New Zealanders not keen on pitching in for those without insurance

A medical emergency while you are overseas can be very expensive.

A medical emergency while you are overseas can be very expensive.

OPINION: I'm always really surprised when people tell me that they travel without insurance.

This probably makes me sound a bit like the fun police. When you're planning a big overseas trip, the last thing on your mind is things going wrong, or cover for that.

But things do go wrong. You might have an accident, fall ill, have something stolen, or get caught up in a disaster – natural or otherwise – that derails your plans.

Southern Cross paid out one claim for more than $500,000 when illness struck a holiday-maker.

Southern Cross paid out one claim for more than $500,000 when illness struck a holiday-maker.

If you aren't covered, the cost can be ruinous. 

READ MORE: Wellington man in Thai scooter accident recovering in Christchurch

Southern Cross revealed this week that over the past 10 years, it has paid 10 medical claims worth more than $200,000.

In one case, someone claimed $561,400 when someone suffered encephalitis in Africa, and one for $374,000 when someone had diverticulitis in the US.

That's the kind of sum you might feel okay about paying off over 20 years when you buy a house, not when something goes wrong when you're on holiday.

More and more people seem to be turning to crowdfunding to bail them out when they encounter situations that should really be covered by an insurance policy.

You see people running campaigns on crowdfunding sites for money for expensive medical procedures, to help the families of people who have died unexpectedly or, yes, when things have gone wrong on holidays. In 2015, a Wellington man received more than $170,000 in donations when he suffered a scooter accident while holidaying in Southeast Asia without travel insurance.

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It makes me uncomfortable.

Givealittle tells me that they have no rules around this – as long as there is a clear use of the funds, the beneficiary has consented, it's not illegal and there is no defamation involved, you can pretty much raise money for whatever you like. After all, it's up to the donors whether they want to hand over their money.

But New Zealand already has an underinsurance problem. Most people do not have enough income protection cover in particular to cover them if they are out of work due to sickness. Insurance commentator Michael Naylor said a survey Massey University did with the Financial Services Council showed only one out of every five New Zealanders who needed income protection cover actually had it.

To have a mindset that you can always tap into the generosity of others if things goes wrong is very risky. You have no way of knowing how successful such an appeal will be. In another scooter crash case, currently appealing for money on the Givealittle site, just $4600 has so far been donated.

Goodwill may also run out for those who have chosen to forgo the couple of hundred dollars it would have cost to cover themselves.

Southern Cross Travel Insurance also released the results of its survey, which showed 61 per cent of New Zealanders think it is unacceptable for travellers without insurance to look for public funding when they need help.

Insurance is a boring, annoying grudge purchase. But skimping on it is false economy.

However, if you really want to harness the power of the crowd to cover your back, rather than turning to the big insurance companies, peer-to-peer models may be something to look out for in future.

 - Stuff


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