought policy.
CGU provides the insurance element of the ANZ gold and platinum cards.
“It is matched to our top level of cover and that was done on purpose,” Okur says.
“ANZ wanted to make sure that, if people were relying on this cover, they were getting coverage for their travels overseas and in the US.
“Not all financial institutions get that level of cover.
“If you are only travelling to Southeast Asia, it might be perfectly fine cover, but people have that misconception, expecting their gold card — because it is a premium product — to provide a premium insurance product.
“The two don’t necessarily go hand-in-hand.”
The difficulty with card insurance can be ensuring that the trip is eligible for cover.
As ever, this means a good hard read of the terms and conditions.
For the American Express Platinum card, the only requirement is that $100 is spent on travel or lodging costs.
For the American Express Gold card, the whole fare must be paid for on the card, or the flight can be paid for with frequent flyer points and the additional tax component put on the card.
For the ANZ Gold and Platinum cards, at least $250 of pre-booked travel must be paid for with a card, and the ticket must have a fixed return date.
What about lost luggage or delayed travel?
If a trip is delayed for over four hours, Amex Platinum will pay up to $700. Rayner says: “It does not specify what you can or cannot buy.”
Caption:Â COVER Design: Toni Hope-caten
Cover the bases: Graham Kingaby says premium cards tend to have better levels of coverPicture: Bob Finlayson
Illus:Â Photo
Table
Column:Â Wealth
Section:Â FEATURES
Type:Â Feature