Buyer Beware: The Great Travel Insurance Rort

Buyer Beware: The Great Travel Insurance Rort

Mozo has just launched a new travel insurance comparison service and as part of our launch we went mystery price shopping for three different holidays: a family trip to the US, a couple visiting Europe and a backpacker heading to Thailand and Europe. We compared travel insurance quotes from some of the biggest Australian travel players, Qantas, Virgin Australia, Flight Centre, Jetset Travel and Harvey World Travel against the most competitive quotes available through Mozo’s new travel insurance comparison service.

What the travel insurance mystery shop revealed:

  • Australians are paying four times too much for travel insurance
  • Buying travel insurance through airlines and travel agents can be highly overpriced
  • Travel Insurers have different levels of covers, different exclusions, and policy definitions so it pays to compare options that offers the best price as well as the best fit for your needs.

For our family of four travelling to the USA for 15 days, Qantas Travel Insurance came in at a staggering $756. The cheapest provider in Mozo’s travel insurance comparison service was Fast Cover at $177 – that’s a $579 difference. Both policies were required to have: $100 excess or less, unlimited medical coverage, at least $10,000 cover for personal effects and $10,000 cover for cancellation costs. One of the reasons for the vast price difference is the commission Qantas earns. According to the fine print on the Qantas website, Qantas can earn up to 53% commission on the travel insurance policies it sells.

In every travel scenario we tested, Aussies travellers were much better off by shopping around for travel insurance online than buying through travel agents and airlines. Our couple travelling to Europe could save $196 (or dinner at the Eiffel Tower Restaurant) and the backpacker could hang out in Koh Samui for an extra 7 days with their $249 saving.

It is important to note that many cheaper online travel insurance providers are often underwritten by the same companies as airlines and travel agents but the savings you see come from not paying huge commissions. The Mozo travel insurance comparison service includes travel insurance policies underwritten by QBE, Alliance, Chartis and Lloyd’s to name a few.

One of the other key differences we discovered in our travel insurance mystery shop was also the difference between the way travel insurers define levels of cover, exclusions and policy definitions. It definitely pays to do some shopping around to compare your options before you take out a travel insurance policy.

Why use Mozo’s Travel Insurance Comparison for your next international trip

  • Instant quotes available for nine travel insurance providers including FastCover, Travel Insuranz, Insure4less, 1Cover, Kanga Cover and Columbus Direct.
  • Compare up to 117 travel insurance policies on features like excess fees, overseas medical cover, luggage and personal effects and cancellation costs.
  • Australia’s most comprehensive database of travel insurance providers and policy choices including Australia Post, NIB, Worldcare, Covermore, American Express and Budget Direct.
  • Helpful travel insurance guides to help with your purchasing decisions.
Buyer Beware: The Great Travel Insurance Rort was last modified: July 26, 2016 by Mozo

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22 Comments - Write a Comment

  1. Travel insurance is now become a great deal between provider and holder as every person wants to travel from here to there and it is also become good business to provide them travel insurance with some limited benefits.

    Reply
  2. I am a pensioner with a pre existing medical problem who wishes to do some travel within Australia and am prepared to pay for travel insurance but cannot understand the fine print exclusions.
    How do I get clarification on these points without having to go through a lawyer or similar ?

    Reply
    1. Mozo

      Hi Neil,

      If you plan to travel within Australia only, you’ll be automatically covered under Medicare and/or your private health insurer. So there’s no need to look into travel insurance!

      Team Mozo

      Reply
    2. Hi Team Mozo. How does travel within Australia preclude someone from the benefits of travel insurance?

      Yes, they will be covered by Medicare or Private Health. But what about unforeseen cancellation? Last time I checked airlines are fairly unforgiving with refunds. Same with hotels.

      Not everyone needs it, but it can be of value.

      Reply
      1. Mozo

        Yes Cody, without a doubt domestic travel insurance is of inherent value! However, our earlier comment was in response to a traveller who was primarily concerned with pre-existing medical conditions. Had the traveller raised other concerns, our reply would have been different.

        Cheers,

        Team Mozo

        Reply
  3. I am an editor, features and travel writer, and had to make a claim on my Australia Post travel insurance after making an emergency flight home from Thailand. At first they ‘lost’ my claim documents, then they wanted more information, which I supplied, and now they are not responding to my emails. It’s been weeks since thew claim (for around $1600 in air fares only). I am a frequent traveller, and regardless of the outcome of the claim, I won’t be dealing with Australia Post again.

    Reply
  4. Thanks for sharing this post, lots of great information! It’s a great idea to shop around and read the fine print. You’re bound to find the best fit for you. I also recommend checking reviews, fist hand experience.

    Reply
  5. Travel insurance in Australia is a rort, nothing but! If you’re resident in the UK an annual policy for world travel for a couple is of the order of $100AUD’s, shopping through the web.
    Here in Australia, a similar world policy (with unusually high excesses) and limits in every possible way starts at over $400AUD’s and goes up radically from there, even to $860 for a couple for one year. Web prices!
    So not only is the lowest Australian price is 4 TIMES that of the UK, where people travel internationally all the time, it’s clear there’s a massive rort on insurance as well as international airline flights if you’re ‘captive’ in Australia.

    Why do we put up with this nonsense?

    I keep trying not to be cynical, with limited success!
    AH

    Reply
  6. @ andrew harker and anyone else who may know to help –
    My life lived in Austl but born in Brit, i’ve dual citizenship/ 2passports ..Can I buy UK one-way travel insur. (still ‘4x cheaper’ for ‘one-way’ TI you think?) from within/while living in Australia (esp. if travel on EU/UK passport) ?

    Reply
  7. Discussion of this blog is really good for people to make awareness of insurance & also necessity of insurance. Thanks for writing this kind of blog.

    Reply
  8. do not use fastcover insurance if you have a relative over 85 years of age – they do not pay cancellation if you need to cancel due to illness etc.

    Reply
  9. 1cover also will not cover cancellation etc if you have a relative over 85 years of age.. this in essence means my kids aged 27 and 24 are not covered for cancellation fees if their grandparents get sick! and they are away

    Reply
  10. Buyer Beware of Flight Centre insurance policy. I was told that their insurance policy likely was able to pay for any health concerns up front in South America. When I was in Argentina, to my surprise, the insurance company, Manulife, did not cover anything up-front. Moreover, they require that you send them signed papers 14 days after your visit to the hospital. Liars at the Flight Centre and bad service all around from Manulife.

    I recently just purchased travel insurance from Lonely Planet online, it was half the price (about $330 for 4 months for all countries outside Canada) and took me 5 minutes. Additionally, they let you purchase while travelling.

    I have never posted before, but when a service is great, I think that as many people as possible should support it.

    Reply
  11. I would definitely not buy my travel insurance through a travel agent. My last couple of trips I’ve had them quote just for fun. They were at least 50% over what I could find online with reputable travel insurance companies. On one occasion I almost accidentally paid for the insurance as the agent had already included the fee in my invoice. It was at the last moment as I was doing the banking transaction that I asked why the amount was different than my airfare. Beware travel agents – they must be making huge commissions on travel insurance premiums.

    Reply
  12. Who is better or safer to insure with when travelling in the USA- AMEX or RACV?
    I am travelling with my wife to the US for a 4 week holiday. I am not sure if I should go with AMEX’s insurer Ace Insurance $ 733 or RACV Travel insurance at $823.
    We are worried about poor service if we have a problem and as to who would be the better for service while in the states?
    These were the best priced quotes. The other quotes especially from 2 Travel Agents were double this premium.

    Reply
    1. Mozo

      Hi Harry,

      We recommend checking the level of cover each provider offers (medical, baggage, cancellation etc). When travelling to America, as medical bills can be extremely high make sure the policy you choose has unlimited medical cover. If you’re worried about service, you can read customer reviews of AMEX here. Unfortunately we don’t have reviews of RACV on our website.

      We hope this helps,

      Mozo Team

      Reply
  13. I used covermore insurance and needed a claim its only then do you realise the fine print. They are the biggest rip off and offer nothing in reality again you need to read the fine print.

    Reply
  14. Never buy travel insurance offered by an airline when you book tickets. The policy will be tailored in such a way that it will be very difficult for a customer to make a claim.

    Shop for travel insurance independently.

    Reply
  15. On our recent trip to USA I got food poisoning and was taken off the plane and taken to hospital. I was admitted and stayed for 26 hours at a cost of $40,000 US dollars. We had to pay the first 4,000 US up front as the 24 hour number we were given when we took out the insurance directed us to a Canadian office who did not answer so we were left to deal with the hospital on our own. The insurance company did finally pay up but like most of them they take their time and want the most impossible information that seems to go on forever. We have always gone with Ace Insurance but after we had taken out the insurance we found that they had been taken over by another company. So be aware with travel insurance.

    Reply
  16. We (me and my wife) took Virgin Money insurance for our 4 month holiday. One week before leaving I was diagnosed with cancer of the bladder. We were allowed 6 weeks before treatment and so had to change our return flight which was over $1100. When I submitted the claim I was told that as I had previously enlarged prostate I am not eligible. I know they are close to each other but prostate problems have most of over 70 men. That is the end of my trust in Virgin and even Emirates for changing the flight.

    Reply

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