Finding travel insurance you can trust
The volcanic ash crisis has proved there’s more to choosing a travel insurance policy than simply getting a good price. Insurers have differed over their approach to paying claims to customers left stranded due to cancelled flights, with some firms supporting policyholders and others refusing to.
The past couple of years have also seen holidaymakers stranded due to airlines such as Zoom and Flyglobespan collapsing – something that’s not necessarily covered by all travel insurance policies.
Many customers assume their insurance policy will cover them for adverse weather conditions, so-called 'acts of God' or an airline going bust but unfortunately not all policies cover these eventualities.
To make sure you're covered for as many events as possible, you should always read the small print of a travel insurance policy before making a purchase. Price comparison site Moneysupermarket.com says it’s seen a surge in people searching for 'premium' or comprehensive travel insurance policies since the volcano erupted.
Bob Atkinson, travel expert at Moneysupermarket.com, says: “Recent experiences highlight the importance of choosing the right policy for your needs and although we have seen a 27% increase in visitors looking for travel insurance through our site, we have seen a significant shift in the number of Brits looking for ‘premium' policies too - quality policies that offer more comprehensive levels of cover, and insure for trip delay and scheduled airline failure and end supplier failure for example; it's certainly not just about price anymore for travellers.”
The majority of travel insurers didn’t cover customers for flight cancellations during the recent disruptions, with most advising affected customers to simply contact their airline. However, some people will be able to claim on their travel insurance if they paid for accommodation they couldn’t use because their flight was cancelled.
"I implore travellers not be put off taking out travel insurance as a result of their recent bad experience or stories of others’ difficulties,” says Atkinson.
“No matter what you think of the product, travelling abroad without insurance is madness. Although it may not necessarily cover unexpected events like the volcanic ash cloud, the probability of these natural disasters happening is relatively low, but making a claim for loss of baggage/belongings or emergency medical treatment are more regular occurrences and can add up to thousands of pounds in extreme cases, all of which would be covered by the individual if appropriate travel insurance isn't in place.”
Experts say a good travel insurance policy should have at least £2 million medical expenses cover, £1 million personal liability cover, £3,000 cancellation cover, £1,500 baggage cover and £250 cover for cash, as well as cover for delays and scheduled airline and end supplier (such as hotels) failure.
"Be prepared when booking holiday travel in case your airline goes bust", says Jonny Langstaff-Ellis, insurance analyst at research company Defaqto.
"Many people might think they would be covered if their airline goes bust, but this is often not the case.” Some well known travel insurers that do cover scheduled airline failure include Direct Line, Direct Travel, the Post Office, the AA, SAGA and Sainsbury's Finance.
One way to protect yourself is to book flights through a travel agent who is ATOL bonded. That way if your airline fails the travel agents will arrange to get you home, or refund the cost of your tickets.
Also, if you do book direct with the airline, always pay by credit card if you can. If the cost of your tickets is £100 or more (and less than £30,000) you will be covered under Section 75 of the 1974 Consumer Credit Act credit card, which states that you can claim a refund from the card provider if something goes wrong.
One good thing to come out of the flight chaos seen earlier this month is that it could force the insurance industry to look at policy wording and tighten up areas regarding exclusions.
Steve Williams, head of travel insurance at Confused.com, says: “The ‘act of god' clause is now on the radar of the Association of British Insurers and Financial Ombudsman Service. This is a good thing for customers as insurance providers will be forced to look at ambiguous wording and change it, clearing up this grey and confusing area of travel insurance.”
Terrorism is another event that is covered by some travel insurance policies but not others. Last week the British Embassy amended its travel advice to advise against all but essential travel to Bangkok following increasing political unrest and a higher than normal risk of violent outbreaks in the Thai capital.
Some travel policies will cover medical costs that result from terrorist attacks, but not other expenses such as lost baggage.
The British Insurance Brokers’ Association says about a third of policies still do not have any terrorism protection at all – so it’s worth checking you’re covered for terrorist acts before you buy a policy. However, in most cases you won’t be covered by your insurance if the Foreign Office has advised against travel to a particular country or region.
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.
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.
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.