Travel insurance is one of those things people often buy reluctantly.
It is not the exciting part of booking a trip. If you return home safely with your luggage, passport, health and holiday intact, it can feel like money you never needed to spend.
That is exactly how insurance is supposed to work.
You buy it hoping you never need it, but if something goes wrong overseas, it can be the difference between a stressful situation and a financial disaster.
Over the years, we have seen a lot of confusion about what travel insurance does and does not cover. Some misunderstandings are harmless. Others can leave travellers seriously out of pocket.
Whether you are travelling overseas, taking a cruise or relying on reciprocal healthcare agreements, misunderstanding how travel insurance works can become extremely expensive.
Travel insurance is often misunderstood until something goes wrong.
Here are some of the most common myths.
This is probably one of the most common reactions to travel insurance.
It is easy to look at the premium and think it seems high, especially if you have never had to make a major travel insurance claim.
Travel insurance premiums are not plucked out of thin air. They are based on risk. Your age, destination, trip duration, health, activities and the overall cost of your trip can all affect the premium.
Insurance works as a pool. Everyone contributes a relatively small amount so there is funding available for people who experience major, unexpected losses.
When someone becomes seriously ill or injured overseas, the costs can escalate quickly.
Real claim examples
| Traveller situation | Claim cost | Premium paid |
|---|---|---|
| A 57-year-old traveller fell in Phuket, fractured her ankle, developed an infection, required extensive surgery and repatriation. | $365,089 | $142.68 for 12 days’ cover |
| A 49-year-old traveller fell off a camel in Morocco and broke her leg, requiring evacuation, surgery and air ambulance back to Australia. | $341,657 | $339.77 for 31 days’ cover |
| A 75-year-old traveller contracted pneumonia while on a South Pacific cruise, was placed into a coma for 10 days onboard, hospitalised in the Philippines for 38 days and repatriated to Australia. | $268,145 | $1,264 for 29 days’ cover |
| A 66-year-old traveller tripped and fell on stairs while walking on the Great Wall of China, fracturing her leg, elbow, hip and wrist. She was repatriated to Australia by air ambulance for emergency treatment. | $300,956 | $474 for 30 days’ cover |
Claims examples are based on real Go Insurance claims. Individual circumstances, policy terms, limits and exclusions apply.
That is the reality of travel insurance. Most travellers will never have a claim of this size. For the people who do, the cost can be life-changing.
The old saying is true: if you can’t afford travel insurance, you can’t afford to travel.
This is a big one.
Many people assume that if they are cruising domestically, Medicare, ACC or their local public healthcare system will cover onboard medical treatment the same way it would at a hospital or medical centre on land.
Unfortunately, it is not always that simple.
Even if your cruise does not leave Australian or New Zealand waters, you may not be able to claim public or private health insurance for medical treatment onboard. It is worth checking before you go whether your ship has a Medicare-accessible doctor onboard, or whether equivalent public healthcare access applies to your circumstances.
Cruise ship medical centres do not usually operate like standard medical practices on land.
Medical treatment onboard a cruise ship can be very expensive and in many cases those costs may not be recoverable through Medicare, ACC or private health insurance.
There is also the issue of evacuation. If someone becomes seriously ill or injured onboard, the ship’s medical centre may not be equipped to manage them. In those cases, evacuation to shore may be the safest option. That can be expensive, complicated and urgent.
Even if your cruise never leaves Australian or New Zealand waters, it is still worth checking whether your travel insurance covers domestic cruising, onboard medical treatment and evacuation.
Do not assume public healthcare will take care of everything.
Australia and New Zealand both have reciprocal healthcare arrangements with a number of countries, including the United Kingdom.
That means Australian and New Zealand travellers may be able to access some medically necessary treatment through the public healthcare system while visiting those countries.
Reciprocal healthcare is not the same as travel insurance.
Take the UK as an example. Yes, you may be able to access treatment through the NHS, but it will not pay to fly you home to Australia or New Zealand if you need special medical arrangements to travel.
It will not cover costs like an air ambulance, nurse escort, stretcher flight, upgraded seating for medical reasons, changed flights home or extra accommodation.
It also will not help if your luggage is lost, your trip is cancelled, your passport is stolen or your travel plans are disrupted.
Public health systems also treat patients based on clinical urgency. If your condition is not an emergency, you may have to wait.
Reciprocal healthcare rights can be very helpful. They are a safety net, not a replacement for travel insurance.
A lot of travellers worry about this.
Most travel insurance policies contain an exclusion relating to alcohol or drugs. That does not mean having a few drinks on holiday automatically voids your cover.
The issue is not whether alcohol was consumed. The issue is whether it contributed to the claim.
For example, if someone gets extremely drunk, climbs over a balcony railing, falls and injures themselves, the insurer is going to look very closely at whether alcohol contributed to the claim.
Conversely, if someone has been drinking, takes a taxi back to their hotel, and that taxi is hit by another vehicle, their alcohol consumption may have nothing to do with the injuries they sustain.
Insurers cannot simply point to the fact that someone consumed alcohol and decline a claim without looking at whether it was relevant.
The sensible message is this: having a drink on holiday does not automatically mean you have no cover. If alcohol affects your judgement, coordination or behaviour and that leads to a claim, you may have a problem.
This is another common misunderstanding.
Travel insurance is generally designed to cover eligible emergency medical expenses overseas and, where necessary, the cost of getting you home.
Once you return home, your ongoing treatment is usually dealt with through your local public healthcare system and/or private health insurance, not your travel insurer.
This can surprise people. Someone might injure themselves overseas, decide to come home for surgery and then expect their travel insurer to pay the hospital or specialist bills once they are back home.
Travel insurers are generally not registered health insurers. They usually cannot pay onshore medical expenses in Australia or New Zealand.
That is why it is so important to contact your insurer’s emergency assistance team before making decisions about treatment overseas. Do not assume your travel insurer will pay for treatment at home simply because the injury or illness happened overseas.
Travel insurance may help get you home, but it does not replace public or private health insurance once you return.
Government travel warnings matter. You should always check Smartraveller or SafeTravel before you book and before you travel.
Many travel insurance policies contain exclusions relating to travel against government advice, particularly where the advice is “Do Not Travel.”
The policy wording, timing of the warning and reason for the claim all matter.
For example, if a traveller goes to a country where the government warning is in place because of terrorism, civil unrest or armed conflict, and they are injured because of that exact risk, the insurer may be able to rely on the exclusion.
If the traveller suffers appendicitis, that is a very different situation. The claim may have nothing to do with the reason the travel warning was issued. In that case, the cost of treatment may still be payable, depending on the policy wording and the circumstances.
That said, travelling to a Do Not Travel destination can still create serious practical problems. If the country is dangerous, unstable or difficult to access, arranging medical treatment, evacuation or repatriation can be much more complicated.
The message is not, “Don’t worry about travel warnings.”
The message is: read the policy, check the advice, understand the risk and do not assume your insurer can easily help you out of a dangerous place.
Travel insurance is not magic. It does not cover everything and every policy has conditions, limits and exclusions.
It can, however, be the difference between a disrupted holiday and a financial disaster.
Often, the biggest mistake travellers make is assuming they know how travel insurance works without reading the policy or asking questions.
Before you travel, make sure the policy suits the trip you are actually taking.
When someone becomes seriously ill or injured overseas, the cost is rarely just the hospital bill. It can include evacuation, changed flights, extra accommodation, a medical escort, a longer stay, worried family members and a complicated journey home.
That is exactly why travel insurance exists.
Kim Murchie
Director, Go Insurance
Not always. Medical treatment onboard cruise ships may not be claimable through Medicare, ACC or private health insurance. Travellers should check whether their cruise is covered before they depart.
Do I still need travel insurance if a country has reciprocal healthcare?Yes. Reciprocal healthcare agreements generally only cover limited public medical treatment and do not replace travel insurance. They usually do not cover repatriation, medical escorts, changed flights, luggage, cancellations or broader travel disruption.
Does drinking alcohol void travel insurance?Not automatically. Insurers generally assess whether alcohol caused or contributed to the incident or claim.
Will travel insurance pay for treatment in Australia or New Zealand?Generally, travel insurance is designed to cover eligible emergency medical expenses overseas and, where necessary, the cost of getting you home. Ongoing treatment once you return home is usually handled through your local healthcare system or private health insurance.
Does travel insurance cover Do Not Travel destinations?It depends on the policy wording, the timing of the government warning and the reason for the claim. Travellers should always check official travel advice before booking and before departure.