Why do I need travel insurance?

Travel insurance is there as a safety net in case your dream holiday turns pear-shaped. It should pick up the bill if you have an accident, die, lose your luggage or travel documents, cancel your trip, suffer delays, are affected by a natural disaster or incur hefty legal expenses.

For domestic travel, most people are adequately covered by their existing insurance. If you're heading overseas, check to see if the country you are visiting has a reciprocal medical agreement with your own. For all international travel however, you should always take out some sort of travel insurance. To put it bluntly, if you can't afford travel insurance, you can't afford to travel.

While you may not be planning to spend your holiday ice climbing up frozen waterfalls, it doesn't mean you won't find yourself with a hefty hospital bill after slipping on a banana peel, or needing to replace all your belongings after losing them to a sticky-fingered passenger on a crowded train or wanting to cancel your trip after a romantic honeymoon destination morphs into a war zone overnight.

While many insurance policies only cover medical expenses and trip cancellation/interruption, the safest option is to purchase a comprehensive package with the broadest possible coverage. Read the fine print: always make sure the insurance covers you for a pre-existing medical condition and for 'dangerous' activities, such as skiing or surfing. Keep in mind that the type and cost of coverage also depends on the part of the world you are visiting; the cost of medical care is more expensive in some countries, most notably the United States.

Where can I buy travel insurance?

Travel insurance is available from a range of sources and you can expect it to cost between 3% and 8% of your total trip. Some of the best insurance deals can be found online, but note that budget policies sometimes offer only the bare minimum. It is important to decipher the insurance gobbledygook to make sure you are covered for every possible scenario. Check out our World Nomads insurance page for some example prices and to get a quote online.

Types of travel insurance

Single trip: If you've finally convinced the boss to give you two weeks off work for your big trip, buying single trip insurance is probably the best way forward.

Annual multi-trip: If you make several trips each year, annual multi-trip insurance may be the best option.

Winter Sports: Skiing and snowboarding insurance is more expensive. This is because it covers piste closures, avalanches and your equipment. Not to mention those individuals who attempt a frontside 1080 and end up getting carted off to hospital along with the guy they accidentally ploughed into.

Over 65's: Insurance companies are recognising more and more older people are enjoying their retirement by going abroad and have come up with specialist packages.

Backpackers or extended trip cover: Destinations and length of your stay determines the price. Some tailor-made packages include worldwide cover, worldwide excluding the USA, Australia and New Zealand only and Europe only.

Watch out for...

Excess is the amount you have to pay if you make a claim. For instance, if your policy has $50 excess on medical expenses, you have to pay the first $50 before your insurer picks up the tab for the rest. Make sure to read the conditions and exclusions. Most policies WILL NOT COVER: drink/drug related incidents, mopeds over 50CC and scuba diving past 30 metres.