Don't let your holiday end in disaster
The summer holidays are fast approaching. If you're counting down the days before jetting off to sunnier climes, make sure you're aware of the most common pitfalls and how to avoid them to save you forking out for any nasty surprises.
If you fall and break your leg in Europe you could end up with a bill for about £20,000, and if you need an air ambulance in the US, this could shoot up to £80,000, according to Mike Rutherford, chairman of AllClear travel insurance. So before you even start packing your bags, make sure you have insurance and that it provides the right level of cover.
In particular, look at the excess you may have to pay on a claim, and the maximum payout for cancellation. The recommended amount of medical cover on a policy is at least £1 million for Europe and £2 million elsewhere, says Greg Lawson, spokesperson for insurance company Columbus Direct.
If you are travelling within the European Union a European Health Insurance Card is advisable, as this gives you reduced medical costs and entitles you to the same care as residents of the country you are visiting.
"However, this doesn't guarantee you the same free treatment you would expect from the NHS and some fees may still apply, so I would always recommend taking out travel insurance, too," warns Lawson.
Before you've even set off, things could go wrong if the company you're travelling with goes bust.
Luckily, Air Travel Organisers' Licensing (ATOL), run by the Civil Aviation Authority (CAA), is designed to protect you when this happens.
However, it mainly applies to those on packaged holidays. If you are abroad and your tour company goes under, your holiday should continue as normal and for those with advance bookings, refunds will be given.
New rules, which came into effect this year under the ‘Flight-Plus' scheme, also mean that if you book your flight, hotel and car hire from the same provider within a certain time limit it is ATOL-covered.
Your different bookings must be made within one day of each other in order for Flight-Plus to apply and then if something goes wrong with one part of the trip, it's the ATOL holder's responsibility to find an alternative or give a full refund. If this company has gone under, it lies with the CAA to do this.
For example, if you request and buy a flight to Orlando from Thomas Cook and the day after go back and get car hire from the same company, then you're covered. But if you just buy a flight to Orlando this isn't eligible for Flight-Plus because you need car hire or accommodation from the same company.
All self-built trips, where you book each part separately with different providers, are not covered by ATOL. In this instance, you need to make sure you have sufficient insurance to cover you and if you pay on credit card, you'll also be covered for bookings worth between £100 and £30,000 under section 75 of the Consumer Credit Act.
This means the card provider and the retailer are both equally responsible if a company goes bust or the contract made during the original transaction is breached.
Losing your suitcase is not only stressful but it can also be expensive. Depending on the type of insurance policy you have, you might be able to claim for losses incurred if your case goes astray for a few days - keep a record of receipts so you can claim these back.
If your luggage is lost forever you should also be able to claim for the full cost of both the suitcase and its contents, but check your insurance policy.
Pack sensibly to reduce the hassle and cost of lost luggage. Split your stuff between your hold and hand luggage, and spread it across your cases if you are travelling as a group.
Even if you follow all the precautions given, it can be impossible to prevent things from being stolen. To minimise the risk, don't carry everything on you and keep photocopies of important documents in a safe in your hotel.
If the worst happens, the more information you have, the better the chance of making a successful claim, so report it to the police immediately and get a crime report.
As you would at home, follow the normal safety precautions such as making sure you're not out at night on your own, not carrying large amounts of cash on you and locking your hotel room. If you are travelling to cheaper hotels, consider taking a travel safe with you.
These are knife-proof bags that can be padlocked to a solid item in your room such as a radiator.
Even if you let your bank know you're off on holiday, this doesn't mean there's a guarantee the card won't be blocked.
So don't just rely on one card and bring along either a credit card or a prepaid card to make sure you're not caught out.
"Prepaid cards are increasingly becoming a more popular option with holidaymakers and travellers as a convenient and secure way of carrying currency," explains Myles Stephenson, chief executive of mytravelcash.com.
After the fiasco of the ash cloud in 2010, many people now worry about getting stranded abroad due to an irate volcano, but there really is no need. Under the EU261 law, airlines have to look after customers if they get stranded because of a natural disaster. Transport and accommodation costs will be covered and refunds will be offered.
However, other extras, such as booked tours, may not be included unless your insurance covers this.
"Natural disaster cover is not included as standard in most policies and cheaper policies are unlikely to cover you for problems arising from an earthquake or floods, so it's crucial to check and opt for a policy which does have cover if you're concerned about this," says Bob Atkinson, spokesperson for travelsupermarket.com.
The Foreign & Commonwealth Office (FCO) website (fco.gov.uk/en/) is key when it comes to political upheaval as it has up-to-date reports from around the world. If the advice from the FCO is not to travel and you go despite this, you won't be covered by your insurance.
Even if the wording of your policy says it covers political upheaval "it is worth checking with the insurer to understand when political unrest becomes war, civil war or revolution, as you may not then be covered", warns Atkinson. If in doubt, check the wording of your policy, speak to your provider and check the FCO website before you travel.
A debit card that works in the same way as a pay-as-you-go mobile: you top it up with cash and then use it just as you would a normal debit/credit card. Although some are badged Visa and MasterCard, pre-paid cards are not a credit card; you can only spend what you load. Prepaid cards are aimed at people who might not traditionally hold bank accounts – children, teenagers, people with poor credit ratings, migrant workers, and benefit claimants – and there are no credit checks on the applicant.
This is more usually a feature of car insurance but it can also crop up in contents, mobile phone and pet insurance policies. An excess is the amount of money you have to pay before the insurance company starts paying out. The excess makes up the first part of a claim, so if your excess is £100 and your claim is for £500, you would pay the first £100 and the insurer the remaining £400. Many online insures let you set your own excess, but the lower the excess, the more expensive the premium will be.
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.
A person (or business) unable to pay the debts it owes creditors can either volunteer or be forced into bankruptcy – a legal proceeding where an insolvent person can be relieved of their financial obligations – but loses control over their bank accounts. Bankruptcy is not a soft option. Although it may wipe the financial slate clean, it is extremely harmful to a person’s credit rating (it will stay on your credit record for six years) and will adversely affect your future dealings with financial institutions. Bankruptcy costs £600 paid upfront.