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Multiple Policies - travel insurance hack

Q: Can I have multiple insurance policies? What are the benefits? Can I claim on two policies?


What is Dual Insurance?

Dual insurance occurs when someone has more than one travel insurance policy that covers the same events. This sometimes happens to travellers accidentally, as they may have multiple policies after they buy a travel insurance policy when they already have annual coverage included in their credit card, or as an intentional purchase to try to beat the system…


Why buy multiple insurance policies?

Sometimes your existing policy doesn’t have the level of cover you’d like, may be subject to exclusions or bans, or lacks add-ons like cruise or skiing cover. So some savvy travellers are buying extra coverage – a small price now that could save you thousands later.

For example, with the November 2017 eruption of Mt Agung in Bali, most travel insurers imposed cover bans for any Mt Agung-related disruptions.  While some travellers were waiting for bans to be lifted (a risk which might leave you out of pocket if you find you must cancel your trip) others were buying when news of the volcanic activity broke, and purchasing a second one once the ban was lifted.


Case study: Mt Agung, Bali 2017

Daniel and Hannah are a couple in their 30s with two kids, and have just booked their flights to Bali.

If they buy travel insurance while the bans are in place:
They might not be covered for Mt Agung-related disruptions in six months’ time even if their insurer lifts the ban next week – the bans may still apply to older policies, depending on the insurer.

If they don’t buy cover and wait for the bans to lift:
Unfortunately, there are no hard and fast rules to know when insurers will decide to list their exclusions – they could be lifted in a few weeks, a few months, or a few years from! Meanwhile, if Hannah’s mum falls ill, or Daniel breaks his leg and they need to cancel before they buy cover, they are potentially thousands of dollars out of pocket for flights and accommodation. 

If they buy cover while the bans are in place, and buy a second policy if the bans are lifted:
They’re covered before their trip in case of cancellation or rescheduling. And if the bans are lifted, they can purchase a second policy (from the same company or a different insurer) which will then cover for any future Mt Agung-related disruptions whether it be in a week, six weeks or six months. If the activity of the volcano increases, and the bans are reinstated, they’d still be protected by their econd policy.
 

Can I claim on both policies and make a profit?

While that’d be nice, the answer is of course a big no. Insurance is about compensating insured people and returning them to where they were before the loss. Under insurance law, you can’t claim against both policies and get back more than you lost.

When trying to claim their expenses, Daniel and Hannah lodged a claim with both their insurers and disclosed that they had multiple policies. One insurer may pay it out in full, or they will split it between them.

The Product Disclosure Statement (PDS) for your policy will generally state that if you successfully claim compensation from another source, your insurer will only pay you back the difference. Applying for more than 100% of the value would be considered fraudulent.


Hopefully these have answered a few of your questions. Please email us if you have any additional questions you need answered, or a hot travel hack you'd like to share!

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