Do you need travel insurance for domestic travel in Australia?

What is domestic travel insurance?

Domestic travel insurance is designed for trips within Australia. Unlike international travel insurance, it doesn't focus on medical costs, because travel insurance providers are not authorised to provide medical cover within Australia.

Instead, domestic policies are more focused on protecting the money you've spent on your trip and helping cover unexpected disruptions.

What does domestic travel insurance cover?

Depending on your insurer and policy, domestic travel insurance may cover:

• cancellation fees and lost deposits
• lost or stolen luggage
• delayed or cancelled flights
• rental car excess
• emergency expenses such as accommodation
• sports and activities cover (if added)
• ski and winter sports cover (if added).

Policies can vary significantly, so it's important to read the Product Disclosure Statement (PDS) carefully to understand inclusions, exclusions and limits.

It's important to note that domestic policies can't cover medical costs aboard cruises. If you're embarking on a cruise, you would need to consider an international policy if you want cover for medical expenses.

Is domestic travel worth it?

Whether domestic travel insurance is worth it often comes down to the value of your trip. If you're taking a quick weekend drive with flexible accommodation bookings, you may decide the risk is manageable.

Domestic travel insurance can be particularly valuable for:

• expensive prepaid holidays - the more money you've committed upfront, the more you stand to lose if something goes wrong. Consider how much you'll pay for flights, accommodation, tours, event tickets, holiday packages - and whether you can afford to pay for it again if something unexpected occurs.
• school holidays and peak periods - travel during busy seasons like school holidays can increase the likelihood of delays, cancellations and lost luggage. Plus, if you need to repurchase flights last minute, they are often at the highest price.
• travel during severe weather seasons - severe weather events, especially during cyclone or bushfire seasons, can also disrupt plans.
• domestic flights - Australian flight disruptions can cause significant knock-on costs. If a cancellation leaves you stranded overnight, insurance may help cover meals, accommodation or replacement transport.
• travelling with valuable belongings - carrying expensive luggage or equipment like laptops, cameras, tablets and sporting equipment can be costly to replace if lost or stolen during your trip.
• hiring a rental car - if your rental vehicle is stolen or involved in an accident, domestic travel insurance can help cover its excess.
• going on adventure holidays - activities such as skiing, scuba diving, hiking or mountain biking may carry higher risks. Some policies offer cover for certain adventure activities, though exclusions often apply.

Insurance can help reduce the financial impact of unexpected events.

What about Medicare?

Australian travel insurers like RACV generally cannot provide medical cover in Australia, because Medicare already covers emergency medical costs.

But while Medicare helps cover many medical expenses, it doesn't cover anything related to travel disruptions, like cancelled flights or stolen valuables.

Do I need travel insurance for a domestic cruise?

If you're wondering whether you need travel insurance for a domestic cruise, the answer is often yes.

While you may be cruising around Australia, a domestic policy will not cover onboard medical costs and evacuations from the ship. This is only covered on international travel insurance plans. Many insurers require you to add cruise cover as an optional extra.

RACV Travel Insurance provides cover for river cruises at no additional charge.^#

More: What does cruise insurance cover?

Do I need travel insurance when I hire a car?

Standard car rental agreements include an excess, which is the maximum amount you are liable to pay if the car is damaged or stolen. In Australia, this basic excess can be as high as $8,000, depending on the vehicle. An RACV Rental Car Excess Plan helps cover that cost, with options from $1,000 up to $8,000. An RACV Domestic Travel Insurance Plan includes rental car excess up to $5,000. 

More: Car rental guide for Australian and international holidays

Tips for choosing domestic travel insurance

When comparing domestic travel insurance policies, consider:

• the value of your flights - calculate how much it would cost to rebook flights if you missed yours due to an unexpected event.
• your activities - check whether your planned activities are covered, especially for skiing, cruises or adventure sports.
• rental car cover - some policies include rental vehicle excess cover, which could save you paying a large excess fee after an accident.
• luggage limits - if you're travelling with expensive electronics or sporting equipment, check item limits and whether additional cover is available.
• excess and exclusions - a cheaper policy may have higher excesses or fewer benefits.