Brendan Manning examines the policies on offer and pitfalls of insuring yourself while travelling overseas.
Filled with adventure, overseas travel is an exciting prospect. However, voyaging into the unknown carries hidden dangers and pickpockets, lost luggage and medical emergencies can trouble even the most well-prepared traveller.
Travel insurance offers reassurance to countless backpackers and tourists. But policies are not all-encompassing and there are flaws in even the most comprehensive, which may be one reason why a third of New Zealanders forgo the financial parachute.
Big claims: A middle-aged man who ran up more than $200,000 in medical bills after being diagnosed with cancer while holidaying in the United States was last year's biggest payout, says Southern Cross Travel Insurance.
Bicycle, motorbike and car accidents are among the top 10 payouts, with gastric problems the most common, says chief executive Craig Morrison.
What is covered and how much will it cost?
Travel insurance typically covers medical, hospital and ambulance costs, and lost luggage and flight cancellation costs.
More comprehensive policies cover a range of unexpected events including legal defence costs (for wrongful arrest), skifield closures because of bad weather, loss of prepaid travel if travel is cut short following a hijacking incident, funeral costs, and even veterinary fees for injured pets.
In terms of costs, travelling to Australia for the weekend will cost about $30, two weeks on a Pacific Island $70 and six months in South America $600. Providers often offer a discount of as much as 35 per cent for booking online.
What cover do you actually need?
Kiwi travellers should check their travel insurance policies to avoid paying for "illusory" benefits they're unlikely to need, says Morrison.
Some policies offer personal liability cover in the millions, but many consumers have been left exposed because their insurance didn't provide adequate cover for travel delays.
"After the 2010 and 2011 volcanic eruptions in Iceland and Chile a lot of companies reduced their travel delay maximum limits to only $1000 or $2000, nowhere near enough for such major events," Morrison says.
"Our customers who were stranded in Europe claimed on average $500 a day.
"For those stuck in Paris it averaged $1000 a day."
Make yourself familiar with add-ons
Travellers should be aware of add-ons concerning specific activities. Hawke's Bay man Sean Kenzie racked up over $80,000 in medical and evacuation bills after an accident in Thailand last year because his policy did not cover scooters. "He believed he was covered," Morrison says, "but it turned out that motorcycle and moped cover had to be purchased as an add-on."
Consumer NZ warns travellers to ensure that their policy covers repatriation if they are journeying to countries where advanced health care may not be available. "To get repatriated privately in an air ambulance can cost up to $100,000 - money you'll have to pay yourself, because the New Zealand Government won't," the consumer watchdog says.
Existing medical conditions can hamper insurance claims, so talk to your provider to ensure you are covered.
Travelling while pregnant
Travelling while pregnant carries another set of complications. New Zealand Herald online travel editor Eveline Harvey says many airlines permit women with complication-free pregnancies to fly until reasonably close to their estimated date of delivery.
But travel insurance cover for pregnancy-related medical complications can be difficult to obtain for those more than 20 weeks' pregnant. The College of Midwives advises pregnant women to travel before reaching their third trimester.
Ministry of Foreign Affairs and Trade spokesman Adham Crichton says: "If you can't afford travel insurance you can't afford to travel."
A survey established that 31 per cent of New Zealanders did not take out travel insurance when heading overseas.
The most common reason was that they were "happy to risk not being covered".
However, Southern Cross points out that the unexpected can happen to anyone at any time.
"Travel insurance is particularly worthwhile for covering unexpected medical and evacuation costs which can quickly climb into the tens of thousands of dollars, or even more," Morrison says.
"If you're in the US, Europe or somewhere more remote, you could be looking at a bill in the hundreds of thousands."