Enjoy a worry-free getaway with the right travel insurance
If you’re busy leafing through holiday brochures planning a well-deserved break, then remember there is more to preparing for a trip than just packing your suitcase. It’s also vital to check you have travel insurance before jetting off.
It’s now cheaper and easier to acquire travel insurance than ever before, with single-trip cover sometimes costing as little at £5. Yet one-in-five of us still fail to take out basic cover that will stop unforseen events ruining your holiday, according to insurer Esure.
There are numerous benefits from travel insurance, such as peace of mind that medical bills will be paid, being about to get home quickly in an emergency or replacing any stolen possessions.
The cost of medical treatment abroad highlights the importance of taking out insurance. According to Esure, 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.
You may have a European Health Insurance Card (EHIC), available through the Post Office or online at ehic.org.uk, but this shouldn’t be relied upon exclusively. The card pays for medical treatment in EU countries, plus Iceland, Liechtenstein and Norway, but it will only fund treatment enjoyed free by locals. This might be less comprehensive than NHS treatment, and could still leave travellers with a big bill. It also won’t cover the cost of repatriation.
As well as covering medical costs, travel insurance can meet the cost of new baggage and clothes if luggage is lost or stolen, reimburse you for the loss of personal items such as cameras, jewellery and cash, and compensate you if your trip is cancelled or your travel delayed, or if you miss your departure.
"The earlier you buy your policy the better," says Simon Lamble, product director at Confused.com. "You remove a key benefit by taking it out on the day of your trip, as if you cancel for any reason before this, you won’t benefit from cancellation cover and be able to get your money back."
Pay the price for peace of mind
When it comes to choosing a policy, remember that the cheapest is not necessarily the best, as the cover might be inadequate and the service thin.
There are various considerations to take into account when picking a policy. If you are likely to take more than two trips a year, it is probably worthwhile investing in annual multi-trip insurance to cover you rather than a single-trip policy, says Peter Gerrard of moneysupermarket.com.
"But this needn’t include winter sports cover," he adds. "If you’re only doing a weekend’s worth of skiing in Europe, it may be worth taking out a separate policy just for this, at about £5 for a few days."
This can work out cheaper, as winter sports cover usually adds around 35% to the cost of an annual premium. Also, bear in mind that worldwide cover is substantially more expensive than European - mainly because medical costs are so high in the US - so only opt for this cover if you really need it. You can find out more about winter sport insurance by reading our article on reducing the cost of a skiing holiday.
Annual policies will cover you no matter how many times you go away during a year, so you won’t risk forgetting to take out insurance. Typically they cover trips of up to around 31 days, and if the trip is longer than this, you can speak to your insurer and get specific cover. If you’re planning a gap year or career break travelling the world, you can opt for a backpackers’ contract, which covers trips lasting for a year or 18 months.
Many people will buy their travel cover from their tour operator when they book their holiday. However, while this may be easy and convenient, policies from tour operators are generally much more expensive than those purchased direct from insurance companies.
Perhaps more importantly, insurance from your tour operator will not be regulated by the Financial Services Authority, which means that if you have a problem with your policy, you will have no recourse to the Financial Ombudsman Service and won’t be able to claim compensation.
Covering the family
For family policies, check how many children are included in the price as some policies only cover two adults and two children, unless you pay extra. Also check the maximum age for children, because some policies treat over-14s as adults, although better ones cover children up to the age of 18 or 23, if they are in full-time education.
"It’s certainly cheaper than taking out cover for each individual family member," says Lamble. "Typically, insurers include children or infants for free or for a small extra payment."
Make sure it allows your children to travel separately, so that you don’t need to buy extra cover for school trips and exchanges. Bear in mind that if you have a partner (you don’t have to be married) you could save a few pounds by buying a joint plan.
In case you do need to claim, it’s vitally important that you provide all relevant information when applying for your policy. If, for example, your mother was ill, but then died shortly before you were due to fly, the policy would not pay out if you wanted to cancel to attend the funeral, because you were aware she was ill when you booked. Also be aware that some policies don’t cover you for jury service or cancellation following redundancy.
When you’re applying it’s vital you’re upfront and honest. Claims are most often rejected because policyholders failed to disclose pre-existing medical conditions. "The insurer will always ask about any pre-existing conditions," says Gerrard. "And if you have a serious illness, it will either decline the cover, remove the condition from the cover or ask for an extra premium to include it."
There are specialist policies that enable those with ongoing health problems to travel. Health charities such as the British Heart Foundation can be a useful source of information about companies sympathetic to your particular health problem. It may also be a good idea to try specialists like Free-spirit.com, and Medi-cover.
Older age groups may face special problems finding suitable cover, but there are policies that can help. Most contracts have an automatic cut-off at age 70, but it is still possible to get cover. Saga, Age Concern and Help the Aged, through its subsidiary Intune, all offer travel cover up to any age, and RIAS will issue policies at up to 89 years of age.
If you are struggling to find cover, then the Association of British Insurers has a specialist helpline. Call 020 7216 7455 for more information. For older travellers, it may also be worth considering a single-trip policy rather than an annual policy. Often insurers will take a risk on what might happen in the next few weeks, but are reluctant to provide annual cover for an older person, especially one with medical problems.
Whatever your age, picking the right policy will also depend on the activities you wish to take part in while away. If you’re an adrenaline junkie, intent on bungee jumping or white water rafting, check you’re covered in case of accidents.
Lamble says: "The majority of sports are accepted by default, such as standard watersports and horse riding. That said, check this carefully, as some have strange exceptions - we recently found a policy that covers cricket but not football."
However, activities which have an added element of risk associated with them such as jet skiing, hang gliding, parachuting and bungee jumping will not be covered under a normal policy, says Halifax general insurance spokesperson Jo Roberts.
"Those willing to take part in these high-octane sports will need to make sure that the company taking them on such activities has public liability insurance."
The level of cover you need depends on a variety of factors, says Gerrard. "For example, if you have a holiday home abroad that you visit four times a year and you travel by budget airlines, you may not need cancellation cover in an annual policy. You might choose a cheaper policy with just repatriation, medical and personal liability cover."
However, if you’re heading off on an expensive cruise costing thousands of pounds, paying a higher premium for greater cover is vital, as cancellation of the trip could see you lose a hefty sum. A cheap policy may limit cancellation cover to £500, but £3,000 worth of cover is generally recommended.
"Make sure the value of the holiday is covered as lots of insurers only offer up to £1,000 of cancellation cover, so it’s important to check this for an expensive holiday," says Simon Lamble.
The Financial Ombudsman Service receives more complaints about disputes over cancellation protection than any other aspect of travel insurance, so it’s vital to read the small print on your policy.
Turning to the level of baggage cover you need, this of course depends on the value of the possessions you wish to take.
"There is often an individual item limit of £200," says Peter Gerrard. "So make sure that your home insurance covers you for pricey items outside the house, and check how many days a year the cover lasts out of the country."
Declare to your insurer any valuables you are taking, such as camera or jewellery, to establish whether special procedures are required with them - such as being locked in a safe - or if an additional premium is required.
"A decent contract should provide £1,500 worth of baggage cover, but beware: baggage for a family of four may be worth more than that," warns Simon Lamble. The excess, which is the sum you are required to pay of any claim, varies from policy to policy. Typically, it is £50 to £75.
The minimum medical protection recommended for Europe is £1 million and £2 million for the US, where hospital costs are higher. But many quality policies automatically provide cover up to £5 million.
Study the small print carefully, and make sure you’re aware of any exclusions. Some policies, for example, will exclude a claim for an accident or illness if you’ve been drinking. "You don’t even need to be drunk," says Gerrard. "You just need to have alcohol in your system for the claim to be refused, as insurers work to the legal limit for driving."
Insurers will not normally provide cover for areas deemed unsafe by the Foreign Office, and exclude cover for acts of terrorism from their policies, although this is starting to change.
If you’ve have a complaint about a financial service product you have bought but the company you bought it from refuses to resolve your problem after eight weeks, the Ombudsman can help. The Ombudsman will investigate and resolve the matter. The Ombudsman is independent and its service is free to consumers. The Ombudsman may find in the company’s favour but consumers don’t have accept its decision and are always free to go to court instead. But if they do accept an Ombudsman’s decision, it is binding both on them and on the business.
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.
Association of British Insurers
Established in 1985, the ABI is the trade body for UK insurance companies. It has more than 400 member companies that provide around 90% of domestic insurance services sold in the UK. The ABI speaks out on issues of common interest and acts as an advocate for high standards of customer service in the insurance industry. The ABI is funded by the subscriptions of member companies.