Travel insurance can be difficult to understand, but it’s an important purchase for any trip. That’s why we’ve outlined some common terms you’ll likely encounter when searching for travel insurance in easy-to-understand language. With our travel insurance glossary of terms, we’ll help you get covered with confidence.
Of course, the definitions used by travel insurers will vary. To ensure you properly understand what you’re covered for, make sure you read the Product Disclosure Statement (PDS) from your chosen insurer.
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Accidental death and critical illness/injury
Accidental loss of life or injury because of life-threatening events (e.g. car accident, sporting accident, etc.). Should you find yourself faced with the death of a family member or other travelling companion, or serious injury to yourself or your travel companion, travel insurance can cover your transport back home (otherwise known as repatriation) and even your funeral expenses.
An add-on is extra cover you purchase to get additional protection that a standard, comprehensive policy doesn’t include. You may choose to add cover for a pre-existing medical condition or a particular activity (e.g. snow sports or cruising).
Activities like diving, abseiling, trekking, hang gliding and more can be considered adventure sports. They may not be automatically included in a travel insurance policy and may attract an extra cost when buying travel insurance. They may also be referred to as extreme or action sports. Cover for certain sports may be included as standard in your policy, and others will need add-on protection.
Some insurers may impose an age limit (minimum or maximum age) on who can be covered by their policy. For example, insurers may see older travellers as more of a risk, which is why those travellers might have more restrictions imposed on their cover (e.g. no skiing), or they may not be able to seek cover at all. This will vary from policy to policy, so check the PDS.
Agent cancellation fee
If you cancel your trip or experience booked through an agent, you might incur a fee. If you need to cancel your trip for unforeseen reasons, your travel insurer could pay your cancellation fees owed to agents (up to a certain amount and subject to any policy excess), provided your policy covers this event.
Basic insurance cover is usually the lowest tier of insurance offered by travel insurers. If you only wish to get covered for a few things (e.g. medical-only), basic travel insurance cover may be what you’re looking for. It usually offers limited cover compared to more extensive policies.
A benefit in travel insurance is the term used to describe the types of cover that are available under a travel insurance policy. This may include cover for cancellations, lost and damaged luggage, medical expenses and more. All benefits will have limits, and some benefits will also include sub-limits (e.g.). Luggage cover may have sub-limits for how much you can be reimbursed for items like cash, personal effects and travel documents.
Cancellation cover can look after the cost of missed departures, connections, lost deposits and cancellation fees if you need to cancel your trip due to unforeseen circumstances. It allows you to claim up to a set amount, as specified by your policy.
If you require exhaustive coverage, you can get comprehensive travel insurance. This typically includes more cover than any basic or mid-range policy, such as rental car excess or cover for lost or damaged items.
Coverage or cover is the protection a travel insurer provides you. If an event or circumstance is included in your policy, you’ll be able to claim with your insurer and receive compensation as specified in your PDS. Cover will be limited by general and specific exclusions, which will vary between insurers.
Current Market Value
If your policy refers to something as ‘Current Market Value’, it’s the amount an item would be worth today – not how much you paid for it at the time you bought it.
If you have to end a trip early due to an unforeseen circumstance (such as a loved one passing away, or illness or injury), this is known as curtailment.
A dependent is usually a child or grandchild under a specified age that you care for on your holiday. They can be covered under your policy, rather than taking out separate cover. However, you need to take out separate cover for them if they’re travelling alone.
Duty to take reasonable care
Your obligation to be truthful when purchasing insurance is called your duty to take reasonable care not to make a misrepresentation.
Whenever you take out insurance (not just travel, but all retail insurance), you should be honest and answer any questions truthfully. Failing to do so could result in a claim not being paid out or your cover being restricted.
Your travel insurer may put you up in a hotel if circumstances beyond your control (e.g. a storm) prevents you from continuing on your trip at the time you intended. It ensures you have somewhere to stay when your trip is disrupted by an unforeseen event.
An excess, also known as a deductible, is an expense you pay or contribute for your claim to be fulfilled. You’ll need to pay the amount as specified by your policy before your insurer can fulfil your claim; sometimes, it can be deducted from the amount owing to you instead.
In travel insurance, exclusions are events or circumstances that won’t be covered under a policy by an insurer. They may refer to locations, activities, acts or omissions and illnesses.
Also known as a hospital cash allowance, hospital benefits help cover out-of-pocket expenses if you’re hospitalised on a trip.
Any cost you incur that’s caused by an event (but not directly related to the event) are considered incidental expenses. For example, if a flight is cancelled and you need to stay in a hotel until another is available, the meals included in your hotel bill could be classed as an incidental expense. However, you cannot claim if your airline provides you with the accommodation and/or meals.
A joint policy, also known as joint cover or travel insurance for couples, is where two people can be listed on the same travel insurance policy. Joint policies can suit relatives, couples or friends holidaying together who are happy to all be covered for the same things..
An event that could disrupt your travel plans that you knew about (or was widely known about) before purchasing a holiday or making plans is called a known event. This could include natural disasters, wars or company strikes.
Luggage and personal effects
Luggage and personal effects refer to the belongings that you’re travelling with. Should they be delayed, misplaced or damaged on your travels, you may be reimbursed for items at their current market value.
Loss of income
Loss of income in travel insurance may refer to scenarios where you’re injured or become ill on a trip and are unable to continue working as usual when you return home.
This is the level of travel insurance cover above basic, and should cover more things than those policies such as lost luggage and theft.
Multi-trip refers to taking numerous trips in a 12-month period. A multi-trip policy, also known as annual cover, can be a good option for people who travel frequently; it may be preferable to taking out insurance for every trip you take. Depending on your provider, it can cover all things included in a comprehensive policy for 12 months, up to the maximum travel days covered per trip.
Medical expenses (emergency and hospital)
One of the most important things to get covered for in a travel insurance policy is medical expenses. Things like hospital care, emergency transport and medication costs are expensive when they aren’t subsidised as Medicare isn’t available overseas, but they can be covered by travel insurance policies. While some countries have Reciprocal Health Care Agreements with Australia, the cover is not as extensive as some travel insurance policies. It should also be noted that if you’re on a cruise, you will need an international travel insurance policy with cruise cover to be protected against potential medical costs, even in Australian waters.
One-way travel refers to heading overseas without a return date. Many insurers will require you to have a return ticket to Australia before you can buy a travel insurance policy. However, one-way travel insurance can offer your comprehensive cover without a return ticket, although it’s less common.
Personal liability refers to your legal obligation for expenses if you injure someone or damage their property when you’re travelling. Travel insurance can cover your liability for these costs.
A pre-existing medical condition is a health condition you have before taking out a travel insurance policy. Some pre-existing conditions may be included in your policy, excluded from others, could limit the types of cover available to you or require an increased premium for cover.
A premium is an amount you pay an insurer in exchange for travel insurance.
Product Disclosure Statement
Also referred to as a PDS, this document describes the extent of your travel insurance cover. It details what you are and aren’t covered for, the limits and sub-limits of your cover, and more. All policies must have a PDS, and it’s important to read this before you take one out.
A price estimate of how much a travel insurance policy could cost you, based on questions you answer to best determine which policy is right for you. A quote is usually an estimate, so it may vary from the actual price you pay.
Rental car insurance excess
Rental car excess is a fee a rental car company charges you if the vehicle is damaged, stolen or involved in an accident while leased to you. Some travel insurance policies will cover your rental car excess if you get in an accident, which can save you a lot of money. Otherwise, you can typically purchase cover for rental car excess as an add-on.
A single trip travel insurance policy will cover you for journeys where you make one trip, even if it’s to multiple countries, where you’re departing and returning to Australia just once.
Target Market Determination
Also known as a TMD, it’s a document written by the insurer that describes the type of customer a product may be suitable for and any conditions or restrictions on the distribution of the product to customers. In addition to a PDS, all policies must also have a TMD. The TMD is equally important as the PDS to read before purchasing a travel insurance policy.
Travel delay expenses
Travel delay expenses mean any extra money you spend due to trip delays. If you’re delayed due to circumstances out of your control, you may be able to claim on expenses related to that delay (e.g. toiletries, meals)
Underwriters accept the risk of insuring you, guaranteeing you will be paid if circumstances call for it. Your policy issuer isn’t necessarily the underwriter of your policy. Instead, the underwriter is the person or the company who evaluates the risk involved in insuring you.
May refer to an event you can’t control that impacts your holiday, such as an illness or death. It doesn’t include a change of mind.
Also known as snow sports, it refers to activities such as skiing, snowboarding and snowmobiling. These activities typically require a winter sports add-on for insurance coverage. Without this, any injuries on-piste (and in some cases off-piste), cancellations due to illness, slope closure due to weather and damaged or lost equipment will not be covered.