Travel insurance falls to cheapest ever levels
The cost of travel insurance has dropped to record lows, yet one in seven holidaymakers still ventures abroad without any cover, new research reveals.
Increased competition in the travel insurance market means premiums have never been cheaper, according to a report by data provider Defaqto.
It found that single trip and annual cover for lone travellers, couples and families to Europe is now between 2.7% and 7% cheaper than last year.
For example, a single trip to Europe for a family over 17 days now has an average premium of £15.70, down 7% from 2007. And annual cover for a lone traveller to Europe is 6.7% cheaper with the average premium currently costing £49.67.
However, the cost of annual policies for trips to the US have increased slightly in the past year. Single travellers will pay the same as they did last year while couples and families will have to fork out 2.3% more.
Defaqto's Brian Brown says that while the cost of annual insurance to the US has increased since 2007, premiums are still lower than they were in 2003 even before inflation is taken into account.
“Competition in the travel insurance market is having a very significant effect on the price of travel cover”, Brown adds. “The availability of a huge number of policies, many of them online, has driven many insurers to lower their premiums. There really should be no excuse for people to travel uninsured.”
Meanwhile, the financial regulator has warned that some insurance comparison websites are supplying incorrect information to customers. Although an investigation by the Financial Services Authority (FSA) found many sites provide clear information about the policies, it says there are still outstanding issues specifically around the clarity of the levels of excess that apply.
It also questioned whether consumers are encouraged to consider features, other than price, before purchasing products.
Tips for buying travel insurance
- Shop around. Around 25% of all policies taken out are purchased direct from a tour operator or travel agent, according to the Treasury, but by using the internet to shop around for a deal you are likely to find cheaper premiums that offer a superior level of cover.
- More is less. Paying extra for annual cover could actually save you money if you plan to go away more than once a year.
- Read the small print. All travel insurance policies offer different levels of cover so make sure you check the small print to see what is included and the levels of excess before you buy. Don't be lead by price alone.
- Think ahead. If you plan to do any winter or summer sports while you are away – such as skiing or diving – then make sure you buy the appropriate insurance to cover these activities.
An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).
The Financial Services Authority is an independent non-governmental body, given a wide range of rule-making, investigatory and enforcement powers in order to meet its four statutory objectives: market confidence (maintaining confidence in the UK financial system), financial stability, consumer protection and the reduction of financial crime. The FSA receives no government funding and is funded entirely by the firms it regulates, but is accountable to the Treasury and, ultimately, parliament.
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.