Travel Insurance with personal liability cover

Don't get stuck overseas swimming in legal costs. Discover why personal liability travel insurance is a must.

Updated

Every year the New Zealand media is dotted with stories about Kiwis that have been “banged up abroad” or forced to fork out tens of thousands in legal fees following a legal mishap in a foreign country with foreign regulations. These situations can escalate extremely quickly and without the correct protection in place, you can find yourself extremely deep in debt, extremely quickly.

What is personal liability travel insurance cover?

Personal liability travel insurance covers third-party insurance claims. In other words, this insurance pays for the cost of damages, loss or injury to someone or their property that you or a member of your travelling party is personally responsible for causing.

While personal liability benefits cover such claims, it does not cover intentional harm. It’s essential that you understand the different benefits covered by various policies and the general exclusions of personal liability cover before purchasing travel insurance.

How do New Zealand travel insurance brands cover personal liability?

Name Product Medical Cover Cancellation Cover Luggage and Personal Effects Cover Default Excess
Holiday Rescue Comprehensive
Unlimited
$50,000
$5,000
$100
Comprehensive travel cover that includes unlimited emergency medical with no excess, up to $5,000 for lost and stolen items, and 24/7 access to a registered nurse abroad.
Cover-More Comprehensive
Unlimited
$10,000
$25,000
$250
Includes unlimited cover for emergency medical, accommodation and transport expenses, $25,000 cover for luggage and travel documents, and $10,000 for legal expenses.
Holiday Rescue Essentials
Unlimited
$50,000
$0
$100
Essentials travel insurance protects you abroad with up to $1,000,000 for personal liability, $500 for dental expenses, and more.
Cover-More Annual Multi-Trip
$1500
$10,000
$5,000
$25
Peace of mind as you travel the world with insurance that covers you over a 12 month period. An affordable option for those who take multiple trips over the year.
Holiday Rescue Domestic
No cover
$50,000
$0
$100
Cover as you travel around New Zealand with $5,000 for rental vehicle excess, up to $1,000,000 in personal liability protection, and $5,000 in alternative travel expenses.
Cover-More Domestic
$1500
$10,000
$2,500
$25
Travel around New Zealand with the security of $200,000 in personal liability cover, up to $4,000 for rental vehicle excess and $10,000 in cancellation cover.
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*Maximum benefit is dependant on the specific policy you choose from the provider. Check the exact personal liability benefit for the policy you interested in purchasing on the providers page.

Is personal liability cover even worth it?

Some of the key benefits of personal liability travel insurance include:

  • Automatically included benefit. Most travel insurance policies automatically include cover for personal liability, which makes travel insurance a smart financial choice.
  • The additional cost has additional perks. Some basic policies may not include personal liability cover or they may have a lower benefit limit. A comprehensive policy with personal liability will also have greater benefits for medical expenses, stolen luggage and cancellations.
  • Protection in the long term. You should consider paying slightly more initially for a policy with personal liability cover to protect you from a potentially greater cost down the track.

Cost of travel insurance vs legal fees

If you were sued while travelling in the United States, you’d be looking at anywhere from $200 to $1000 per hour to hire an attorney. On the other hand, a travel insurance policy for a two-week trip for someone 21 years old or over is only $98.45*, which is less than half the amount for the cheapest lawyer, per hour. You also could be liable for potential court fees and compensation on top of the attorney fee.

AJ's Accident

AJ learned early in life that prevention is better than a cure. The day he accidentally set fire to the lodge he was staying in at the Pocono Mountains in the US would have been the end of him if he didn’t have travel liability insurance. The candle that AJ forgot to put out when he went to bed resulted in the lodge burning down and the injury of two other patrons. AJ was faced with a $2 million lawsuit that his personal liability travel insurance covered.

Expenses that AJ faced:

  • Cost for destroyed cabin: $100,000
  • Medical expenses and hospital stay for people affected by fire: $100,000
  • Total lawsuit amount: $230,000 (miscellaneous expenses and lawyer fees included)

Amount covered by AJ’s insurer

$230,000

Out-of-pocket expense

$200 excess

When you compare the cost of travel insurance to the costs you could face in a liability case, it’s clear that travel insurance is absolutely worth it, especially when personal liability cover is included.

*Cost based on the average cost of travel insurance going to the USA. Price last obtained November 2015.


What to do if you become liable for third party injury, death or property damage

  1. Contact your insurance provider as soon as possible. The first thing you must do is get in touch with your travel insurance provider or the underwriter of your provider.
  2. Provide the required documents. Your provider will take you through getting the required documents to process the claim for damages.
  3. Seek approval for legal fees. Your provider can give you approval to cover your legal fees if necessary.

What you must NOT do once you become liable

  • Hire any lawyer, attorney or legal team without approval. This is a move that can void your cover. Most travel insurance policies require their written approval before you incur any legal fees or costs.
  • Admit fault to the third party or any relevant party. Admitting fault or promising to pay money will also void personal liability cover on your policy.

Am I covered for personal liability in car crashes?

Nearly every comprehensive travel insurance policy includes a certain level of protection for personal liability. What most travellers don’t realise, however, is that this cover does not extend to car crashes. You can usually find this mentioned in the policy’s list of general exclusions or personal liability-specific exclusions. Most policies have words to the effect that they will not pay any claim for a legal claim against you for causing bodily injury, death, or property damage while using a mechanically propelled vehicle.

  • If you cause personal injury to someone else or damage their property when driving a rental car, travel insurance does not provide any cover.

Four situations where personal liability travel insurance can protect you

Accidents involving another party can happen, and you could find yourself in financial hardship if they occur while you’re travelling overseas. Possible liability situations that can occur while travelling include:

  • Injuring someone while playing sport. If you pick up a game of soccer with some teenagers in the back streets of Buenos Aires and get a bit too aggressive contesting the ball, you could be liable for another person’s broken leg.
  • Falls due to spilled liquids. If you get careless in your shared hostel accommodation and leave water on the bathroom floor, someone could slip and hurt themselves.
  • Accidentally burning down your accommodation and injuring patrons. If you’re helping out with the BBQ in the shared hostel area and mishandle the gas cooker, things could go wrong.
  • Breaking hotel facilities and equipment. If you accidentally short-circuit the power in your hotel room and damage the audio system, the hotel may seek compensation for the equipment on top of the bond you paid.

Personal liability cover can cover legal and compensation expenses brought against you in these unfortunate circumstances.


What personal liability insurance won’t cover you for

While most insurance policies offer similar cover, there are differences in what each insurer will and won’t cover. When it comes to personal liability, most insurance companies won’t cover claims in the following situations:

  • Losses to you or your travelling party. Injuries or property damage caused by you to you or your travelling party won’t be covered.
  • Losses involving cars and other vehicles. Injuries or damage from the use, ownership or custody of a mechanical, aerial or water-propelled vehicle won’t be covered.
  • Work and profession cases. Injury, loss or damage that relates to your profession or personal business won’t be covered.
  • Unlawful acts. You won’t be covered if the injury, damage or loss was caused by an illegal act.
  • Sexually transmitted diseases. Communicable disease transmitted by you won’t be covered.
  • Non-monetary claims. Claim in any form other than monetary compensation is not included.
  • Intended conduct. You won’t be covered if third-party losses occur because you are wilfully neglectful and intend to cause harm or damage.

Personal travel liability insurance exclusions for any loss, damage or expenses are not limited to this list. It’s imperative that you read your insurance policy carefully before travelling and before making a claim with your insurance provider.

Picture: Getty Images

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