Many travellers simply rely on the travel insurance offered by their credit card companies when going on holiday. However, have you made sure you understand what is covered and what is not? Here are some points to consider:
Payment of your holiday: Does your travel insurance kick in only if you pay for your entire trip by credit card? There was an instance, reported by the Financial Ombudsman Service (FOS), where a traveller used frequent flyer points to secure his flights while paying for his accommodation via his credit card. His travel insurance claim was rejected on this basis. However, lucky for him he took the issue up with the FOS who ruled it wasn’t fair or reasonable to reject his claim just because he ”paid” with points.
Trip cancellation: The issue of trip cancellation was highlighted this year following the ash from the Icelandic volcano and major local floods and natural disasters. It focused attention on checking whether all your flights are covered on your journey or merely those of your originating flights from and back to Australia.
5 things to consider when buying travel insurance
1) Check what features are offered. For example, Canstar Cannex Financial Analyst Chris Groth says insurers that rank five-star in their rating system might offer flexible features such as being able to extend your insurance after you’ve embarked on your trip, offer generous limits and possibly include extreme sports such as snow sports as standard.
2) Do you have any health issues? Look for travel insurance which includes select pre-existing conditions automatically. TID, for example, covers 42 common conditions, such as asthma, without the policyholder having to declare them.
3) Do want to risk a large excess? Obtaining a cheap travel insurance package might sound like a bargain until its time to make a claim. You might find yourself being hit by a huge excess to pay upfront. Check your excess beforehand so you’re not in for a nasty surprise.
4) What will it cost to replace your most valuable items? Check your travel insurance policy to see what caps and limits apply per item or category. Is your electronic equipment (including your valuable laptop) covered up to a maximum of $1000 or $5000?
5) Besides these points, make sure you read the policy carefully to make sure it’s the right one for you. Cheaper isn’t always better when its comes to travel insurance.
Agents hamstrung when it comes to offering advice
A ”mystery shopper” exercise in Britain earlier this year found that travel agents were selling people unsuitable policies. In Australia, the concern is that they can’t give good advice even if they want to.
The Financial Ombudsman Service’s dispute resolution manager, Graham Warner, says advising people on insurance is giving ”financial advice” under the Financial Services Reform laws, so travel agents now only provide factual information. ”The legislation was aimed at helping the consumer but … now the public isn’t getting advice as to what product suits their particular needs. Again, it’s a case of ‘buyer beware,”’ he says.
The Australian Federation of Travel Agents’ chief executive, Jayson Westbury, says travel agents were granted an exemption from the FSR laws after they agreed to sell just one policy range per agency. Flight Centre, for instance, offers only CoverMore’s suite of policies.
Agents can only point people to the relevant product based on information such as where they’re going and how long they’re going for, though dealing with only one product means they tend to be knowledgable about that product’s features.
”With any financial product, you’ve got a PDS [product disclosure statement] and you’ve got to do your own homework – that definitely still applies,” Westbury says.
Westbury’s concern is that people are being swayed by price alone.
The federation has lodged a complaint with the Australian Securities and Investments Commission about ”misleading” advertising by online insurers, which says they’re 50 per cent cheaper than travel agents.
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