What is the point of travel insurance?

John has been burnt by his COVID-19 travel insurance experience and wants to know whether he should even bother with it in future.

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Q. John
I think travel insurance is a scam! On 20 January I booked a round-the-world business class ticket for my wife and I to depart in mid-May. Cost me just over $13k. I took out travel insurance with the RAC travel insurance for a two-year travel package as we were going to be travelling for over five weeks. I tried to claim for a refund when the pandemic hit. They told me that I wasn’t covered. I then claimed with my credit card travel insurance and had the same result. What is the point of taking out travel insurance?

A. As someone who has had a very similar travel experience this year and also has never had to make a claim on my travel insurance, I definitely understand your sentiment.

While you were not able to claim your cancelled trip on your travel insurance, you should have been able to have the trip refunded by the airline, which does sort of make the travel insurance a moot point, however.

In my situation this year, however, my travel insurer didn’t offer me a refund for my premium of the trip I was no longer able to take, so you are still out of pocket for the insurance money, which is frustrating.

While I was unable to secure a refund, my travel insurer has allowed me to reuse the insurance cover I purchased when we do eventually take our trip, whenever that may be. Hopefully your insurer has offered the same.

Getting back to the point of travel insurance, like most other insurance, it is more of a necessary evil.

Sure, you can take the risk and travel without it, in the same way you can take the risk and forgo home insurance. But if your house burns down you had better be able to afford to build a new one entirely from your own funds.

Similarly, if you are overseas in a foreign country and require a medical evacuation to get home, you are up for expenses possibly in excess of $100,000.

Do many houses burn down? No. Do many travellers require a medical evacuation from their holiday? No. Do you want to be stuck with the expense if it does happen to you? That is a question you will have to answer yourself.

While medical evacuations are usually the worst scenarios for holiday horror stories, your travel insurance can also save you a lot of money for any medical emergency that may happen on your travels, as well as covering you for more common experiences such as losing your personal belongings or having them stolen.

You can also be covered for non-pandemic-related cancellations, including reasons such as illness, or injury or death of a close relative.

No-one likes paying for their travel insurance, but we can’t recommend going anywhere without it.

Have you ever travelled without travel insurance? Do you think it is a scam?

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Written by Ben

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