Southern Cross Travel Insurance (SCTI) has reported a gap between Australians’ attitudes to domestic travel insurance and the claims it is paying, after settling more than $240,000 on local and interstate trips in the first eight and a half months of 2025. The insurer’s recent claims data includes an incident in the Northern Territory, where a buffalo ran into the side of a customer’s rental vehicle as they were driving back from a tour. The collision caused damage to the vehicle and resulted in a $4,506 payment for rental vehicle excess. For insurance professionals, the figures point to non-medical costs on domestic trips – including cancellations, transport changes, and damage to hire cars – as a significant part of current travel exposures.
From Jan. 1 to Sept. 15, 2025, SCTI has settled a range of domestic claims for Australian travellers, many of which related to disruption rather than emergency medical treatment. Examples released by the insurer include:
Across its domestic portfolio in 2025, SCTI reports that it has paid more than $211,300 for journey changes and cancellations, almost $11,000 for baggage and personal items, more than $10,000 for rental vehicle excesses, more than $6,700 for a personal accident, and more than $700 for pet services.
Despite these outcomes, SCTI’s Future of Travel report, released in February 2025, indicates that many Australians assign a lower priority to insurance for domestic trips than for international travel. According to the research, 76% of respondents regard travel insurance as a high priority when arranging an overseas holiday, compared with 41% who say the same for domestic trips. SCTI says this is reflected in its sales data, with domestic travel policies accounting for only about 2% of policy sales so far in 2025. SCTI chief customer officer Jess Strange said that, while Medicare provides a foundation for medical care in Australia, it does not extend to a range of other financial exposures when trips are disrupted. “Many Aussies believe that domestic travel insurance is an unnecessary expense, especially as most medical situations are covered under Medicare. However, while Medicare may cover medical costs, they will not cover the costs of cancelled flights, accommodation, or pre-paid tours,” Strange said.
Strange noted that the average domestic claim SCTI has paid in 2025 is higher than the average claim under one of its international products. “Comparing the average claim paid for our domestic customers with international examples reveals a surprising result. The average domestic claim made in 2025 stands at $2,376, while for our International Comprehensive cover, the average customer claim paid comes in at $1,872! Given the high costs of domestic flights, accommodation, and tours in Australia, the loss of these bookings can leave domestic travellers with a significant financial loss. With the cost of travel not showing any signs of reducing, it’s often just not worth taking the risk, to end up hundreds or even thousands of dollars out of pocket, even when travelling domestically,” she said.
SCTI’s observations are consistent with market data from 1Cover Travel Insurance’s 2025 Travel Wrap Up, which finds that Australians are continuing to travel but are adjusting how and where they do so. According to 1Cover, cost of living is now the primary factor shaping travel decisions for 61% of Australian travellers. Many are choosing destinations closer to home that they see as better value and returning to familiar locations, particularly in Asia and the Pacific, instead of booking longer and more expensive itineraries to Europe. Japan remains a prominent outbound destination, with increased demand also reported for the US and China. For insurers, these patterns mean domestic and near-region travel remain important lines of business. 1Cover reports that almost half of its customers are arranging policies at least a week before departure, suggesting that some travellers are considering insurance earlier in the booking process and paying closer attention to cancellation and pre-trip medical risks.
The cruise market continues to generate travel insurance policy sales. 1Cover’s data shows cruise-related policies rising 17% year on year, with Australians spending an average of 19 days on board. Almost 44% of cruise customers purchase insurance within 180 days of departure, a longer lead time than is typical for many land-based holidays. Common cruise itineraries include domestic and near-Pacific routes such as New Caledonia and the South Pacific, with growing traffic to the UK, Canada, Japan, and France.
At the same time, 1Cover reports increased use of artificial intelligence tools in trip planning. About 41% of surveyed travellers said they had used AI to research or prepare for holidays, mainly for destination ideas, price comparisons, and putting together itineraries. However, the provider notes that final decisions on coverage and exclusions often still rely on advice from travel agents, airlines, and insurers, particularly where claims scenarios and detailed policy wording are involved.
In contrast with segments where insurance is arranged further in advance, RACV data points to a persistent pattern of last-minute travel insurance purchasing among many Australians. RACV says 35% of its customers buy travel insurance within seven days of departure, and 5% purchase cover on the day they travel. It has also recorded an increase in policies sold within 48 hours of departure. The organisation attributes this behaviour to factors such as a tendency among some travellers to downplay risk until close to departure, a booking sequence that places flights, accommodation and activities ahead of insurance, limited understanding of when cancellation benefits take effect, and confusion linked to the number and complexity of available products. For insurers, brokers, and underwriting agencies, the combined data from SCTI, 1Cover, and RACV points to ongoing work in explaining how domestic travel insurance responds, when cover for cancellation and disruption begins, and how non-medical benefits sit alongside Australia’s public health system.
