What is Travel Insurance? Guide to Policy Types, Coverage, and Excess

From accommodation and transport, to experiences, phone data and finances, there’s so much to organise when you travel. One key thing not to overlook is travel insurance. If you’re travelling from or within Australia, understanding how travel insurance works, what it covers, and how policies differ can help you choose protection that actually fits your trip.

In this guide we’ve broken it down and addressed these things, to help make planning your next journey that little bit easier. You can also learn more about the Wise card, an easy way to stretch your dollars when paying in foreign currencies.

What is travel insurance?

Travel insurance is a type of insurance policy designed to help with unexpected costs that arise during your travels. Depending on the policy it can include benefits for medical expenses, trip cancellations, travel delays, lost or stolen luggage, personal liability, and even rental car excess.

On top of the standard coverage, many policies can also be customized to include additional benefits, such as cover for motorcycle riding, adventure activities, pre-existing conditions, or high-value belongings.

How does travel insurance work?

When you buy travel insurance the policy will come with terms and conditions that outline the eligibility, benefits, limits, exclusions, excess, and claim procedures. It’s important to carefully read the fine print, to help avoid any unpleasant surprises down the road.

If something does go wrong during your trip and the event is covered by insurance, you’ll generally need to pay the expenses upfront then claim the money back. One of the main exceptions to this is emergency medical expenses, as many insurers are willing to pay the hospital directly.

Types of travel insurance available

When searching for the best Australian travel insurance, it’s important to know about the different policy types. Understanding them can help you decide which policy is best for your upcoming trip.

Single trip travel insurance vs Annual travel insurance

Depending on how often you travel, a single trip policy or an annual policy will make more sense.

• Single trip travel insurance covers one trip for specific dates
• Annual travel insurance, often called multi-trip insurance, covers multiple trips over a 12 month period, with each one generally being limited to 30 to 90 days

Single trip insurance is usually best for travellers going on a long journey or just one trip, while annual travel insurance is better for people who make multiple trips throughout the year.

Domestic travel insurance vs International travel insurance

The key difference between these two is relatively simple; domestic travel insurance is for travel within Australia, while international travel insurance is for travel abroad. Past that, there are some differences in what’s generally covered by the policy.

In Australia, domestic travel insurance doesn’t include medical cover because of Medicare.

Basic travel insurance vs Comprehensive travel insurance

A majority of travel insurance companies offer multiple tiers of coverage, with most being separated into basic and comprehensive cover.

• Basic travel insurance focuses on essentials, like medical expenses for overseas travel and cancellation for domestic trips
• Comprehensive travel insurance covers a greater range of events, such as lost or damaged luggage, travel disruptions, and optional extras like cruises or snow skiing

Basic travel insurance has lower benefits and inclusions, but is most cost effective for budget travellers. Comprehensive insurance tends to have higher limits and cover more, better for people who want or need more cover.

Credit card travel insurance

If you have a credit card it may come with credit card travel insurance. To access your credit card travel insurance there’s generally some specific spending requirements for the trip, along with eligibility criteria and trip duration limitations.

Having credit card travel insurance is a useful option, especially since it’s usually complimentary, but you do need to assess if it’s enough for your plans.

What is covered by travel insurance

What’s actually covered by travel insurance varies depending on the policy and provider, but most include some combination of the following benefits.

Medical and emergency cover

International travel insurance generally includes cover for overseas medical treatment, hospital stays, emergency dental care, and medically necessary evacuation or repatriation. It’s one of the core benefits of any international travel insurance policy, especially when travelling to countries where quality medical care is expensive.

Trip cancellation and interruption

Cancellation and interruption coverage is there to reimburse you for any prepaid, non-refundable expenses in the event you need to cancel or cut your trip short. The policy documents usually have a list of acceptable reasons for why your trip is cancelled or interrupted, such as illness or injury.

Luggage and personal belongings

Unfortunately there’s always a risk that your luggage and personal items can be lost, stolen, or damaged. Travel insurance can offer cover for this, but be aware there’s usually limits that apply per item and in total, and high-value items may need to be listed separately and insured for an additional premium.

Travel delays and disruptions

Some policies offer compensation for additional expenses caused by delayed flights, missed connections, or accommodation issues. Again it must be related to a covered event, as per the policy documents.

COVID-19 cover

Post-pandemic, many travel insurance providers include some level of COVID-19 cover. This can include medical treatment if you contract COVID-19 overseas, or cancellation if you’re unable to travel due to a positive test.

Excess and policy limits

The excess is the amount you pay when making a claim. Often you can choose your excess, with a higher excess usually meaning lower premiums.

Policy limits cap how much the insurer will pay for each type of claim. These amounts are how much protection you actually have, so they’re important to know.

How much does travel insurance cost?

The cost for travel insurance is variable, with a number of different factors in play that can influence the price of a policy.

• Destination
• Trip length
• Number of people insured and their ages
• Type of policy and level of coverage
• Policy add-ons
• Pre-existing conditions
• Excess

For Australians, international insurance is generally more expensive than domestic travel. The United States tends to be the most expensive destination, due to the cost of their healthcare system. Choosing a higher excess can often decrease the premium, while pre-existing conditions, longer trips, older travellers, and add-ons tend to increase the price.

Holiday insurance tips: What to look out for

When choosing travel insurance, it’s worth spending time looking into the details and small print, rather than focusing solely on price. Here’s some things to look out for:

• Are the limits on medical expenses high enough for the destinations you’re traveling to?
• What’s the claims process?
• Are the activities you're planning to do covered?
• What’s in the policy exclusions?
• Do you have pre-existing conditions, and are they covered?
• Can the policy be extended if your return is delayed?

Safeguard yourself from foreign transaction fees with the Wise card

Travelling with peace of mind starts with the right insurance. Once you’ve got your travel insurance lined up, it’s time to work out the best way to spend when you’re overseas. The Wise card is a simple way to save up to 7x when you're spending internationally. You can spend in 150+ countries at mid-market rate — basically the rate you see on Google. With no foreign transaction fees and low, transparent pricing, Wise usually gives you the best value for your money.

Simply create a Wise account for free, order a card and top-up AUD to get started. Having a physical Wise card allows you to make chip and pin payments, as well as make some free ATM withdrawals each month for when you're abroad. You can get digital cards and add to your Google or Apple Pay wallet for instant use. Spend directly with the Wise account in AUD and let auto-conversion do the trick or convert in advance to your desired currency. You can hold and exchange 40+ currencies in your Wise account and spend the currencies you hold for free.

Wherever your travel takes you, the Wise card makes spending money abroad cheaper and easier.

🚀 Get your Wise card