A 2022 survey by the Department of Foreign Affairs and Trade (DFAT) and the Insurance Council of Australia found a number of people have or would consider buying travel insurance with an airline (16%) or through a travel agent (25%).

This could be an expensive way to buy your travel insurance if you don't shop around, though. We found that a couple in their forties travelling to Bali for a week would pay $218 more for their travel insurance by clicking the checkbox on Virgin's online flight booking page compared to buying the same policy from Virgin's standalone online travel insurance website. 

And with only 43% of people reading their travel insurance Product Disclosure Statement (PDS) in detail, do you know what you're paying for when you tick the travel insurance box?

On this page:

• What does travel insurance from an airline cover?
• Will travel insurance cover if your airline goes broke?
• What does travel insurance from a travel agent cover?
• Is travel insurance from an airline or travel agent any good?
• What does airline travel insurance cost?
• What does travel agent travel insurance cost?

What does travel insurance from an airline cover?

It's midnight, and you're stranded at the airport exhausted and frustrated because your flight is cancelled. The airline desk has shut up shop, so you don't yet know when the next flight is, or whether the airline is going to pay for the mess they've created for you.

All you need is a meal, a taxi and a hotel room to sleep in. The travel insurance you bought from the airline will cover those extra expenses, won't it? Well, maybe – just because you bought travel insurance from an airline doesn't mean you're covered for travel problems caused by your airline.

The insurance policies sold by Qantas and Virgin won't cover claims to cancel or amend your trip due to the mechanical breakdown of your transport.

Jetstar's travel insurance, meanwhile, won't cover 'cancellation, delays, or rescheduling caused by your covered transport provider, including Jetstar'. 

So if you have to cut short part or all of your trip because Jetstar cancels or reschedules a flight for its own reasons, Jetstar travel insurance won't cover your cancellation expenses.

The international travel insurance sold by the Australian airlines generally will cover you for additional or cancellation expenses for interruptions to your flight caused by severe weather, strikes, or collisions. They'll also cover you for additional expenses or cancellation claims if you contract COVID-19, but they won't cover you if your airline has to cancel or reschedule the flight due to another pandemic.

If you're out of pocket because the airline delayed or cancelled your flight, try to claim compensation from the airline before you claim on your travel insurance – even if you bought your travel insurance from the airline.

_{*Covered for additional expenses but not for cancellation claims.}

Will travel insurance cover if your airline goes broke?

If the airline you're flying becomes insolvent, as Virgin Australia almost did during the pandemic, then the airline's travel insurance won't cover you for your losses. In fact, they don't cover your losses if any travel provider or agent goes broke and takes your money with them. 

This isn't unusual – no travel insurer in our comparison will cover your losses for insolvency of a travel agent, and very few will cover you if a travel provider goes broke. That's why it's best to pay for your travel with a credit or Visa/Mastercard debit card, and use your bank's chargeback service if all else fails.

Read the terms and conditions, but lose your flight booking

The last few years of travel turmoil underlined how important it is to read the travel insurance PDS and understand what you're covered for.

Pre-pandemic, Virgin travel insurance didn't cover cancellation expenses resulting from pandemics such as COVID-19. And while Virgin will provide limited cover now if you catch COVID-19, none of the airline's travel insurance policies will cover your cancellation expenses for other pandemics.

But the flight purchase screen places a time constraint on how long you have to read the PDS. Qantas's terms and conditions, for example, run to almost 22,000 words. It takes the average adult over an hour and a half to read such a document, but the Qantas flight purchase screen times out in 10 minutes, so you'll lose your flight if you try to read the fine print.

What does travel insurance from a travel agent cover?

None of the travel insurance policies in our comparison, including those from Flight Centre and Webjet, will cover your losses if the travel agent goes broke. So just because you buy insurance from the travel agent, don't expect it to cover you if their business runs into the ground.

Comprehensive travel insurance will generally cover you for a travel agent's fees up to a specified limit if you have to cancel a trip. Flight Centre and Webjet cover this up to $4000.

_{*Travel providers include airlines, hotels, bus lines and cruise lines.}

The travel agent's word isn't binding

The Australian Financial Complaints Authority's (AFCA) dispute decisions reflect several cases where people say they relied on their travel agent's advice about their travel insurance, but were ultimately left disappointed and out of pocket.

Conversations with a travel agent aren't recorded like they generally are when you call an insurer directly, so any conversation you've had with your travel agent about insurance will boil down to hearsay. And in one decision, AFCA stated the "travel agent's opinion that the claim would or should be covered is not binding on the insurer". So don't take the travel agent's word for it.

Examples of denied claims for people relying on travel agent advice

• A couple said the travel agent told them the policy they were sold covered them for pregnancy. However, the policy provided by Zurich Insurance didn't cover them for pregnancy, and when they complained, they were unable to provide evidence that the travel agent said this.
• A man with an existing medical condition booked his first overseas holiday. He said he wasn't given a PDS or asked any questions by the travel agent about pre-existing medical conditions, and if he was asked, he would not have booked a holiday for that time knowing he may lose the money. AFCA said there was no indication the travel agent provided misleading or incorrect advice regarding the coverage.
• A woman cancelled her trip for financial reasons, which was not covered by her travel insurance. She said she was misled about the cover by the travel agent when she booked a non-refundable ticket, because the travel agent told her she would be covered for job loss.

A good travel agent will provide you with the PDS when they give you a quote for travel insurance, and they'll also give you time to read it and make a decision as to what cover is best for you. If the agent advises anything that isn't included or is contradicted by the travel insurance PDS, check with the travel insurer. Even if it can be proved the travel agent gave bad advice, the travel agent's opinion is unlikely to be binding on the insurer.

Is travel insurance from an airline or travel agent any good?

The 'checkbox' travel insurance sold while you're otherwise booking flights with an airline or accommodation with a travel agent often has the same, or sometimes even better, coverage than travel insurance sold separately.

Below, we compare the prices of checkbox travel insurance to standalone travel insurance. Some of these policies are the same, such as for Virgin, but some are different brands sold by the same underwriter. 

What does airline travel insurance cost?

We found buying travel insurance on Virgin's flight checkout screen cost 41% more than buying the same policy from Virgin's standalone online travel insurance website.

That was for a couple in their forties travelling to Bali, but if you're a family flying with kids, the cost can get even uglier if you click Virgin's travel insurance checkbox. Jetstar and Virgin Australia flight purchase screens charge per person for every traveller, including the kids. 

Buying direct, a family policy costs the same as a couple policy, with the kids covered free. If you buy travel insurance from Virgin's flight purchase screen you'll need to call to get the cheaper rate for kids under 21 travelling with you.

Travel insurance policies from the same underwriter can still vary widely from brand to brand in what they cover

The bottom line? If you click the travel insurance checkbox on Virgin's flight screen, you'll probably get ripped off. Buy your travel insurance direct instead, and get the same policy for a cheaper price.

Qantas travel insurance, on the other hand, costs 70% less than the insurance sold by the same provider, NIB. So it pays to shop around to make sure you get the best deal.

Travel insurance policies from the same underwriter can still vary widely from brand to brand in what they cover. The Qantas policy we compare, for example, only covers adults under 70 years old (older travellers will be directed to buy a different policy), while NIB is unlimited.

However, Qantas travel insurance comes with unlimited cancellation by default, while for NIB you'll need to choose the level of cancellation you want. And the Qantas cover limit for lost or stolen baggage is higher than NIB's.

_{*Jetstar travel insurance is excluded because it is provided by AIG, who no longer offer a standalone travel insurance product in Australia.}

_{**Unlimited cancellation, $8000 rental vehicle excess selected for NIB and Qantas.}

What does travel agent travel insurance cost?

Our couple flying to Bali could pay $147 more for their travel insurance if they click Flight Centre's travel insurance checkbox instead of buying a policy direct from Flight Centre's travel insurance website. 

But there are differences between the two policies – for example, the policy bought directly from Flight Centre's website instead of as an add-on provides a higher overall cover limit for baggage. For Webjet, our couple could actually get a better deal through the travel insurance checkbox.

_{*$250 excess and $3000 cancellation limit selected for both direct and the flight purchase screen.}

_{**$100 excess and Unlimited cancellation limit selected for both direct and the flight purchase screen.}

Travel insurance sold by travel agents isn't necessarily any better or worse than insurance sold directly. It boils down to the terms and conditions of the policy. You need to know and understand what you're covered for – and you can't rely on what the travel agent tells you.

Stock images: Getty, unless otherwise stated.

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