If you're going overseas, international travel insurance is a must, but do you need cover for an Aussie vacation? There's no shortage of events that can disrupt your local holiday – in particular the recent bushfire crisis. 

We look at what is, and isn't, covered by domestic travel insurance in Australia.

Is it worth getting domestic travel insurance?

If you've paid a lot for your Aussie holiday, are hiring a rental car, or travelling with sporting equipment, you can get good value out of domestic travel insurance. But if you've scored a budget airfare and cheap accommodation, you might be better off claiming what you can from the airline and accommodation provider.

How much does domestic travel insurance cost?

Domestic travel insurance costs on average $49 for a single person travelling seven days in Australia, or $87 for a family. The price for families and couples are generally the same, so children are often insured at no extra charge.

Below is the average price and range from cheapest to most expensive for people travelling in Australia for seven days.

Natural disaster cover

Most insurers cover cancellation and amendment claims resulting from natural disasters for both international and domestic travel insurance. The exceptions are Insure and Go and Tick, which offer it as an optional extra, and lower-level policies that cover baggage only. Cover will vary significantly so check with your insurer to determine if you're eligible to claim.

Flight cancellation cover

If you get the impression that flights are being cancelled or delayed more frequently, you're right. Domestic airline cancellations and delays rose last financial year, a trend that continued in September 2019. During that month, on-time departures were five percent below average.

Unfortunately, travel insurance doesn't always cover cancellations and delays. It all depends on what caused them. If they're not the travel provider's fault, such as a natural disaster, then travel insurance covers them more often than not. But if it's a cancellation caused by the transport provider, such as your airline, the majority of travel insurers in our review of domestic policies don't cover these cancellations, unless they're the result of a strike.

If the cancellation or delay is the airline's fault, domestic airlines do give a set compensation for travel, accommodation and meals. Just don't wait for them to give it to you – you'll need to research the conditions of carriage and quote them back to the airline. 

The usual exclusions

If you regularly travel internationally, you'll find domestic travel insurance contains many of the usual exclusions. Chief among them are existing medical conditions. If you need to shorten or even cancel your holiday because of such a condition, travel insurance will often exclude it, unless you declared it in advance and possibly paid an extra premium. The same goes for age limits – insurers may raise premiums or cut off cover altogether as you get older.

Rental car cover

Domestic travel insurance policies usually contain cover for hire-car excess. Hire-car companies charge about $20 to $45 a day to reduce your standard liability, so domestic travel insurance can be an affordable alternative that covers more than just your car hire. That said, there are a few things to bear in mind:

• If you're in an accident in your rental car, you'll probably have to pay the car-hire company for the damages upfront, and then claim them back from your insurer.
• Travel insurance is charged per person, so if you have more than one driver, you'll need insurance for each person.
• The exclusions in the car-hire contract usually still apply. For example, if your rental contract excludes windscreen cover, your travel insurance is unlikely to cover it.

If you're concerned, a standalone car-rental excess policy may give you broader cover.

Cruise cover

Domestic travel insurance generally won't cover you for medical expenses while travelling in Australia, as they should be covered by Medicare or your health fund. Medical evacuation may be covered by the ambulance scheme in your state, or your private health insurance. 

If you book a cruise in Australian waters, however, you'll probably need travel insurance with medical cover, as Medicare might not cover shipboard medical expenses. You may need international or cruise-specific insurance – standard health insurance won't cut it and nor will many domestic travel insurance policies. Note that some insurers, such as TravelCard, provide optional cover for medical and evacuation cover while cruising. 

Baggage cover

Domestic travel insurance will cover your baggage, with the exception of some 'Cancellation only' policies. But before you let your policy choice hinge on the baggage cover, it's worth checking that you don't already have 'portable contents' cover for specified items under your home contents insurance. If you want to cover an expensive item you regularly leave home with, such as a smartphone, laptop or camera, you might want to make sure you're covered all the time.

Also, domestic travel insurance policies usually have an exclusion saying they won't cover you if you're already covered by another insurance policy.

Sports equipment

If you're taking something that only leaves home for holidays, such as a surfboard or skiing gear, you may be able to get specific cover with your domestic travel insurance. Watch out for tricky insurance policy loopholes though, such as losses excluded for theft or damage to watercraft.

Several policies also have optional cover for snow sports and golf equipment, including green fees if you have to cancel. Boomers and Defence Health travel insurance will pay you $250 if you get a hole in one.

Liability cover

Domestic travel insurance will generally cover you if you become legally liable for accidentally injuring someone, or damaging or losing someone's property. But your home contents insurance will also cover you for this, and domestic travel insurance will exclude liabilities that your other insurance policies cover. 

Credit card insurance

Credit card insurance usually won't apply to domestic travel, although some platinum cards will reimburse expenses that arise from domestic flight delays and missed connections.

Stock images: Getty, unless otherwise stated.

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