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Why should I get domestic travel insurance?

Sometimes it’s hard to understand why you need domestic travel insurance, especially if you have never had a mishap on holiday. We recently came across this misguided conversation on OzBargain that we think summaries the confusion out there about domestic travel insurance.

orangeavatar  Geewhizz on 30/10/2013 – 09:46

We’re planning to travel to Tasmania for a couple of weeks in November – December.

We recently applied for and received a platinum mastercard which I, wrongly, assumed was going to cover hire car excess (it’s only good for overseas,) so I’m now looking into Travel Insurance, mainly for that purpose.

Can anyone recommend a company, or make suggestions for any that should be avoided? We’re with Bupa for health insurance and I can get coverage for those couple of weeks for $136. Never having used travel insurance before though I don’t know if this is a good price, or if they are reasonable to deal with???

To solve the mystery of domestic travel insurance, please look through out list of commonly-asked domestic-travel-insurance-related questions below:

What is domestic travel insurance?

Well, you don’t need us to tell you that it’s a travel insurance policy that covers domestic trips because duh. What you may not know is that domestic travel insurance policies cover lost luggage, flight cancellations and rental car excess. Little inconveniences can turn into big problems when you don’t account for them, domestic travel insurance does the worrying for you.

Luggage lookouts

People usually associate lost luggage with international flights. The fact of the matter is, though, the chances of an airline misplacing or damaging your luggage is just as high no matter where you are. Lost a laptop in your suitcase or a bracelet in your carry-on? It isn’t a problem when you purchase a domestic travel insurance policy. A youGo domestic policy includes up to A$3000 in lost luggage cover.

Cancellation cover

Maybe you got sick the day before your trip. Maybe a big dust storm grounded your flight. Maybe your airline went bankrupt. Listen, there are actually a million ways your trip can get derailed before it even begins. Have a back-up plan with cancellation cover included in your domestic travel insurance policy. A domestic policy from youGo includes up to A$10,000 in cancellation cover.

Rental car relief

Renting a car this holiday? Don’t let one little fender-bender cause a lifetime of hurt. A domestic travel insurance policy covers you in the event of an accident on the road. A youGo domestic policy includes A$4000 in rental car excess.

Get an overall view of domestic travel insurance with our article ‘What is domestic travel insurance?’.

Do credit cards offer domestic travel insurance?

Just because you have a card in your wallet doesn’t mean you have credit card travel insurance. In fact, most credit card companies do not cover domestic travel. Free travel insurance sounds great and often comes with high-end credit cards – but credit card travel insurance can have unexpected loopholes. As Geewhiz noted above, the travel insurance policy he/she hoped to use did not have all the benefits desired.

Because travel insurance is usually a free add-on, you don’t get to customise the cover. The standard amount for credit card travel insurance is A$20,000 for items like baggage, property and flight cancellation. Usually only the cardholder is covered, so these policies are not ideal for travelling with companions or children. Even if your card company does offer domestic benefits, many other exclusions may apply, so take a look at our commonly-overlooked credit card factors.

Eligibility limits

You can’t just hop on the plane and assume your credit card travel insurance will cover you. Across the board, credit card travel insurance has to be activated by spending between A$500 to A$1000 on pre-paid transportation costs with the credit card. (You didn’t think that company would give you the perks without having you use the card, did you?)

Again, most credit card companies do not offer domestic travel insurance, so look for a supplementary policy if you are travelling in-country.

Expiration dates

Don’t have a set schedule for your trip? Don’t use credit card travel insurance. Unlike traditional travel insurance policies, most credit card travel insurance policies cannot be extended. Be aware of your travel expiry dates if you are using credit card travel insurance.

For more information on credit card travel insurance, read our article ‘What is credit card travel insurance?’.

How much does domestic travel insurance cost?

Travel insurance policies can vary in cost depending on your age, destination and pre-existing medical conditions. In general, though, a bare-bones travel insurance policy will cost between 4 and 8 percent of your trip’s prepaid non-refundable cost. If you choose to get a few more bells and whistles (such as a ‘cancel for any reason’ addition), expect the policy to cost about 10 percent of the non-refundable cost. Your policy could be more expensive if you are older or engaging in adventure activities.

For domestic trips, a policy from youGo Travel Insurance starts at A$36 (for trips up to five days for travellers in good health). Curious as to how much your policy will cost? Get a free quote from youGo.

To learn more about how much travel insurance policies should cost, read our article ‘How much does travel insurance cost?’.

What is rental car excess?

Geewhizz asks specifically about rental car excess above, and it’s a great question because most people don’t quite understand what excess is when it comes to insurance. Essentially, purchasing rental car insurance excess (as you will usually see it noted in a travel insurance PDS) means if you hire a car and happen to have an accident, you won’t have to pay for the damages yourself (at least not all of the damages). A youGo domestic travel insurance policy comes with A$4000 in domestic cover per insured adult.

If you are renting a campervan or caravan for your domestic holiday, read our article ’10 practical tips for renting a campervan’ before taking off.

What should I look for in a travel insurance company?

We may be a bit biased (buy youGo!), but ultimately we know buying a travel insurance policy is a confusing process. When looking for a company, be sure to shop around. Choose a plan that meets your needs, and steer clear of companies that try to force benefits on you that you don’t need. Make sure the company you choose is clear and transparent (you should see a product PDS on the company’s website; it is usually in the footer), has resources for 24/7 emergency assistance (look here for the youGo emergency assistance department) and specific numbers to contact the claims department (look here for the youGo claims department).

Ultimately, you wouldn’t buy a plane ticket from an airline you didn’t trust. Don’t buy a travel insurance policy from a company that tries to confuse you or hide the facts.

Why should I get domestic travel insurance?

Now that you know exactly what a policy does, it’s really up to you to decide if you need domestic travel insurance. Taking a day trip to the next town over? You probably don’t need travel insurance. Driving to Uluru for the week? You probably do need travel insurance. Learn the benefits, and more importantly learn the risks of being uninsured, and take it case-by-case. Travel insurance will give you peace of mind, if you choose a company you trust.

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