A father and son go hiking

Travel insurer reveals hit to pocket when pre-holiday illness strikes

Wednesday , 29 September 2021 by Tegan Crawford

The list of most expensive domestic claims from New Zealand’s leading travel insurer is a reminder to purchase travel insurance as soon as a trip is booked – the highest claims came from customers who hadn’t yet packed their bags.

Southern Cross Travel Insurance has revealed the ten most expensive domestic travel insurance claims paid to customers since launching the policy a year ago, with eight of them for a cancelled trip due to injury or illness.

Sitting at the top of the list is a claim for $16,274, paid to a customer from Auckland who had to cancel a Fiordland cruise after developing a respiratory infection.

A traveller from Christchurch also had to cancel a cruise around Fiordland after their mother suffered a stroke – Southern Cross paid out $11,324 for this claim. Several other high claims on the list were for cancelled holidays after customers incurred hip, knee and leg injuries.

Southern Cross Travel Insurance CEO Jo McCauley said these claims show that holidays in New Zealand can be as expensive, if not more, than heading overseas, and demonstrates why travel insurance is just as important for trips closer to home.

“Prior to the pandemic, just 11 per cent of New Zealanders purchased domestic travel insurance, but after last year’s first lockdown, research showed 27 per cent of people were prepared to buy it for their next domestic trip. Following the outbreak of COVID-19, there has been a heightened sense of what could go wrong on holiday, and we’ve seen this reflected in the growing number of people purchasing domestic travel insurance with Southern Cross.

“Interestingly, people commonly purchase insurance because they want to be covered while they’re away on holiday, but our most expensive claims are proof that the unexpected can happen beforehand, regardless of whether you’re travelling domestically or abroad. Unfortunately this can have a serious hit to your pocket if you don’t have travel insurance,” said McCauley.

Customers needing to change or cancel their journey accounted for 39 per cent of the total value of domestic travel insurance claims paid out by Southern Cross over the past year.

“The majority of our customers who’ve had to cancel their holiday due to injury or illness have been older travellers. As we age, we become more susceptible to health concerns so it’s particularly important for older people to be covered,” said McCauley.

Following the suspension of bubble travel and the restrictions of the latest lockdown, New Zealanders will be eager to go on a domestic holiday when they are able to. To make sure there are no surprises when it comes to claim time, it’s important to declare any pre-existing conditions when purchasing travel insurance.

A couple had to cancel a trip to the Chatham Islands because one of them had a recurring heart condition which flared up before they left. Fortunately, the customer had declared their health concern, meaning it was covered under their policy, and Southern Cross was able to pay the claim, which came to $6,300.

Another benefit of SCTI’s domestic travel insurance policy is cover for rental car excess.

“If someone hires a car and the car is damaged or stolen, an excess of thousands of dollars can be charged. Rental vehicle companies will often recommend customers pay an additional daily fee to reduce or waive this excess and this fee can quickly add up. Many New Zealanders are unaware that purchasing domestic travel insurance can be much more cost-effective than paying for excess reduction directly through a rental car company,” added McCauley.

Southern Cross has calculated that over the school holidays, a customer could pay approximately $134.02* for a 14-day domestic travel insurance policy for two adults aged 40 years-old and two dependent children, which includes cover for their rental vehicle excess**.

“We have worked out that when hiring a typical family car over a two-week period, the excess reduction alone could cost over three times what you would pay for a domestic travel insurance policy with SCTI,” said McCauley.

“With the school holidays coming up and the borders still closed, a road trip is a great way to see the country, and domestic travel insurance can help reduce the cost of a hire car.”

Two claims for damage to hire cars made it onto SCTI’s most expensive claims list. One customer was in an accident which caused damage to their rental car – the claim paid was $4,200. Another customer had a claim paid for $3,544, after a stone caused a chip in their vehicle’s windscreen while driving.

Southern Cross’ top 10 most expensive domestic travel insurance claims paid:

1. An 80-year-old from Auckland had to cancel their Fiordland cruise after suffering a respiratory tract infection (claim paid - $16,274)

2. A 57-year-old from Wellington had to cancel their Fiordland cruise after a family member suffered a stroke (claim paid - $11,324)

3. An 80-year-old from Christchurch had to cancel their Southland train tour after fracturing their leg (claim paid - $10,168)

4. An 84-year-old from Napier had to cancel their Chatham Islands tour after suffering a hip injury (claim paid - $10,100)

5. A 62-year-old from Lower Hutt had to cancel their Milford and Routeburn hikes due to a heart condition (claim paid - $9,160)

6. A 75-year-old from Christchurch had to cancel their Chatham Islands trip due to a heart condition. This was declared as a pre-existing condition and covered under their policy (claim paid - $6,300)

7. A 47-year-old from Auckland had to claim for a rental car damaged in an accident while driving in Christchurch (claim paid - $4,200)

8. A 71-year-old from Hawkes Bay had to cancel their hike in Hollyford after suffering a knee injury (claim paid - $4,024)

9. A 32-year-old from Christchurch had to claim after a stone caused a chip in a rental vehicle’s windscreen while driving around the South Island (claim paid - $3,544)

10. A 72-year-old from Auckland had to cancel their South Island tour due to suffering osteoarthritis. This was declared as a pre-existing condition and covered under their policy (claim paid - $3,516)

*Calculation based on:

• $134.02 – Non-member rate with two adults aged 40 years-old and two dependent children, four days cover ($100 excess selected).

**SCTI does not charge an excess under its rental vehicle excess benefit. The maximum cover is $6,000 per paying person.