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Policies leaving travellers out of pocket

12 June 2013 By Natali Mansberg Advert banned for being grotesquely obese

A recent study conducted by Australia’s leading travel insurance comparison site www.comparetravelinsurance.com.au reveals that Australian travellers are left out-of-pocket as leading insurers don’t pay out.

CTI investigated 20 of Australia’s leading travel insurance brands (1Cover, Amex, Australia Post, Columbus Direct, Cover-More, Down Under Insurance, Fast Cover, Good2Go, Insure4Less, InsureandGo, iTrek, On Tour, Qantas, Simply Travel Insurance, Southern Cross, Travel Insurance Direct, Travel Insuranz, Virgin Money, Woolworths). Based on the research, travellers can expect to lose out on at least $500 if making a claim for an Apple iPhone purchased over 12 months ago for example. (Based on a new iPhone costing $799, less the averageexcess of $107.89 and the applied estimated depreciationof 50%).

Travellers are set to lose out further if signed into long term contracts on monthly plans with mobile phone providers unless they provide documentation from the provider showing the payout figure for the phone. What’s more is that insurance companies require proof of ownership for the mobile device and if travellers have not yet paid for the phone in its entirety (At end of 2 year contract), the insurance provider may not pay out at all.

CTI is urging travellers to shop around and always read the small print; the devil is certainly in the detail. Even though your insurer might say it will cover you to the value of $10,000 for lost, stolen or damaged items, there will be a per item sub-limit, and in the policy document you will probably find the words: “Depreciation will be applied to claims for lost luggage and personal effects as reasonably determined by the insurer.”

American Express was the only insurer out of all 20 that offered ‘new for old’ replacement on a mobile phone.

Media spokesperson for Compare Travel Insurance Natalie Ball …

“Most travellers carry a smartphone these days. It’s the quickest way to snap and share your holiday moments with friends. Travellers shove them in their pockets, throw them into their bags and drop them without too much concern – but a standard travel insurance policy won’t cover the cost to replace it.

Insurers will usually depreciate the value of any item you claim, so travellers need to get smart about their travel insurance. If you’re planning on taking your smartphone abroad, consider adding it as a specific high value item so that you’re not left out of pocket; or take an old phone with you instead”.

CTI research on a standard comprehensive policy showed:

9 out of 20 of the insurance providers’ “single item limit” was less than $750.
19 out of 20 of the insurers when calculating the amount payable would apply ‘reasonable’ depreciation due to age, wear and tear determined by the insurance provider for unspecified items.
19 out of the 20 providers allow travellers to increase their ‘single item limit’ by specifying items and paying an additional premium.
The average maximum limit for increased “single item” cover was $6,900.
Nearly all of the companies had an excess fee of $100, the highest was $150 from Virgin Money.
The average* ‘maximum limit cover’ for Luggage and Personal Effects was $10,550 with the lowest total cover from iTrek, 1Cover and Down Under Insurance at $5,000 and the highest from Southern Cross at $25,000.
The lowest ‘single item limit’ we found was from Qantas at $400 for ‘each other item’, $500 for watches and jewellery and $1,000 for personal computer, camera and video items, with a $100 excess payment. Travellers can expect to be $499 out of pocket on this policy based on a new iPhone costing $799, the single item payout of $400, excess of $100 and the applied estimated depreciation* of 50% on payout.
The highest ‘single item limit’ was from InsureandGo at $3,000 for laptops, tablets, cameras, video cameras and mobile phones, with a $100 excess payment. Insurers will never pay more than the item was originally worth and based on this travellers can still expect to be $299.50 out of pocket. This is based on an iPhone costing $799, excess of $100 and the applied estimated depreciation* of 50% on payout.
CTI also looked into the cost of a quote for a 10 day trip to Bali for 1 person aged 40. The average comprehensive quote for a 10 day trip to Bali for a single person aged 40 was $62.00. Best value for money was Down Under Insurance ranking cheapest at $42.05 for the policy with a ‘single item limit for mobile phones’ capped at $1,000 and the most expensive and worse value was Qantas at $116.00 for the policy with a ‘single item limit for mobile phones’ capped at just $400.

The importance of travel insurance:

Having the right travel insurance for your holiday or business trip- whether domestic or international can really change how your trip turns out. Personal belongings and high value items aside, travel insurance more importantly covers events such as trip cancellation/interruption and medical expenses for injury or illness.

Regardless of whether you travel regularly or are planning the trip of a life time, the unexpected may happen and being on the end of exposed risk could see your holiday end in financial ruin. Travel insurance gives you the freedom to focus on your holiday and provides loved ones back home the peace of mind that should anything happen you’re covered.

Whether you’re after a single trip policy, an annual multi-trip policy, or family travel insurance, every person can benefit by doing a travel insurance comparison.

CTI advice:

CTI encourages travellers to shop around and know the details of their policy. Check limits and any excess that applies; the cheapest isn’t always the best option for your trip. Assess what items you’re taking away with you and specify any high value items you must take. Compare Travel Insurance‘s biggest advice is to be sensible and keep your wits about you when you travel!

What you won’t be covered for:

Compare Travel Insurance has highlighted likely situations you will not be covered for.

Travellers are not covered if they leave their belongings unattended or if belongings are out of reach
Travellers are not covered if they do not report the loss, theft within 24 hours with a full written report
Some insurance companies will not pay any claim relating to a mobile phone (or device with phone capabilities) if you are unable to supply the IMEI (International Mobile Equipment Identity)
Travellers are not covered if they cannot prove the device belongs to them with an original receipt. Photocopied, faxed or scanned documents will not be accepted
Some insurance companies will not pay if mobile phones, computer equipment, or jewellery is left unattended in a motor vehicle at any time
Travellers are not covered if driving a vehicle they are not licensed to drive e.g motorcycle in Thailand
Travellers are not covered for any claim where alcohol or drugs is a contributing factor

Average*

An average of the 20 Insurance providers researched: 1Cover, Amex, Australia Post, Columbus Direct, Cover-More, Down Under Insurance, Fast Cover, Good2Go, Insure4Less, InsureandGo, iTrek, KangoCover, On Tour, Qantas, Simply Travel Insurance, Southern Cross, Travel Insurance Direct, Travel Insuranz, Virgin Money, Woolworths.

Depreciation of an estimated 50%*

This figure is conservatively based on general industry practice. Taking your smartphone and laptop away? Read this first! inadequate travel insurance policies