On my last radio interview, near the end one caller said words to the effect of: "my recently-bought Travel Insurance policy wording is 58 pages long”. Another caller's was 62 pages long.
“Do travel insurance companies really expect people to read these and understand all of the jargon?”
Without exception amongst the callers, they all expressed frustration at the length of the wording, the loopholes, and feel exasperated that they cannot possibly understand what it all means. The general conclusion is that insurance companies just make it this way so they can decline claims.
According to FOS (Financial Ombudsman Service), they received 43,684 disputes and closed 43,325 disputes in 2017-18. An 11% increase on the number of disputes received (for all types of financial services) during 2016-17 and a 10% increase on the number of disputes closed in 2016-17. You can check out the comparative table on travel insurance providers they released for 2017-18 to get an indication of how disputes are mostly resolved for each. Our underwriter is Hollard, if you want to see how they measure up against others.
Two of the most ‘popular’ travel insurance complaints are:
1. PEC’s (pre-existing conditions), and
2. the existing condition of a relevant person.
These both came up in my radio interview.
So that got me to thinking…why don’t we have a post on “The key things you really need to know about your travel insurance policy.” Here’s my take on what you need to know – and why.
Key things you need to know about travel insurance policies.
1. Pre-Existing Conditions (PEC’s).
At Holiday Rescue, we’re not trying to trap you by creating some loophole where we can decline your claim, through some spurious indirect link to your PEC! No siree Bob, we want to give you confidence that you’re covered. It may cost you $5, or $250, but you’ll have certainty about your cover when you buy and while you’re on holiday.
To offer you an insurance policy and provide that certainty, we need to understand what we’re covering. To begin with, you need to think seriously about your answer to 4 short questions:
- Is anyone waiting to see a medical professional, or for the results of a test or investigation?
- Does anyone take prescription medication or require ongoing treatment?
- Has anyone seen a medical professional in the last 3 months or been hospitalised in the last 3 years?
- Does anyone have heart problems (such as angina, palpitations, high blood pressure, or stenting), stroke, transient ischaemic attack (TIA), chronic obstructive pulmonary disease (COPD), or cancer?
If your answer is YES to any of them, you’ll need to do a simple online medical assessment. That’s done right after you enter all the traveller’s details. You can see how much everything will cost, and it only takes a couple of minutes depending on how many pre-existing conditions you have.
Remember, if you will for a moment, that the insurance company is offering UNLIMITED medical cover. That’s a BIG number! If you’re in a car accident overseas and the costs for treatment overseas and to bring you home are $500,000 – we’ll pay that bill. Not bad for a policy that only cost you about a hundred bucks!
Example: You have high blood pressure, high cholesterol, and take meds for these, and are going to the USA for 14 days. You land at LAX, get a triple espresso double macchiato at Starbucks, have heart palpitations that take your breath away, so call an ambulance and go to the nearest hospital emergency room. Your preliminary tests will cost around US$20,000 just to see if you’re having a heart attack. Whether you had one or not may not matter when it comes to what you’re covered for. What matters is whether you declared, or had the chance to declare, or were required to declare, your high blood pressure (HBP) and high cholesterol (HC)!
Did the HBP and HC contribute to the palpitations? No one knows for sure. What will your insurer do? If they exclude all pre-existing conditions from cover as a general rule, you’re probably not going to be covered. And if you were a) offered a chance to declare them, but didn’t, or b) declared them but didn’t want to pay the extra premium (“what could possibly happen?”), you’re probably not going to be covered.
However, at Holiday Rescue, we require you to declare these two conditions. If you had, you would have been offered 100% assurance of cover in the scenario above, for an additional premium. In this scenario, the additional premium we’d require is specifically related to the extremely high cost of healthcare in the USA, the severity of your conditions, the length of time you’re in the USA, and your age. Not a bad return on a US$20,000 bill…if it happens to you. Do you want to take that gamble and roll the dice?
For a small additional premium, you get 100% certainty, and no question on cover from us.
2. Health Conditions of a Relative.
Scenario A: Nana is 90 years old, no major health problems, just the usual minor ones for a 90 year old.
Scenario B: Nana is 90 years old, but for the last 10 years has been getting progressively worse from heart problems, basically chronic obstructive pulmonary disease (COPD), with associated symptoms.
“We do not expect you to put off going on holiday or put your life on hold because of Nana.”
So you book a non-refundable cruise for the family, trip of a lifetime, with deposits paid of $50,000.
Nana dies.
What will Holiday Rescue do?
In Scenario A, we’ll pay your cancellation or curtailment claim up to the policy limit of $50K. Nana’s death was not reasonably foreseeable, (Nana might live to be 95, who knows?).
In Scenario B, we would limit your claim to $5,000, because Nana was sick, and getting more sick as each year went by. While we don’t want you to put your life on hold, we also require that you think about the risks of taking a $50,000 non-refundable ‘trip of a lifetime’ when Nana is so ill. For a premium of, say, $200, you want to pass on a $50K risk to the insurer? Travel insurance covers you for the unexpected, and Nana’s death in this second scenario wasn’t exactly unexpected. So go on holiday, but choose an itinerary where the total non-refundable deposits are $5,000, so that you’re 100% covered if Nana were to die (either before you departed or while on the cruise).
And here’s the thing – this might seem surprising to you, but all insurers have a similar policy, buried in their 60+ page policy wordings in 6pt font. The difference with Holiday Rescue is, we want you to understand up front what you’re covered for.
3. Cancellation Cover.
Most decent travel insurance policies offer cancellation cover from the moment of purchase. Far too many people don’t understand what this means – if something (the dreaded unexpected event) happens to you before you depart, your non-refundable deposits are covered by your travel insurance. So the right time to buy your travel insurance is the nano-second after you’ve paid out some money for non-refundable deposits.
This section of the policy also covers you if you’re already on holiday, but need to cut short your holiday due to an unexpected event, which might be to do with you or your family getting sick, or relating to something back home.
For example: you’ve paid out $2,000 in non-refundable airfares to go to Sydney with your partner in two months’ time. A weekend getaway! You deserve it, of course! For less than $50, you can insure those deposits. Against what, you say? A car accident, where you aren’t well enough to travel anymore! An unexpected death or illness in the family. Your son is hospitalised with appendicitis… Otherwise, you’ll lose $2,000. We’re biased when we say that a $50 layout to protect $2,000 in non-refundables is worth it. $50 bucks = a bottle of wine at a mediocre restaurant, or 10 morning coffees, or 5 beers at the pub.
Another example: you’re half-way through your overseas holiday, and one of your kids back home ends up in the hospital after a car accident. Your travel insurance policy will cover you for the cost to change your flights on your existing tickets to get home right away, (in rare cases buying you new tickets if the old ones cannot be used, due to flight or seat availability). And we’ll reimburse you for any deposits you lose on the hotel nights you couldn’t use.
4. Why is the policy wording 50-100 pages long?
Because it often combines more than 5 different types of policies (almost always sold separately) into one policy document.
These are all the types of cover you should find included in a standard travel insurance policy:
- Medical cover – unlimited (so long as it’s not an undeclared PEC – see #1 above!)
- Cancellation/Interruption/Delay/Curtailment (curtailment is jargon meaning to cut short your trip)
- Funeral Cover (if you die overseas)
- Personal Liability (click to find out what this means and why it’s included in travel insurance).
- Lost Passports/Documents
- Personal Property/Cash
- Rental Car Excess (in full, rental vehicle insurance excess cover – understand what you get with this cover).
Holiday Rescue has made every effort to eliminate insurance jargon to make it easy to read, and reduce the number of pages (currently 35). This summary is a further attempt to explain a complex policy that is usually sold as a one-off and very cheap, relative to the car/contents/house policy bundles offered in New Zealand, and where you have a (sometimes) lasting relationship with your insurer.
5. Don’t go without knowing the emergency assistance number!
Have that number preloaded onto at least two phones so you’ll always have it handy!
Far too many people head off and don’t know the number to call when, alas, they need urgent help. This is particularly true if you’re relying on credit card travel insurance!
6. Keep these priorities in mind when buying travel insurance
1. Can you declare your pre-existing medical conditions, and be 100% certain before you buy about what you will (or won’t) be covered for?
2. Is there at least limited cover to cancel your holiday or come home early for sick/aging relatives back home?
3. Can you understand what you’re getting – is the policy wording written in plain english?
7. Don’t be stupid on holiday!
When at home, we wouldn’t think about going out after midnight drinking and riding a moped without a helmet. Or stripping down to our underwear outside of our local church…
For some strange reason, people do stupid things when they’re overseas; they let their guard down. When we should be MORE conservative with our behaviour, given we’re in a foreign country with different laws than at home – instead we’re relaxed, unaware of, or naive to the inherent risks.
In over 17 years in the industry, I’ve never seen a serious injury or accident (with the exception of car accidents) that occurred before midnight. NOTHING GOOD HAPPENS AFTER MIDNIGHT! Sure, I can hear you now saying “what are you, my mother?”, “What a killjoy!”
This is what usually happens when our investigator gets to the hospital where you’re laid up with serious injuries from your alcohol-fuelled accident, you’ll swear you “only had two beers.” But the CCTV tapes from the bar will show you were there from 8pm until 2am hammering the beers, shots and other local brew. No travel insurance policy covers drug or alcohol-induced stupidity. The stories of what people do when drunk in foreign countries are embarrassing, and the outstanding medical bills going into hundreds of thousands of dollars that they are left with is stone-cold sobering. Do you want to have to mortgage your house – or your parents’ house – to pay your overseas medical bills? No? Then don’t be a dick when you’re on holiday.
8. Pregnant?
We want what’s best for you and your baby, and I know from being involved in travel insurance for over 18 years – and researching the medical outcomes – that it’s best to travel during the first 20 weeks of your pregnancy. And that’s why our policy is designed to cover your pregnancy for the first 20 weeks.
Why 20 weeks?
Because that’s how early the most premature babies have been able to survive, and if your baby has even a slim chance of survival – you can guarantee most medical professionals will do whatever it takes to save your baby. Which is what you’d want right? Only, that’s when you get hit with the huge bills because care of a newborn is not covered under regular travel insurance policies. So we like to encourage pregnant women who have passed the 20 weeks pregnant mark to postpone their overseas holidays until we can cover them and their beautiful baby. And if you’re newly pregnant – congratulations – book that babymoon in before you get to 20 weeks so you can relax and enjoy it without any worries!
What else do I need to know?
I can only confirm what Holiday Rescue offers, so if you’re looking around please take care. Every policy is different when it comes to cover for pregnancy, so read the ‘fine print’ carefully. What is common for all regular travel insurance policies, is that childbirth, care of a newborn baby, regular antenatal care and common pregnancy symptoms are not covered at any time.
At Holiday Rescue, we want our insured customers to always be aware and sure of what they’re covered for. We can’t stomach the idea of customers being ‘caught out’ or feeling insecure about their cover. That’s why we’re upfront about limiting our cover for pregnant women once they’re more than 20 weeks pregnant.
How do I know?
When you get a quote and begin to apply, you’ll see a heading that says “Pregnant? – You must read this.” When you click it, we explain how to apply for cover if you have any complications, and exactly how your cover is limited if you’re going to be more than 20 weeks pregnant during your holiday. You can read more about what’s covered, and what’s not for pregnancy after 20 weeks here. We’d rather have less customers than one mum-to-be who’s 24 weeks pregnant, and has an unexpected event that leaves her stuck with a huge medical bill.
Unfortunately other insurers are not always so direct, or easy to understand with all of their “terms and conditions”. It can be confusing to work out how long your pregnancy is covered for, if it is covered at all, and what happens once you’ve exceeded their limit. So take care out there, don’t get caught out by vague promises on a website. Avoid being stuck with a massive hospital bill after a car accident, just because you required additional treatment for your pregnancy and you didn’t realise you were past their cut-off date.
9. Fine print.
Every insurer has ‘general exclusions’, which is a list of ‘things’ they don’t cover. We don’t cover some things, because we don’t like the risk of those ‘things’ – usually high risk activities. Like hiking to Mt Everest base camp. That’s an adventure – way more than a holiday – and encompasses way more risk than our policy is designed to cover.
If you’re riding ATV (all-terrain vehicles) or quad bikes, are you doing it under the guidance of a commercial operator as a normal tourist would do? ATV’s and mopeds are inherently risky activities, but when you add being overseas on unfamiliar roads or terrain, where different rules apply, possibly without a helmet, maybe with a hangover or “good buzz” or whilst drunk – and the risk exponentially rises.
X-Games or similar stunt and extreme types of activities? You’re more likely than not to be injured.
Your premium doesn’t cover this, it is outside of what we call our ‘risk appetite’ and isn’t what most regular people do while on holiday.
10. “Your stuff” a.k.a contents/property.
Are you an overpacker? How many times do you get back from holiday, and sigh as you unpack because half the stuff you took over wasn’t used? I mean, if you’re going to Fiji you only need a few tops, shorts or a skirt or two, sunscreen, mosquito repellant, sunglasses and togs.
That’s why we set the cover for your personal items at $5,000 per person, because most people don’t need or take enough to justify $30,000 or $50,000 worth of cover. And we figured, why pay for the extra cover when you don’t need it?
So if you’re going overseas, we made it easy for you – and even better – we give you a choice. Either don’t pay anything at all if you don’t need cover for your stuff with an Essentials policy, or pay for a reasonable level of cover with a Comprehensive policy.
What does Holiday Rescue cover my stuff for?
We cover your stuff for theft, but not accidental loss. So if you forget it, lose it or drop it – that’s not covered. We also limit jewellery claims to only watches, wedding and engagement rings, and to $2,000 per item. Hey, leave your expensive jewellery at home – why do you need it on holiday, anyway? And if you do, we’re not the insurer for you.
On the flipside, we reimburse you for the amount you originally paid for items, when the claim was a legitimate loss related to a crime or an accident like a fire, boat sinking, car crash, or a mugging. Because we think that’s fair, rather than applying depreciation to everything because you’ve had it for a year or two – like many others do.
We’re working on it.
I, too, wish it was all easier. If everyone was 100% honest, and understood that stupid, reckless behaviour wasn’t covered, we could get the policy wording down to one page! But that’s not the world we live in, unfortunately. So we’ll keep working on improving it from our end.
In the meantime, at the very least think about your pre-existing medical conditions – and any conditions that those travelling with you have. Pay the lousy $5 for your high blood pressure or asthma, and if nana isn’t in the best of health maybe consider a different holiday closer to home, in case you need to rush back to her side. Check whether you’ll be covered for all your holiday plans, rather than just taking a punt. Know before you go!