Do you need domestic travel insurance holidaying in New Zealand?

23 September 2020

Kiwis love to travel.

Millions of trips are taken each year out of the country alone by Kiwis. However, with no end in sight for COVID just yet, and with most nations closing their borders to tourism travel, we have to make do and scratch our travel itch within the borders of our own backyard. 

Once you've sorted out where you're off to for your getaway within New Zealand, whether it be the picturesque Queenstown, our capital Wellington, the oldest city in our land - Christchurch, the City of Sails - Auckland, or one of the many other places within Aotearoa that remains undiscovered to you, the question will come up - should you get travel insurance? 

Typically, when travelling overseas, more than 70% of Kiwis are purchasing travel insurance. However, when travelling within your own country, it might seem odd to purchase travel insurance. Because it doesn't feel as if you're exposed to more risk.

What will you need domestic travel insurance for?

You're right to think that some of the big costly risks such as the enormous cost of overseas medical treatment in the event that you get into an accident or require medical help will not be as relevant. As you are still in New Zealand while travelling, you will be able to seek the medical help you are entitled to as is normally the case.

However, here are some reasons why you should get travel insurance. 

Rental Car Excess

If you are travelling to another city where you will be picking up a rental car, you will want to consider getting domestic travel insurance. Simply, it offers better value than purchasing rental car insurance only.

The standard excess for domestic car rental ranges from $2,500 to $5,000+ which is expensive if you did get into an accident. You are typically told that this excess must be paid regardless of whether you are at fault in the accident. This makes it all the more a worry. To bring the car rental excess down to between $250 - $500, the rental company charges between $15 per day to $45 per day. For a 5 day trip, reducing the car rental excess or getting it completely waived will set you back between $75 and $225.

Let's look at the other option - getting domestic travel insurance.

Most domestic insurance (e.g. AA, AMI, State, CoverMore and Southern Cross) offers cover for Rental Car Excess. The excess amounts covered by these policies vary between $4,000 to $6,000. The cost of domestic travel insurance for a 5 day trip for 2 people cost approximately $80, or $40 per person.

It simply seems that domestic travel insurance offers better value. For the same money or less, you can get covered for more than just your rental car excess. Read on to learn more.

Delays and Cancellation Expenses

While COVID (pandemic) related delays and cancellation are mostly not covered under insurance, there is still a chance that bad weather and unforeseen medical events or family emergencies could derail your planned trip. In these cases, domestic travel insurance can cover these costs. Pre-booked flights, accommodation and car rental which you may not be able to get a refund for and can be costly.

Bad weather is a relatively common risk when flying domestically. Fog for example has been the reason for a number of flight delays and cancellations in New Zealand. If this happens, a domestic insurance policy will likely cover the cost your accommodation cost for the night, your travel expenses to get to the accommodation and other reasonable expenses such food due to the delay. 

If there is a family emergency (e.g. a death in the family) that derails your trip, domestic travel insurance can cover you for most of the cost of your accommodation, flights, car rental etc.

Other Benefits

Here are a couple more reasons to consider domestic travel insurance.

Your personal effects such as your luggage and the contents of it (e.g. laptops, mobile phones etc.) typically get some cover as part of your domestic travel insurance. However, if you already have Contents insurance, you'll likely have cover there. To be sure, check your Contents policy.

There is also a small amount of life insurance cover typically between $25,000 to $50,000 that is built into the domestic travel insurance policy, but again, you may have life insurance policy in place and therefore this is may not be a key benefit to you.

If you have neither Contents insurance nor Life insurance, you may find this useful. However, they only provide a relatively small amount of cover for these.

Will my credit card travel insurance cover me for domestic travel?

No, unless you are using an American Express credit card.

The credit cards offered by the main banks (ANZ, ASB, BNZ, Kiwibank and Westpac) that provide travel insurance only covers overseas travel insurance, not domestic. If you have an American Express credit card, you may be covered. But check, as they have a range of credit cards with different benefits and level of covers. Some include rental car excess waiver and others don't. Remember to activate the credit card travel insurance. 

Most banks in New Zealand offer a range of credit card benefits. To see a summary of the benefits you have with your card, simply sign up to Quashed where you can bring all your insurance together in one dashboard including seeing the free insurance benefits you are entitled to simply by just selecting the card you have.

In summary, domestic travel insurance is relatively cheap and provides you with a range of benefits and is especially value for money if you're going to be purchasing rental car insurance waiver anyways.

Key points to note:

  • If you're travelling within New Zealand domestic travel insurance is relatively cheap e.g. 5 days trip cost roughly $40 per person

  • If you're going to buy rental car excess waiver insurance, look at purchasing domestic travel insurance which is much better value

  • If you're relying on your credit card insurance for domestic travel, don't - unless you have an American Express (but check what you're covered for)

  • If you've realise insurance is a hassle and want to make it simpler, get Quashed so you can see and manage all your different policies in one place online!

Happy travels!

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