Do you really need insurance for domestic travel?

When you're heading overseas, getting travel insurance is as essential as applying for a visa or putting in your holiday form at work. But a decade ago, or even in the years just before COVID-19, ask an Aussie if they were buying travel insurance for their Uluru holiday and they would have thought you were a sausage short of a Bunnings sizzle.

Like just about everything else in our lives, the domestic travel landscape has changed, says Dean Long, CEO of the Australian Federation of Travel Agents.

"Given the increased cancellation rates for airlines currently occurring, having travel insurance means, if you get disrupted, you can get your accommodation covered and additional support," he says.

"It's not nearly as expensive as insurance for international destinations, but given the amount people are spending on Australian holidays - on large tours or going to places they may never have been before - it's worth it," he adds.

People feel safe travelling in their own country, says Doug Skoog, head of marketing at travel insurance app Freely, but it's not guaranteed.

"The top benefits of having domestic travel insurance are receiving coverage for cancellations and amendments - with regards to accommodation or tours, or even pre-paid festivals and big events such as weddings - along with lost, damaged or stolen luggage, and flight inconvenience, which includes things like expenses racked up due to delays," he says.

It won't include medical expenses because they're covered by Medicare or private health insurance, but some policies protect for losses due to illness, like having to cancel a trip due to COVID-19.

"Australia is currently gearing up for a fifth wave of Omicron," says Skoog. "Sure, we might not have to isolate any more, but people are still getting sick. Eight per cent of Freely's claims are related to COVID-19."

There are often events people don't consider when contemplating domestic travel insurance, says Todd Nelson, managing director for Cover-More Australia.

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"We had a customer diagnosed with skin cancer who had to cancel their entire family trip, but they had an amendment and cancellation claim value of $20,000," he says. "Another customer's rental car was written off after a third-party collision - they could claim $4000 of rental car insurance excess."

The main consideration is the money you'll lose if the holiday is cancelled compared to the cost of insurance.

"Buy insurance as soon as you book," says Skoog. "Some coverage will only be provided if your travel insurance policy was purchased a certain amount of time in advance. Pre-trip cancellation is a good example of this and is one of the key reasons people make claims on a domestic travel insurance policy."

The best advice of all, however, is to read the policy carefully before you actually buy one. That way you know what you're covered for - some only cover disruption, others will cover cancellation due to illness - and won't be the one who's surprised when it comes time to making a claim.