7 things to know about travel insurance
by Ryan Ong
I THINK travel insurers play two main roles. The first is to ensure you have adequate financial protection, in the event your luggage gets sent to the next continent, or you end up sightseeing in the local emergency ward. The second is to prove that you are some kind of filthy liar. Maybe it’s because of people who make false claims and game the system; I don’t know. But whenever I make a claim, the response is just an angry demand to prove I didn’t smash my own kneecaps, and send my own luggage to Hong Kong. Know some things to ease the process:
1. Prepare for things to degenerate into word games and definition debates
Remember when we had the haze in January? Some flights were grounded, because of it, and that led to some travellers claiming compensation. Some of them got it. But in some cases, such as with ACE Group and MSIG Insurance (Singapore), the claimants were told they were not covered. That’s because the haze isn’t a natural phenomenon (for which they’re covered), it’s man-made.
Now you might notice the ridiculous precedent being set here. I’m waiting for the day when someone gets caught in a tornado, and the travel insurer blames global warming (Man-made! No payout!).
Similar word games get played when something is stolen. It’s easy to accuse you of negligence when your wallet gets pickpocketed, or you break a leg skiing. There are hundreds of ways to blame you (or some other far-fetched reason) when things go wrong, and avoid giving you a payout.
Even if you drag the insurer to court and fight it out, your win might come at great cost, and months of emotional distress. So be warned: No matter how obvious the terms may seem, there might be “wiggle room” for the insurer.
Rather than go for cheap deals online, I prefer to get travel insurance from my insurance agent. At least I know who to rant to, when the claims get complicated.
2. The fancy “insured for up to a million” phrases are less impressive than they sound
Travel insurance coverage of up to one million dollars! Yeah, in theory. In practice, there are limits to how far the insurance stretches for each specific item.
For example, you might be insured for loss of goods, up to $10,000. But look closely at the terms and conditions. It might show that the maximum coverage for a laptop is $500, or that “handheld computers” like your smartphone are not covered. In some cases, even watches and jewellery are not covered. In particular, note that lost cash is seldom covered; even if it is, it’s often capped at a few hundred dollars. You could lose $5,000 in cash, and get back $250 as the maximum compensation.
So read the terms carefully, and don’t bring expensive, easily stolen things because you assume they’re “covered up to $X.”
This is especially true with in-flight theft on the rise. There was recently a passenger who lost over US$260,000 ($355,500) during a flight. So keep your valuables close, insurance or no.
3. You may need to produce the receipts
Okay, so you lost your tablet and it’s worth $1,200. If you’re asked to produce the receipt, can you?
Some insurers won’t fork out unless you can produce some proof of purchase and price. Now if you obsessively keep all your receipts for years, that’s not a problem (except maybe in a mental health sense). Nor is it an issue if you make the purchase on a credit or debit card; in many cases, the insurer may accept the credit / debit transaction records from the bank.
But if you lose your stuff and you have absolutely no paperwork, be prepared for the possibility of zero payout.
You’d think this would be stated before you buy the insurance policy (e.g. you must have a receipt in order to make claims on items, etc.), but that would make too much sense. So either (a) ask about how the claims process works before buying, or (b) don’t bring it on the plane unless you have a receipt.
4. You may need to get a police report, which can be harder than it sounds
If something is stolen or lost, you’ll have to make a police report. Without one, there’s a high chance your claim will just be dropped.
The bad news is, the police in some countries absolutely hate having more work. In other cases, they may be straight up unpleasant or slow. In the United States, for example, I was straight up accused of insurance fraud when I reported lost money. In Japan, I had to spend half the day waiting for a translator after being mugged. Whatever happens, insist on having a copy of the police report – just verbally speaking to a police officer is not enough. They may drop the case and not write an actual report, which could destroy your claim.
As a back-up, have the number of the insurer (so you can call and find out what documents you need), and the number of the Singapore embassy (in case the local authorities give you trouble) handy.
5. Travel insurance usually doesn’t “double up”
Most insurance policies state that you cannot claim insurance on something, if you have already received a payout from another policy. So if you use your credit card’s complimentary travel insurance, you may not be able to claim from a policy that you also bought. Check the terms, and call the companies to clarify.
This means you need to check for the biggest payout, and claim it from the right policy. If you have one policy that covers your broken laptop for $500, and another that covers it for up to $700, you’ll want the bigger one; don’t assume you can stack the two.
The same goes for cancelled flights, lost luggage, medical claims, etc.
6. You might be asked for an annoyingly precise description of your luggage
Take a picture of your luggage before it goes on the plane, inside and out. This is useful for two reasons.
First, it’s useful for the airport staff. One of the first things you’re asked to do, if it goes missing, is to describe your luggage. The brand, make, distinguishing tags, etc. You’ll be surprised how often people forget the brand or colour of their luggage carrier in a fit of panic. Flashing the picture will save you time and stress.
Second, if the luggage vanishes forever, you’ll need to tell the insurer what was lost. You’ll be thankful that you have that picture for reference.
7. You seldom know how long the claim will take
You might get the payout in a week, or you might get it three months down the road. For that reason, it’s a good idea to build up an emergency fund for the trip, even if you’re insured.
If you end up using loans or credit because of an emergency (e.g. you broke an arm while horse riding abroad), a fair amount of interest can accumulate by the time your claim is processed. Also, there is a risk that your claim will be denied, or that you will get a smaller payout than expected.
I usually have a “buffer” of about $2,000 for each trip, even if I bought the best insurance policy. You can decide how much works for you.