Kiwis are flying again — but is your insurance up to standard?

The Covid-19 pandemic might seem like it’s over but, if you’re flying, it most certainly isn’t

New Zealanders are travelling again. It seemed like every man and his dog has been away somewhere in the October school holidays. Just wait for the Christmas break.

The world has changed a lot since most of us last did any significant travel. Back in March 2020, the industry lobby group the Insurance Council of New Zealand argued long and hard that insurance companies couldn’t cover pandemics.

Of course they could. And most standard travel policies do now cover Covid-19 and some offer general pandemic and epidemic cover as well. But never assume.

The cynical side of me says now that Covid is so much less of an inhibitor to travel we get the cover we need. The outcome is good, however.

The pandemic might seem like it’s over. It’s not from a travel point of view. Plenty of Kiwis have caught Covid while travelling this year and some will have been barred from flying. That’s expensive. If you’re one of the small number of people hospitalised while overseas, you could be up for tens or even hundreds of thousands of dollars in bills if you’ve not chosen the right cover.

Even since I last wrote about the issue of travel insurance at the beginning of this year, policies have changed. Back then one of our biggest insurers, Southern Cross Travel Insurance (SCTI), didn’t cover Covid, although some of its smaller competitors did. As I said then and still think now, an insurance policy that excludes pandemics isn’t worth the paper it’s written on.

SCTI extended its cover in February and chief executive Jo McCauley says the company has now paid out $850,000 in Covid-related claims.

McCauley says SCTI is witnessing a lot of anxiety in travellers, with increased calls to its contact centre.

“Call handling times are extended due to lots of hypothetical questions about how our cover works,” says McCauley.

“Many of those contacting us are looking for reassurance they will be supported if things don’t go according to plan.

“There are multiple issues which concern them — flight cancellations, missing luggage, pre-existing conditions, and of course Covid.”

Let’s not forget the hassle of lost luggage when you’re travelling. McCauley says, as a proportion, lost luggage makes up 7 per cent of claims currently. For the same period prepandemic in 2019, it was only 2 per cent.

“This comes as no surprise especially given the pressure airlines and airports are under with having to staff up again quickly. The average amount we have paid out is $527 per claim.”

Domestic insurance is also worth giving thought to. It never used to be much of a thing. Most people relied on their contents insurance to cover their belongings, and ACC and the public health system to cover illness and injury.

Who doesn’t know someone who has lost money on domestic travel since March 2020, or had to fight long and hard with airlines and accommodation providers for reimbursement?

Domestic insurance has started to make a lot more sense during the pandemic and I now buy it for every trip involving a flight. On my last two domestic trips I bought a $15.30 cancellation-only policy, with $600 cover for my flights, accommodation and other bookings such as rental cars should I fall ill and not be able to travel, or my flights are cancelled. It was a lot cheaper than buying fully flexible flights, and covers accommodation bookings, not just the flights. Comprehensive domestic travel insurance also usually covers rental car excesses, instead of paying the hire car company’s exorbitant rates.

Insurers such as AA Insurance, TOWER, SCTI and others offer domestic travel insurance. Just make sure Covid is covered because it’s still a risk that you can’t board a flight, or need to extend your stay.

It wouldn’t be insurance if there wasn’t a Catch-22. The Covid cover on domestic and international insurance policies doesn’t extend to lockdowns. So it’s still a gamble, albeit small, that we go into lockdown for an illness far worse than Omicron and you still lose the cost of your holiday or more.

Finally, your credit card insurance is unlikely to offer pandemic cover. Nor is it likely to cover domestic holidays either.