Travel insurance in Australia is designed to protect travellers from financial losses and unexpected events that can occur before or during a trip, both domestically and internationally. While not legally mandatory for Australians travelling overseas (unless required by the destination country), it is highly recommended due to the significant costs that can arise from medical emergencies, trip cancellations, or lost belongings.

Types of Coverage

Travel insurance policies

 in Australia are generally categorised by the scope and duration of travel:

1. Domestic Travel Insurance:
   • Covers: Trips taken within Australia.
   • Key benefits: 
     • Trip Cancellation/Interruption/Delay: Reimbursement for non-refundable costs if your trip is cancelled, interrupted, or delayed due to unforeseen events (e.g., illness, natural disaster, airline issues).
     • Lost/Damaged/Stolen Luggage & Personal Effects: Covers the cost of replacing or repairing your belongings.
     • Rental Car Excess: Covers the excess you’d have to pay to a rental car company if their vehicle is damaged or stolen while in your care.
     • Medical Expenses: While Medicare covers Australians for medical treatment within Australia, domestic travel insurance can cover additional costs like ambulance services, private hospitalisation (if preferred), or emergency medical transport if you’re far from home.
     • Personal Liability: Covers legal costs if you accidentally injure someone or damage their property during your trip.
   • Who needs it: Recommended for domestic flights, cruises, or tours where cancellation fees or non-refundable bookings are involved, or for peace of mind regarding luggage and rental car excess.
2. International Travel Insurance:
   • Covers: Trips taken outside Australia.
   • Key benefits (often with much higher limits due to overseas costs): 
     • Emergency Medical Expenses: This is the most crucial component. Medicare does not cover you overseas. This benefit covers hospitalisation, doctor’s fees, medication, ambulance costs, and emergency dental treatment.
     • Emergency Medical Evacuation & Repatriation: Covers the often enormous cost of being medically evacuated back to Australia or to a suitable medical facility, or repatriation of remains in case of death.
     • Trip Cancellation/Interruption/Delay: Reimbursement for non-refundable costs if your trip is cancelled, interrupted, or delayed due to unforeseen events (e.g., illness, natural disaster, airline issues, or even a sudden illness of a family member not travelling with you).
     • Lost/Damaged/Stolen Luggage & Personal Effects: Covers the cost of replacing or repairing your belongings, including passports and travel documents.
     • Personal Liability: Covers legal costs if you accidentally injure someone or damage their property overseas.
     • Travel Delay/Missed Connections: Covers additional accommodation and travel expenses if your journey is delayed.
     • Theft of Cash/Documents: Limited cover for stolen cash or assistance with replacing passports/visas.
     • Rental Car Excess: (Often an optional extra)
   • Who needs it: Highly recommended for all international travellers due to the exorbitant cost of overseas medical care (e.g., a simple medical emergency in the US could cost hundreds of thousands of dollars) and potential for travel disruptions.
3. Annual Multi-Trip Insurance:
   • Covers: Unlimited trips (both domestic and international, depending on the policy) within a 12-month period, up to a maximum duration per trip (e.g., 30 or 60 days).
   • Who needs it: Frequent travellers who take multiple trips a year, as it can be more cost-effective and convenient than purchasing individual policies for each trip.
4. Specialised Policies:
   • Cruising: Specific cover for medical emergencies on board, cabin confinement, and often different liability terms.
   • Adventure Sports: For activities like skiing, snowboarding, scuba diving, bungee jumping, etc., which are often excluded from standard policies or require an optional add-on.
   • Seniors Travel Insurance: Designed for older travellers, often with higher age limits and tailored medical screening.
   • Backpacker Insurance: For long-term, multi-destination travel, often with options for working holidays.
   • Business Travel Insurance: For individuals travelling for work, may include specific business-related coverages.

Common Exclusions (What’s generally NOT covered):

• Pre-existing Medical Conditions (PECs): Unless declared and approved by the insurer, and often with an additional premium or specific exclusions.
• Alcohol/Drug-Related Incidents: Claims arising from being under the influence.
• Reckless Behaviour/Uninsured Activities: Engaging in activities explicitly excluded by the policy (e.g., certain adventure sports without an add-on, driving without a valid license).
• Undeclared Valuables: High-value items (e.g., expensive jewellery, electronics) often have sub-limits or need to be individually declared.
• Known Events: Claims arising from events that were “known” or “foreseeable” before you purchased the policy (e.g., purchasing insurance after a cyclone warning has been issued for your destination).
• Terrorism/War: Standard exclusions in many policies.
• Change of Mind: Not covered if you simply decide not to travel.
• Failure to Obtain Visas: Not covered if you can’t travel because you didn’t get the necessary travel documents.
• COVID-19: While many policies now include some COVID-19 coverage (e.g., overseas medical expenses, cancellation due to diagnosis), the extent varies significantly, and specific exclusions (e.g., government-mandated border closures) may apply. Always check the PDS.

Average Premium

The cost of travel insurance in Australia is highly variable, depending on numerous factors. It’s impossible to give a single “average” that would apply to everyone, but here are some insights:

• General Average (Comprehensive Policy): Finder research from September 2023 indicated the average cost of travel insurance for Australians was around $235.37. However, this is a broad average and doesn’t account for specific trip details.
• International Trip (e.g., 2 weeks to Bali for a 30-year-old): Comparative data from 2024 showed comprehensive policies from major providers in the range of $120 – $160.
• Seniors: Travel insurance for seniors is significantly more expensive. For a 79-year-old travelling for 2 weeks, average domestic policies were around $510, and international policies were steeper at $786 (2023 data).
• Canstar Data (2024): Overall average international travel insurance premiums increased by 6% from $299 in 2023 to $317 in 2024. 
  • Single: $204
  • Couple: $374
  • Family: $424
  • Mature Single: $265
  • Note: These averages cover a range of destinations and travel periods with a target excess of $200.

Factors Heavily Influencing Premiums:

• Destination: Countries with high medical costs (e.g., USA, Canada, some European nations) or higher security risks will lead to higher premiums.
• Duration of Trip: Longer trips mean more exposure to risk, hence higher premiums.
• Age of Traveller: Older travellers, especially those over 65 or 70, face substantially higher premiums due to increased medical risk.
• Pre-existing Medical Conditions (PECs): Undisclosed or high-risk PECs can significantly increase premiums or lead to exclusion of cover for related claims.
• Level of Coverage: Comprehensive policies are more expensive than basic medical-only or cancellation-only policies.
• Chosen Excess: A higher excess (the amount you pay out-of-pocket per claim) typically lowers the premium.
• Planned Activities: Engaging in adventure sports (skiing, diving, hiking, etc.) often requires an additional premium or specialized policy.
• Value of Personal Belongings: Higher sums insured for luggage and valuables increase the premium.
• Insurer and Policy Type: Different insurers have different pricing models and product offerings.

Trends in Australian Travel Insurance

1. Rising Premiums: Premiums have been steadily increasing due to:
   • Post-Pandemic Travel Surge: Increased demand has allowed insurers to adjust pricing.
   • Higher Claims Costs: Global medical costs, particularly in popular Western destinations, are rising.
   • Natural Disasters/Geopolitical Events: Frequent and severe weather events, and global instability, lead to more claims (cancellations, delays, medical emergencies) and increased reinsurance costs for insurers.
   • Inflation: General cost of living increases and supply chain issues impacting replacement costs.
2. Increased Demand, But Still Underinsured:
   • There’s been a strong resurgence in travel demand post-COVID.
   • However, surveys still show a significant portion of Australians (around 13-16%) travel without insurance, particularly younger travellers, risking huge financial exposure.
   • Many also rely on credit card travel insurance, which often has significant limitations and exclusions, leading to underinsurance.
3. COVID-19 Coverage Evolution:
   • Initially a major exclusion, most policies now offer some level of COVID-19 cover (e.g., overseas medical costs if you contract COVID, trip cancellation if you’re diagnosed before departure).
   • However, specific scenarios like government-mandated border closures or changes in travel advice not related to personal illness may still be excluded. It’s crucial to check the PDS.
4. Emphasis on Medical Costs & Assistance:
   • Insurers are highlighting the critical importance of overseas medical and evacuation cover due to the escalating costs. Many policies now boast “unlimited” medical cover, though terms and conditions still apply.
   • 24/7 emergency assistance services remain a key feature, providing help with medical emergencies, lost documents, and general travel advice.
5. Rise of Specialised Policies:
   • Growing demand for tailored policies for specific traveller types (seniors, adventure seekers, backpackers) and trip types (cruises). For example, there’s a surge in demand for cruise travel insurance with specific benefits integrated into base policies.
6. Digitalisation and Comparison Tools:
   • The market is heavily reliant on online platforms and comparison websites (e.g., Finder, Canstar, Compare the Market) for purchasing and comparing policies, making it easier for consumers to shop around.
7. Consumer Education:
   • There’s an ongoing effort from consumer bodies and the insurance industry to educate travellers on the importance of reading the Product Disclosure Statement (PDS) thoroughly to understand what is and isn’t covered, especially concerning PECs and specific activities.

In conclusion, while travel insurance in Australia has seen premiums rise, it remains an indispensable protection for anyone travelling, especially internationally, due to the high financial risks associated with medical emergencies and unforeseen disruptions. Comparing policies and understanding the fine print is more important than ever.