Is domestic travel insurance worth it? – Diana Clement

Opinion by

Diana Clement is a freelance journalist who has written a column for the Herald since 2004. Before that, she was personal finance editor for the Sunday Business (now The Business) newspaper in London.

Many Kiwis are unaware of the finer details of domestic travel insurance, which covers flights, accommodation and rental cars. Photo / Azaria Howell

Do you take out domestic travel insurance when you go on holiday in New Zealand? I do.

A lot of Kiwis still have no idea that it’s a thing. Or they think that a combination of contents insurance, ACC and free hospital care here means it’s not necessary.

It is if you’re at risk of losing flights, accommodation, rental cars and other prepaid costs for travel, you can lose a lot of money; even for just one person, let alone a family. Think weather events, illness, or transport disruptions.

Most of the major travel insurers such as Southern Cross Travel Insurance (SCTI), AA Travel Insurance, AMI, Allianz, Tower, 1Cover, have policies. You can also get domestic travel cover from airlines at booking and through some credit cards.

Comprehensive “bundled” policies cover prepaid accommodation, baggage, rental vehicle excesses, cancellations and delays if your travel provider doesn’t refund or reschedule, and a range of other benefits if you can’t travel because of unforeseen circumstances such as illness, accident, severe weather events or the death of loved ones.

Unless you pay extra, policies typically exclude cruise cover, snow sports, and pre-existing conditions.

Every policy is different, so it can be difficult to compare apples with apples. But as an example, a policy for two adults and two children for a four-day, Auckland-Christchurch return trip with SCTI came to $106.02, which is just over $26 per person. A person’s age and the number of people covered would result in a different premium.

You can also buy domestic travel insurance along with your Air New Zealand and Jetstar tickets when booking flights. I plugged the same dates and ages into the airlines’ websites and the cost came out at $96 for Air New Zealand and $68 for Jetstar.

Many travellers are now offered domestic travel insurance during the flight booking process – often without fully understanding what is and isn’t covered. Photo / AFP

One quirk about domestic insurance policies is that some require your trip to be a certain distance from home, or have pre-paid accommodation, or other requirements before they kick in. So read the policy. All the usual war, hijack, terrorism, and pandemic-type get-out clauses will apply as well.

If you travel a lot within New Zealand it can make sense to get an annual, multi-trip policy. I did a quote for the same fictitious family above with AMI for unlimited trips per year of up to 15 days each. The annual premium was $315, or slightly less for existing customers. Some other insurers, including Allianz, offer annual multi-trip policies. The Allianz policy covers you for domestic and international travel, providing the trips start and finish in New Zealand.

However, each journey is subject to duration limits selected at purchase, and domestic travel may also need to meet minimum distance or overnight stay requirements.

Most of these single and multi-trip domestic insurance policies cover rental vehicle excess, which is worth singling out because it can offset the cost of paying for loss damage waivers with rental vehicle companies.

Some insurers offer cancellation-only policies, which cover your prepaid travel and accommodation costs without the bells and whistles. But don’t buy this if you’re hiring a car.

Domestic holidays may feel lower risk than overseas travel, but prepaid accommodation and transport costs can still leave travellers financially exposed. Photo / James Allan

I checked the prices for the same “family” trip above and cancellation cover was $24 from AA Travel and AMI, and $44 with Tower. Flight Centre offered a halfway house with cancellation and a few other benefits, such as baggage and personal liability, for a $28.29 premium, but only $500 for prepaid costs and no rental car cover.

A few credit cards offer domestic travel cover for “free” as a perk of the card. The Amex policy is reasonably comprehensive. But Kiwibank and TSB’s relevant cards offer cancellation and travel delay cover only, not extras such as baggage and rental car cover.

If you’re relying on credit card travel insurance make sure you activate it and download the full Ts&Cs to check how long you’re covered for, if your family is included, whether you can pay to cover pre-existing conditions, and for any tricky fine print.

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