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Compare Travel Insurance Travel Insurance Refunds

Travel Insurance Refunds

01 July 2020 By Eugene Wylde


No longer travelling and want your money back on your travel insurance?

Our travel insurance experts provide the low down.

All travel insurance policies offer a cooling-off period during which time you can cancel your cover and get a full refund. This is usually between 14 and 21 days from when you purchase your policy and will only be paid if your trip hasn't yet started and you haven't already made any claims. 

After the cooling-off period is up, ordinarily you are no longer entitled to a full refund as you will have had enough time to read through your policy wording to understand the terms and decide whether it is the right policy for you and your holiday.

Of course, this isn't welcomed news for would-be holidaymakers opting to cancel their travel insurance policies due to the government-imposed travel restrictions, only to discover that they may not be entitled to a full refund.

It is, however, important to note that all policyholders have a right to request a refund of some sort if they believe that the service cannot be provided and that their policy is not fit for purpose.

WHAT are my options For covid-19?

In the wake of the coronavirus pandemic (COVID-19), few industries have fallen as far and as fast as travel and tourism. Never before has international travel been restricted to such extreme causing disruption, frustration and angst for so many Australians.  Under these extraordinary circumstances, many insurers are stepping up to offer flexible options outside of their usual policy terms.


Variable Refund Terms

Some insurers will honour requests to terminate a policy and provide a full or partial refund of the premium paid. Terms and conditions vary between insurers, so it never hurts to ask.  Particularly vulnerable customers that are evidently unlikely to travel in the future should have more success in obtaining a refund than the young, fit & healthy.
cancellation cover


If you're intending on travelling within the next few years, your insurer may be offering the option to change your travel dates or cancel your policy in exchange for a credit voucher.  If available, a credit voucher will allow you to purchase a new policy once you've re-booked your holiday.  Be sure to check that the credit voucher is valid for a reasonable timeframe to ensure that it can be used.


Internal Dispute Resolution

All insurers have a dispute resolution process to ensure that any concerns are dealt with quickly and fairly. If you're unhappy with your dealings with your insurer you can ask to make a formal complaint.  Your insurer will escalate this for you and follow their complaints handling process.  This provides the opportunity for your concerns to be reviewed by an independent panel if you're dissatisfied with an outcome.

consumer confusion on entitlements

Are travellers entitled to get a refund on their policy if they can no longer take their holiday due to circumstances outside of their control?

There is a lot of misconception amongst consumers on their rights to a refund on their travel insurance policies.  Regardless of the cause of cancellation, you're bound by the contract you entered into when you bought your policy. The refund terms are usually outlined under a section titled "money-back guarantee" or "cooling-off period".

The ACCC recently published advice on event and travel cancellations which only applies to airlines, cruise ships and travel agents. This has caused a lot of confusion among those who are no longer able to go on their trip and feel that their travel insurance policy is of no use to them. 

It is important to note that consumer guarantees under Australian Consumer Law may not apply to financial service providers, including insurers.  Having said that, insurers are regulated and there is an expectation on insurers to consider their conduct in light of the current circumstances and to act in a fair manner that is in line with the duty of utmost good faith.

Most insurers are offering flexible options to customers outside of their usual policy terms. These include credit-vouchers for ‘unused' portions of their travel insurance and in certain cases, full or partial refunds on their policies.

While many would-be holidaymakers have received travel vouchers or their money back for cancelled trips from airlines, accommodation providers and tour operators, and no longer feel their policy is necessary, it’s worth thinking twice before cancelling it.  You must be sure that you no longer need the cover and do not want to exercise any rights under the policy.  Once a policy has been cancelled you will be unable to lodge a claim against it.


Refunds & Credits Faq'S

Questions on travel insurance refunds have been coming thick and fast.  We answer some of the most common questions we're getting on cancelling travel insurance and obtaining a refund either in cash or other means such as a credit voucher.

I'm not going on my trip, so why won't my insurer give me a full refund?

If you're not getting a full refund, you're likely to be outside of the cooling-off period. Another reason you may not receive a full refund is that your policy may have been in place and providing protection for some time. Something that a lot of people are unaware of, unless they’re unfortunate enough to have to use it, is that the cancellation benefit on a travel insurance policy starts from the day that you purchase your policy. So whilst it may seem like a policy hasn’t been ‘used’, the insurer was on risk for any pre-trip cancellation should an event such as injury, illness, bad weather or natural disaster have prevented the holiday from going ahead. The pre-trip cancellation benefit makes up part of the premium that you paid and the protection your insurer provides.

Australian Financial Complaints Authority (AFCA) states, "From the time a travel insurance policy is purchased, some cover is generally provided for cancelation and unforeseen events. This means the policy is providing coverage or already ‘doing work’. For this reason, it is fair for an insurer to retain a portion of the premium in consideration of this cover.

For example, if you made your travel booking and bought a single trip travel insurance policy back in December 2019, your cover for holiday cancellation would have started the day you bought your policy. If you or a family member became ill and you had to cancel or rearrange your trip, you would have been covered for lost deposits and change fees. In the wake of the coronavirus pandemic, if you had your holiday cancelled by your airline, booking agent or you are simply unable to travel due to the government travel restrictions imposed in March 2020, your insurer had already been protecting you for any pre-travel issues for those three months. This is regardless of whether or not you made a claim.

How is a partial or pro-rata credit or refund calculated?

Travel insurance is there to protect you and your holiday both before and during your trip. Often part of the premium paid includes pre-trip cancellation. The percentage of premium that this makes up varies between insurers. The amount of refund will depend upon a few factors:

  • The type of policy purchased (whether the policy was an annual multi-trip or single trip policy)

  • Whether the policy had commenced at the time of cancellation

  • Whether any travel took place during the term of your policy

  • Whether the policy had "any work to do". This date may vary depending on the date of policy cancellation, the date travel bans were implemented or in instances where people were already travelling, the date they returned to Australia.

    AFCA has provided a standard methodology for calculating a proportionate refund (whether cash or credit-voucher) as a guide. View AFCA's guide on partial refunds. Insurers may have variations to how they calculate the "unused" portion of your policy. In providing a partial or proportionate credit or refund, insurers should clearly outline to the customer how the refund amount was calculated. For a holiday that never took place, your insurer is likely to calculate what portion of pre-trip cancellation they were on risk for. Generally speaking, this is from the time you purchased your policy to when your travel was restricted (i.e. when travel bans were implemented) or cancelled. For a long duration holiday that was significantly cut short, your insurer may offer a pro-rata credit voucher for the 'unused' portion based on the day you returned home. Another scenario is those frequent travellers that purchased an annual multi-trip policy valid for 12 months unable to use a large portion of their policy due to travel bans imposed a few months in. Again, insurers may at their discretion defer the policy or offer pro-rata credit that can be used when the time is right for travel.


Can my insurer keep my money and only offer a credit voucher?

With the travel industry being hit not only by significant revenue loss, but also the spate of cancellations due to the coronavirus, most travel agents and smaller businesses are offering the option of rebooking or taking a credit voucher for future use over refunds. The ACCC's advice for travel changes and cancellations is that you are entitled to request a refund or other remedies such as a credit note or voucher. In terms of insurance, the offer for date changes and credit vouchers aligns with this. A few insurers are providing full refunds, and others are assessing each request on a case-by-case basis. The terms of your policy apply and requests are being considered in the light of individual circumstances. For example, an 80-year-old with medical conditions that had their trip of lifetime cancelled is more likely to receive a refund than a fit 50-year-old that is likely to have many years of travel ahead of them.

My friend got a refund, why can't I?

Each insurer is taking a slightly different approach to refunds and credits during this crisis. The impact that COVID-19 has had on specialist insurers that solely focus on travel insurance is far more severe than the impact on big insurers that offer different types of insurances. You may have seen an ACCC Ruling that authorises insurers and brokers to be able to work together to co-ordinate to allow SME customers to defer premium payments for up to 6 months and provide refunds. It authorises Suncorp, Allianz and QBE to provide the same solutions for SME customers as each other. Without this authorisation, they would be in breach of competition law. However, not all insurers are participating and the ruling only relates to those 3 insurers. There is no obligation on insurers or underwriting agencies to partake in the relief package. Even if you bought the same policy as your friend or travelling companion, refund requests outside of standard policy terms are usually considered on an individual basis taking many variable factors into account.

I've been offered credit but don't know when I'll travel!

Understandably, many Australians are grappling with the idea of accepting a credit voucher for future travel when travel bans are still in place for overseas travel. Before accepting a credit, make sure that the credit is valid for a long enough period to accommodate your anticipated or preferred travel dates. AFCA has provided a guideline for insurers of 18 months being reasonable. Should travel restrictions not be lifted within this time, expiry periods of vouchers are likely to be extended. With lockdown restrictions being lifted worldwide, there are positive signs for future travel. Certain countries may remain off-limits for some time, but there several countries that have already reopened their borders in a bid to reboot their struggling tourism industries. But remember, many countries, including Australia, are still warning against all non-essential travel and some are quarantining all overseas arrivals, including their own returning citizens. Check all the relevant restrictions before you think about travelling and opt for flexible travel providers with minimal or no change fees.

OTHER HANDY Tips & Guides

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Contributor Hayley Kennedy

Hayley Kennedy

Originally from the UK, Hayley took a gap ‘year’ in 2011… and it’s still going! She’s travelled all over the world, volunteering in a Ugandan orphanage, skydiving in Australia, shark diving in South Africa, and skiing in the Alps (and snapping in a ligament in the process!). Certified in Tier 2 General Insurance General Advice and working in travel insurance for over two years, Hayley is a thrillseeker and a storyteller who loves hearing about customers’ holiday plans and sharing her own tips and must-see spots to help get them inspired.

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