10 tips when buying travel insurance

Even in the current economic climate, people are still planning holidays and short breaks to the UK, Europe and beyond. But failing to take out travel insurance could be a costly mistake - even minor surgery, for appendicitis for example, costs around £7,500 in Europe, increasing to a staggering £25,000 in some parts of the US.

Don't let the price quoted by your travel agent put you off - according to Confused.com, policies bought from travel agents can cost four times as much as those you find by shopping around.

Follow our 10 tips on cutting the cost of travel insurance and making sure you get the right policy for you.

1. Look beyond the cost

Travel insurance is no different to any other insurance policy in that price should not be your only consideration. As a general rule, you should only consider policies that include £2 million for medical expenses, £1 million for personal liability, £3,000 for cancellation, £1,500 for baggage and £250 for cash.

The level of excess you opt for – i.e. the part of the claim that you have to meet before the insurer pays out – will affect your premium. Remember not all insurers will allow you to adjust the excess, but the more you are prepared to pay, the lower your premium will be.

2. Different types of policies

There are two main types of travel insurance – single-trip policies, which only cover one trip, or annual multi-trip policies, which cover you for every trip you make over the course of a year.

A single-trip policy is best for people who know they will only be taking one holiday over a 12-month period – research from data provider Defaqto found that the recession means more people will be restricting themselves to just one break in 2009.

Brian Brown, head of insight at Defaqto, says: "For most customers taking just one overseas trip a year will mean that purchasing a single-trip policy makes more sense."

A competitive single-trip policy, according to moneysupermarket.com, could cost as little as £4.11, compared with annual cover, which starts at around £25. However, if you know you will be making more than one trip abroad then annual insurance might be cheaper than buying several single trip policies - especially if you are going long-haul. 

And Steve Nickerson, managing director of travel insurers Preferential, says: “A benefit of having an annual multi-trip policy is that you are automatically covered if you want to book your holiday at the last minute to take advantage of any holiday bargains available.”

3. The type of holiday

There are a few more things to bear in mind before you decide what's the right type of policy for you.

First of all, if you are looking at an annual multi-trip policy, then think about where you are planning to go throughout the year. Insurers tend to offer European cover or worldwide cover, with the latter policy attracting a higher premium in most cases.

If you do intend to take a trip outside of Europe then make sure you opt for worldwide cover; alternatively, it might be cheaper to buy a single trip worldwide policy to cover any travel outside of Europe, as well as annual insurance to cover trips within Europe depending on the number of holidays you have planned.

Next, bear in mind that many standard travel insurance policies won’t include any high-risk activities you enjoy while away – for example, scuba-diving or skiing. Adding winter sports cover to your annual travel insurance policy could see your premium jump by 35%, so it might be worth taking out a specialist single trip policy to cover a particular holiday.

Each insurer is different so check the activities that they include.

If you are older or have a pre-existing medical condition then you may struggle to get travel insurance, as you are viewed as high risk. Specialist insurers – including Saga, Age Concern and Help the Aged – all offer travel cover regardless of your age. You can also call the Association of British Insurers (020 7216 7455) to help you find a specialist insurer.

If you are pregnant then you may also struggle to find suitable cover, as again you are viewed as high risk by insurers. Many companies will not cover you beyond the 28th week of pregnancy – so, if you already have annual travel insurance and intend to travel then check the small print to see if you are covered.

It’s vital that you are upfront and honest about any pre-existing medical complaints, as non-disclosure could result in your claim being rejected. Another factor that could lead to a medical claim being rejected is if you have been drinking alcohol.

4. Maximum trip duration

If you do decide to opt for annual multi-trip travel insurance, then make sure you check how many days come under your ‘maximum trip duration’. According to Preferential, some policies offer as little as four days - potentially leaving you at risk if you go away for longer.

However, most insurers will cover trips of up to around 31 days. If you are planning on being away for longer than this – on a gap year for example – then it might be best to speak to insurers directly or opt for specialist cover.

Another consideration is any domestic trips you might have planned during the year. While you may not feel that a weekend break in Bath is worthy of travel insurance, you could still become a victim of theft or cancellation, and need to make a claim. When buying annual multi-trip travel insurance check the small print to see if UK travel is included. 

5. Cancellation

It’s best to buy your travel insurance as far ahead as possible, because one of the key benefits is cancellation cover. If your trip is cancelled or travel delayed then you could claim for this.

Some insurers only offer £300 of cancellation cover, so keep an eye out for policies that allow around £3,000, or more if you are going on a cruise or expensive holiday.

However, Steve Williams, head of travel insurance at Confused.com, says: “Look at how much you paid for your holiday – if it only cost you £1,000 then there is little point in buying cover for £3,000 as your insurer won’t pay you any more.”

Another consideration in the current climate is redundancy cover. If you are concerned about losing your job – and consequently having to cancel your holiday – then look out for a policy that covers this.

Thomson offers a redundancy protection scheme, that allows free cancellation if you lose your job as long as you let it know 28 days before departure. Preferential’s annual multi-trip policy has a similar offer - provided you weren’t aware of any impending redundancy at the time of booking your trip. 

6. Baggage

Before automatically including baggage cover in your travel insurance, think about whether you are already covered under your home contents insurance.  Also be aware that it can be hard to claim for items lost or stolen when abroad.

Williams explains: “Insurers take claims on a ‘good faith’ basis but they are alert to people making fraudulent claims. You may be required to supply receipts and proof that you took the items on holiday with you.”

7. Family finances

If you are travelling with your partner and children, then consider opting for family travel insurance. Most policies are flexible these days, according to Confused.com, so you can specify the number of adults and children.

“Remember to check with your insurer to see if it will cover your children if they travel without you – on a school trip for example,” says Williams. “Also, if you child falls ill and is unable to make the scheduled journey home, then see if one parent is also covered to stay with them and travel back at a later date.”

8. Driving

If you plan on driving while abroad then remember to make sure your car insurance covers you – some insurers do this as standard while others require you to pay extra. Also, pay attention to local laws.

In France, for example, you are required to carry a high-visibility jacket and sign in the car with you at all times or you could be fined.

If you are hiring a car then, generally speaking, it’s probably cheaper to add this to your standard car insurance rather than opting for a policy from the hire company, says Williams.

9. Airline failure

2008 saw the collapse of several airlines and travel companies, prompting concerns from travellers that their insurance might not cover them for scheduled airline failure.

Some insurers, such as Marks & Spencer, now include this cover as standard but make sure you check the small print. If they don’t, then adding this cover to your travel insurance could cost just £7 for an annual policy, according to Confused.com.

Remember, if you buy your flight by credit card then you are covered under Section 75 of the Consumer Credit Act for purchases between £100 and £3,000. Meanwhile, if you are booking a package holiday, check whether your tour operator is ATOL-protected – this will enable you to reclaim any money lost or be refunded if you need to make alternative travel arrangements.

10. And the rest...

There are several other considerations to remember before you jet off on your holiday. First of all, if you are heading to the US, then the rules have now changed and you must complete a visa application online.

Secondly, make sure your passport has at least six months left on it from your date of return – any less and you might be refused entry to a country.

Finally, if you are travelling to Europe, remember to pack your European Health Insurance Card (EHIC), available through the Post Office or online at ehic.org.uk. This will pay for medical treatment in EU countries, plus Iceland, Liechtenstein and Norway, but only includes treatment enjoyed free by locals. It won’t, however, cover the cost of repatriation and is not an alternative to travel insurance.