Families hit by Christmas travel insurance mark-ups

I hope you know better than to buy your travel insurance at the counter where you might have bought your holiday. For consumers, this "value add" has long been "value bad" - such is usually the cost of convenience.

But it's possible you've been tempted to tick the box adding travel insurance to your online flight or holiday booking.

It would be so easy. But remember my convenience comment? You'll pay potentially three times more than a standalone travel insurance policy.

Mystery shopping by price comparison site mozo.com.au, obtained exclusively by Fairfax Media, reveals a dollar discrepancy of up to 205 per cent between insurance bought through an airline or holiday booking site compared with an online travel insurance specialist.

And just in time for school holidays, families with dependent children have been found to be hardest hit. Some airlines, regardless of the age of the traveller, are even charging add-on insurance per person.

At least this group also has the most room to save.

The mystery shop found a family of four travelling to the United States for 15 days this Christmas break could keep up to $377 back for the holiday itself, with one airline quoting a staggering $560 compared with just $183 from travel insurer iTrek.

The other scenario the study compared was a couple in their late 20s travelling to Thailand - and purchasing insurance through an airline or booking site costs up to 118 per cent more than finding the most competitive quote online.

Here, you have the potential to save up to $114, as one airline quotes $210 compared to just $96 from, again, iTrek.

Naturally the insurance you choose has to be appropriate with adequate limits but it should be noted quotes were for policies with an excess of only $100, unlimited medical cover and a minimum level of personal effects and cancellation cover relevant to each scenario.

The message is that shopping around can save you a packet. Don't procrastinate either, as analysis of the searches on mozo reveal 20 per cent of us do, and delay buying insurance until the week before departure date. Those travelling alone are apparently the worst culprits.

If you delay, you risk something expensive stuffing you up between purchase and insurance. Like an extreme weather event or, in a sign of the times in which we live, geo-political or terror disruptions. Or even just a schedule change by a travel operator.

So long as there's no pre-existing condition, insurance should cover you for illness, accident and an unexpected death too (it's usually possible to pay extra to get this added where the traveller has a pre-existing condition; this is also sometimes possible if a non-traveller's pre-existing condition might cause you to change a trip. You'll never get cover if they're over a certain age though, say 80).

You're just cheating yourself out of value if you wait to buy. For example, it was too late once the Bali volcano started to rumble for the un-covered holiday maker who was inconvenienced and out-of-pocket. One insurer announced a specific refund cut-off time.

If you plan a number of trips in a year, Mozo says purchasing multi-trip travel insurance rather than several single trip travel insurances could save you money.

But what if you're ignoring insurance because it's complimentary through your credit card?

Be acutely aware you normally need to "trigger" policies by either carding the entire flight overseas, or a minimum amount of travel costs, such as $500. Find out.

You also need to scour the fine print as medical cover limits with these policies may be more restrictive than with paid policies (and the excess is generally a bit higher). Ironically though, some automatically cover skiing while you have to purchase this extra on many dedicated policies. Check carefully the situation if you have a prior medical condition or you are pregnant.

Complimentary insurance is not necessarily worse than paid, but it's always different and you don't want those differences to cost you. For example, QBE's standalone insurance has an exclusion if you're "under the influence of??? intoxicating liquor". The wording of the complimentary credit card policy is subtly, but maybe significantly, different: for example, you're sometimes not covered if simply "under the influence of alcohol or drugs".

In whatever form, medical coverage is essential if there's no reciprocal treatment agreement with the country you're visiting - check vigilantly (and note travel insurance is still recommended). Never leave home without this type of coverage if you're travelling to the US, most of Europe or Japan.

And actually have a happy Christmas holiday!

Nicole Pedersen-McKinnon is a commentator and educator who presents her Smart Money Start, fun financial literacy incursion, in high schools around Australia. Follow Nicole on Facebook: @NicolePedersenMcKinnonMoney.

This story Families hit by Christmas travel insurance mark-ups first appeared on The Sydney Morning Herald.