Pack Your Travel Insurance Policy Before You Pack Your Bags
The right travel insurance policy can make or break your holiday
Every year, thousands of Saffers, having slaved away at the salt mines, have earned every second of booking that overseas trip. And then boof, just before the final checkout, another checkbox appears, annoyingly asking for more of your hard earned holiday spending money.
The truth is that travel insurance is a fraction of the trip cost. Skip it and you have saved a larney restaurant dinner, with an entry level cabernet sauvignon.
Take it and you may have saved your financial year and possibly your marriage. Nothing like a few scenarios to colour in some travel insurance what ifs.
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Scenario one: the we are not going trip
A family books R140 000 of flights and accommodation for a December trip to Europe. In November, dad needs an urgent procedure. No travel insurance means the airline shrugs, the hotel points to its cancellation policy and alas, most of that R140 000 is down the tubes.
With cancellation cover, bought when they booked, not the week before flying, the prepaid, non refundable costs are recoverable. But, as always, read the policy t‘s and c’s.
The timing of the policy purchase is one of the most misunderstood features of travel insurance. Buy late and you may still get basic travel insurance cover for your trip, but the opportunity to buy pre trip cancellation insurance protection is gone.
Scenario two: the card declined, patient waiting trip
This can be catastrophic.
Most South African medical aids are licensed for local use. They cannot guarantee payment to a foreign hospital, and at best you may be able to claim reimbursement afterwards, at South African tariff rates.
A procedure costing R50 000 in Cape Town can cost ten times that in New York. Add an air evacuation and you are comfortably into seven figures. Proper travel insurance covers these emergency medical costs and just as critically, can arrange the payment guarantees or direct settlement that foreign hospitals may require before treating you.
Scenario three: the bells & whistles add up trip
Bags delayed for five days. A missed connection, resulting in new flights and four unplanned hotel nights. A stolen phone and passport. Individually not a train smash, collectively, tens of thousands of rand that a decent policy covers.
And the “free” travel cover on your credit card deserves proper scrutiny. Limits are often modest, activation usually requires paying for the tickets with that specific credit card and the medical benefits may fall well short of a serious overseas emergency. Read the fine print with eyes wide open or speak to a risk professional.
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Three Ways to Ruin a Perfectly Good Claim
1. Holidaying vs Partying
Insurers take a dim view of too many Klippies & Cokes before an elaborate jet ski manoeuvre. They will usually say dramas involving alcohol or non prescribed drugs over the legal limit of the country you are in, is a no no.
2. The crystal ball factor
Insurance is designed to cover the unforeseen. If you intend participating in dangerous sporting or adventure activities, if you have pre existing medical conditions or if DIRCO issues a travel advisory, the risk of loss or injury becomes foreseeable and is probably no longer insurable, unless you get insurer’s specific buy in.
3. A rejection letter is an opening move. Not checkmate
A high percentage of travel claims get rejected or delayed, mostly due to missing paperwork. Yet rejections are often overturned in the traveller’s favour. The difference between those two scenarios? Usually someone who pushes the insurer when they need pushing. That someone is the highly underrated Risk Advisor.
So, is travel insurance worth it?
Yes if you read the policy and probably no if you do not. Unless you are one of those lucky parking gamblers, you know the type that just knows that a bay is open at the entrance of the mall. The law of averages applies to everyone else.
Do you enjoy reading insurance warranties, clauses, conditions, endorsements, exclusions after the Sunday paper? Thought not.
Have someone in the know read the fine print before you fly. An international survey revealed that around a staggering 90% of people do not understand their insurance policies. Psychologists call this condition “cognitive overload”. I call it a claim waiting to be rejected.
Pack the sunscreen. Pack the type C charger. But pack the properly understood travel policy first.
Disclaimer: This article is provided for general information only and does not constitute insurance, financial or legal advice. Where relevant, it draws on publicly reported information. The scenario is fictional and is used to illustrate real insurance principles and common industry practices. It does not refer to any specific insurer, policyholder or claim.
About The Author: Tim Chadwick is the CEO of Chadwicks. He advises businesses and individuals on risk and insurance. He also writes on the psychology of risk.
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