Diana Clement: Will your travel insurance go the distance?


With the borders open to New Zealanders, travel is on again. In fact, some younger people planning their OE have left already and others will be booking holidays.

That brings up the big question of insurance. We live in a different world to that of the care-free days of late 2019 before Covid-19 was ever a thing. When Covid-19 hit, many insurers tightened their policy wordings to make sure no one had a hope of claiming on medical or cancellation cover. That has eased up, with some insurers now offering cover if you catch Covid and need medical attention.

Insurance typically has exclusions for countries that the Ministry of Foreign Affairs and Trade’s (MFAT) Safetravel.govt.nz lists as level 4 “do not travel” or level 3 “avoid non-essential travel”. From March 4, MFAT has lifted the global “do not travel” warnings.

Now most countries are listed as “exercise increased caution”.

The significance of level 3 and 4 warnings is that insurance policies typically exclude events in those countries that relate to the travel advisory. Some insurers refuse all claims from those countries, and others will refuse a claim related to the warning. If the warning is terrorism and you’re victim to an attack you wouldn’t be covered. Sometimes the level 3 and 4 warnings relate to just part of the country.

Don’t assume you’re covered without reading the policy and checking the provider’s website. While SCTI, for example, will cover you for claims not related to the do not travel warning. I checked a popular budget insurance TINZ’s website, which made it clear there is no cover at all for countries under a “do not travel” warning. Even if you had an unrelated claim you would not be covered in that case.

A key thing to remember, an Allianz spokesperson pointed out, is if you’re taking side trips from your main destination to ensure you are covered in those countries. In relation to side trips from the UK, she said: “Europe is so easy to reach once you are in the UK and it’s affordable, but not all countries are safe to travel to, and insurance companies may have restrictions.”

Regarding Covid, every insurer and every policy is different. I looked at Southern Cross’ TravelCare policy. It does now cover fully vaccinated travellers for medical expenses if you catch Covid-19 while away, costs if you or a relevant person are diagnosed before you leave and your journey is cancelled or amended and costs up to $5000 to change your travel arrangements if your journey is interrupted by Covid after you leave. I noted that AA Travel Insurance covers unvaccinated people, which seems a bit nuts.

It’s unlikely that New Zealand will ever go into lockdown again for Covid-19. But it’s important to be aware that no insurance company will cover for disrupted travel due to government-issued travel bans. If you’re overseas and you can’t travel back for this reason, I don’t know of any policy that would cover you for your losses. Nor will the insurers pay out for disinclination to travel due to Covid-19.

If you’re going on a cruise, make sure it’s not excluded. Air New Zealand’s travel insurance, for example, excludes that.

Anyone planning an OE does have limited options currently for insurance. Some insurance companies that previously offered insurance tailored to OE trips such as World Nomads aren’t offering these policies.

Typically, someone travelling for up to a year needs a single trip policy. A year-long policy with some companies can be super expensive, but essential. I checked and a backpacker annual policy for a 21-year-old for worldwide starts at about $980 at AA Insurance.

Someone who takes multiple trips can buy an annual multi-trip policy, which covers just that: multi trips up to a certain number of days each. Credit card insurance usually has a limit such as 30 days and if you don’t return after your trip there is no cover for any of it, even if something goes wrong within that 30 days.

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