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Insurance warning: Holiday act that can void your coverage

Will my travel insurance cover me if I have been drinking? 'Blanket rule' explained.

With the New Year in full swing and work and life back to near normal, your thoughts may be turning to your next holiday. And when it comes to travel insurance, Finder's insurance and innovations editor Gary Hunter has an important warning to keep in mind for your next trip: “You'll never be covered by travel insurance if you were found to be intoxicated.”

The blanket rule across all insurance hinges on that very important word: intoxicated. But some policies are void even if you have had only a couple of beverages.

“If you've had a glass of wine, you might be fine to claim as it's unlikely to have impaired your judgement. But as soon as you become intoxicated and put yourself in any danger, you won't be covered,” Hunter said.

Compilation image of champagne glasses together on a boat, a Qantas airplane and Nicole Pedersen-McKinnon headshot inset to represent her talking about travel insurance
Whether you're travelling overseas or staying in Australia, it's vital to know the rules of your travel insurance. (Source: Nicole Pedersen-McKinnon/Getty) (Samantha Menzies)

Finder has some examples in their online guide explaining how three separate insurance brands deal with claims involving alcohol.

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Just note first what the comparison site says about drugs: “Insurers won't pay out for any claim related to drug use unless your drugs were prescribed by a medical professional.”

Also by Nicole Pedersen-McKinnon:

That means you won’t be covered for medical expenses, legal liability or even rental insurance excess costs.

When being ‘under the influence’ cancels claims

A key term in many insurance policies is under the “influence” – these policies may be the toughest on the number of drinks. Southern Cross Travel Insurance is one policy with strict rules, but there is another determining factor here too: whether you have put yourself in danger.

It appears from Southern Cross Travel’s fine print that just being under the influence counts as endangering yourself. Putting yourself in danger includes "you being under the influence of alcohol, solvents, or drugs - including your conduct while under their influence". It’s a fairly large catch-all that could hugely catch you out.

Then there are the insurers that will demand a breath test.

When insurers want blood tests

Let’s look at Cover-More for this one. The first point to note is that its allowable blood alcohol level is some four times the legal driving limit. So, the insurance may payout in a higher number of cases.

The fine print says there will be no payout if the incident is "involving, arising from or related to your impairment due to you drinking too much alcohol: which is evidenced by the results of a blood test which show that your blood alcohol concentration level is 0.19 per cent or above".

But just keep in mind the ‘out clause’ for a pay out. Based on a third-party witness, doctor’s report or other piece of evidence, it can refuse a claim regardless.

When the alcohol policy is ambiguous

There are also insurers that – worryingly – don’t specify. For example, travel insurer Fast Cover leaves lots of room for interpretation.

No mention is made of how it determines if you are under the influence of alcohol, saying merely it won't cover you "if you were under the influence of drugs or alcohol". It could mean anything really.

What about complimentary credit card insurance?

As ‘free’ policies, these are often not as generous on many measures. It is vital with these, in particular, to check exclusions.

For example, American Express’s complimentary insurance – remember, it will only be activated if you have purchased a certain part or portion of your trip on the card – leaves out some things you might want to do.

The fine print says jet skiing, bungee jumping and hiring a scooter if you don’t have a motorcycle licence, won’t be covered.

It also specifies: “If you have pre-existing medical conditions, this cover may not be right for you.”

Put more clearly: you will never be covered.

When it comes to alcohol, such policies will usually err on the side of denying claims. However, the American Express policy says: “We will not pay for or reimburse any costs… arising from or relating to being under the influence of alcohol whilst operating a motor vehicle, where you have a recorded blood alcohol concentration (BAC) greater than the limit prescribed by the applicable governing authority, or at all other times having a recorded blood alcohol concentration (BAC) greater than 0.10 per cent.”

So, it is a much lower limit than the independently purchased Cover-More policy, above, but still twice the legal driving limit.

The difficulty is that what each brand will do with alcohol-affected claims will come down to the interpretation of your claim assessor. And that points to the very purpose of these exclusions: to encourage you to think before you drink.

Nicole Pedersen-McKinnon is the author of How to Get Mortgage-Free Like Me, available at www.nicolessmartmoney.com. Follow Nicole on Facebook, Twitter and Instagram.

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