Finance Your Budget Things that could void your insurance
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Things that could void your insurance

The New Daily
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Everyone’s heard an insurance horror story.

The couple whose house burned down and were left footing the bill after forgetting to replace batteries in the smoke detector.

Careless travellers who slept in and missed their flight before receiving a rude shock when trying to make a claim and being rejected.

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Insurance policies are brimming with loopholes and many Australians are being caught out through reckless actions or failing to check the fine print.

“Every year the news is flooded with stories of people left devastated after discovering their policy didn’t contain cover for a certain loss,” says finder.com.au’s Michelle Hutchison.

“Taking the time to compare different options may lead you to taking out a policy that offers a higher level of cover for your situation.”

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Checking you have the right cover is crucial. Photo: Shutterstock

Here’s some common mistakes catching people out.

Beware the booze

Being drunk is a typical reason for travel insurance claim rejections, explains Mozo’s Kirsty Lamont.

“Most travel insurers won’t pay out if you’re under the influence of alcohol or drugs when the incident occurred.”

So if you pass out on a park bench one night and get robbed, you’re likely to struggle when fronting up to make a claim.

Check your theft cover

A report into home and contents insurance by consumer group Choice found common traps that can reduce your claim or void it completely.

It was sparked from the tale of a consumer who had $20,000 worth of jewellery burgled only to realise his maximum payout was just $4900.

Choice says most policies place limits on high-value items unless you specifically ask for a higher cover.

If you do so you will pay a higher premium, but in the event of a claim it might be worth it.

Choice also found 75 per cent of policies it reviewed said they would not provide cover if you inadvertently invite a thief into your home.

So a guest at a party, maintenance workers, or even buyers inspecting your home, could invalidate some theft cover if there’s no clear sign of forced entry.

Smoking
Smoking can prove costly when it comes to insurance. Photo: Shutterstock

Up in smoke

Even if you indulge in the occasional cigarette your health insurer may deem you a smoker.

The same goes for cigars and pipes.

Some insurers will class any nicotine-based products as tobacco use, meaning even measures to curb smoking such as nicotine gum or patches.

“It can be harsh but life insurance providers recognise anyone that has smoked in the last 12 months as a smoker,” Ms Hutchison says.

“With smokers paying up to double the rate of non-smokers for cover, the benefits of quitting go far beyond improving your health.”

Pre-existing medical conditions

Many travel insurance policies exclude any pre-existing medical conditions unless you declare them and failure to do so can make the policy void. Likewise, with ordinary health insurance policies there may be a delay for coverage on existing conditions.

A pre-existing medical condition includes anything you are aware of or have sought treatment for.

A pregnant women who has undergone IVF treatment, for example, will likely pay more for a travel insurance policy.

“If people are undergoing IVF then many insurers are not interested in taking on the additional risks that are associated with this type of pregnancy,” Canstar spokesperson Simone Downes says.

“You should still be able to get travel insurance however any costs that arise from pregnancy complications would not be covered by the insurance policy. If you seek coverage for an IVF pregnancy as a pre-existing condition then you may need to pay more.”

Think twice when rock climbing

Biting the bullet and tackling rock climbing, or similarly dangerous adventure activities could end in turmoil.

According to Canstar research, only five out of 141 basic travel insurance policies it researched included rock climbing cover as it falls under the category of ‘dangerous activities’.

Even other seemingly common ‘extreme sports’ such as jet skiing, scuba diving or bungee jumping are left out.

Some companies offer insurance policies tailored to rock climbing and other activities so make sure you’re completely protected before you harness up – but remember, the more dangerous the activity, the more expensive the policy will be.

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