Trip Trap That Could Cost You $500,000

Sun Herald

Sunday April 16, 2006

George Liondis

Ensure you know just what your travel insurance covers, writes George Liondis.

PASSPORT? Check. Credit cards? Check. Airline tickets? Phew, got them too. What have you forgotten?

Hopefully not the travel insurance - something you should never leave home without, says the Department of Foreign Affairs and Trade, which handles 16,000 cases a year of Australians who suffer illness, accidents or misadventure overseas.

But if you have taken out travel insurance you can relax, right? Wrong. Even with insurance, you could end up in a hospital bed far from home, racking up hundreds of thousands of dollars in bills with no one to pick up the tab or pay your way home.

Sound scary? You could never go on holidays again - or you could read on to find out about the most common traps with travel insurance.

CREDIT CARDS

If you own a premium credit card, chances are the provider has thrown in travel insurance. So you can forget about it and get on with planning your trip. Or so you think. The problem with travel insurance through your credit card is that it is often so riddled with exclusions it's barely worth the paper it's written on.

Some cards will cover you only if you are on a business trip, a catch most people don't realise until it's too late.

But the trap that dupes most, says John Braithwaite, managing director of insurance broker International Medical Assistance Network, is that credit card providers typically insist you pay for a trip on the card or the insurance won't apply.

TERRORISM

Don't take out travel insurance without reading what a policy's fine print says about terrorism. It is reasonably safe to assume you will be covered for medical treatment if you are injured in a terrorist attack, but problems arise when you decide to cancel a trip because of safety fears.

Rod Frail, of the Insurance Council of Australia, says most policies will not refund you the costs of a cancelled trip unless the Federal Government issues a formal warning first advising against travel to the specific area you are heading to.

But this is not universal, and some insurers will not pay claims relating to terrorism, regardless of the circumstances. Don't be alarmed, but definitely be alert and go through your policy with a fine-tooth comb.

BIRD FLU

With the bird flu and SARS scares in recent years, you can't get on a plane with the sniffles these days without all the other passengers refusing to sit next to you. New and dangerous diseases can also be difficult as far as travel insurance goes.

Like terrorism, unless the Government issues a specific travel warning about your intended destination, insurers are unlikely to cover the costs if you pull out of a trip because of fears about getting sick. Even with an official warning, insurers may not cover you, so read the fine print. "The government warnings are important when they say that you shouldn't travel to a country," Frail says. "But this is not universal. There are policies that exclude any [claim that arises as a result of ] government decisions."

LOST LUGGAGE

Most people don't like to think they can get sick or injured on holidays, but most will probably concede there's a chance they'll lose or be robbed of luggage. Which is where travel insurance kicks in, right? Wrong again. Most policies will not cover you for lost or stolen luggage if it is "unattended" at the time of the incident. Braithwaite says he has seen instances of when luggage stolen from the boot of a car was deemed to have been "unattended".

Even if you were attending to the luggage, and someone snatched it from under your nose, you won't get paid unless you obtain an official police report of the incident - something that is not always practical, given the time and even language constraints most travellers encounter.

"This is a huge cop-out by the insurers," Braithwaite says. "It varies with different insurers, but some make it impossible to get a claim paid."

THE UNITED STATES

Want to try your luck in Las Vegas, climb to the top of the Empire State Building in New York or schmooze with the Botox set in LA? Be prepared to take out the biggest, hairiest, no-limits insurance policy you can find. The US is notorious for its health-care costs and medical bills of $500,000 are not uncommon.

"You are foolish to go to the US without a very good policy because the costs are quite horrendous," Braithwaite says.

Europe and Japan can also be very expensive. Other countries, such as Britain, have reciprocal Medicare arrangements with Australia, but even this does not mean you can travel without insurance; if there are no beds available in a public hospital you could end up being cared for, and charged, as a private patient.

EVACUATIONS

Most good policies should provide for it, but check to make sure the full costs of a medical evacuation are covered by your travel insurance. The Department of Foreign Affairs warns that it can cost $95,000 if you need to be shipped out of the US in a medical emergency.

Even for somewhere as close as Bali, it can cost $60,000. Never assume that insurers will pick up the tab.

"If you have broken your leg, don't book three seats on the plane home so you can rest your leg," Frail says. "You need to get approval from the insurer first."

THE INTERNET

Many holidaymakers let their travel agent arrange their insurance, but this can be more expensive than buying it online, the Australian Consumers Association says. Often, this is because travel agents are paid commissions by insurers, which bumps up the cost. But anyone who buys travel insurance over the internet should take care to ensure they are dealing with a reputable organisation that is recognised overseas.

If an overseas hospital does not recognise your insurer you may not be admitted. And remember to get a signed statement from the hospital where you are treated, as insurers are unlikely to pay your claim without it.

OLDER TRAVELLERS

More older people are travelling these days but the unfortunate truth is it is becoming harder, and more expensive, for them to obtain insurance. Some insurers will not cover you if you are above a certain age, others exclude you if you have an existing medical condition.

Some will insure you if you have a medical problem, but only if you pay extra. And don't even think you can get away with not telling your insurer about a medical condition.

If something happens when you are overseas, and it is determined that it was a result of an existing condition, insurers will not pay your claim.

© 2006 Sun Herald

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