How to avoid travel insurance traps

While some people don't even bother taking out travel insurance, even those who do may be getting stung by the fine print.

There are two main rules to go by when you purchase insurance for your holiday - book comprehensive, and book early.

Giving your insurer details of any pre-existing medical condition could be the difference between being covered, and being left with a massive hospital bill.

Susan Taylor from Financial Services Complaints limited says the more details you give them, the better, even with things as simple as high blood pressure.

"If while overseas they have a heart-related issue and the travel insurer decides that the high blood pressure was related to that heart issue then the claim will likely be excluded," Taylor said.

The Insurance Ombudsman received 220 travel insurance complaint enquiries in the past year, and investigated 46 of them.

They say pre-existing conditions are the most common travel insurance complaint issue.

A further 65 travel insurance disputes were formally investigated by Financial Services Complaints.

Sue Chetwin from Consumer New Zealand says it's worth paying that extra to get full cover.

"If you've got a pre-existing condition then talk to your insurer about it because most often they will be able to insure it, It might cost you more, it might cost you quite a bit more, but if something goes wrong while you're away you will be covered."

Will Ashcroft from Allianz Partners says being covered by your policy depends on what pre-existing condition you have.

"With the policies we manage, a number of pre-existing medical conditions are automatically covered; some conditions will be covered for additional premium, and some unfortunately can't be covered." 

It's not just pre-existing conditions that you need to be aware of. If you book after an event like an earthquake or volcanic eruption then you will not be covered as these will be considered a 'known event' at the time the insurance was taken out.

If you book before one of these events and they affect your travel, then you will be covered.

Bali, which has had a string of volcanic eruptions over the past year is not currently covered for any volcano-related claims.

Brent Thomas from House of Travel says natural disasters aren't the only reason you should get insurance as soon as you book.

"Thirty-eight percent of claims happen before people go away. There's a lot of people that have issues before they even board that plane," Thomas said.

And finally, don't assume you'll be covered if you pop next door to Australia, Thomas said often people get caught out when making claims from across the Tasman.

"If you're going to Australia and you need an ambulance, that ambulance will take you to the nearest hospital, that hospital could be a private one and you'll be paying private costs," Thomas said.