Millions could be overpaying for travel insurance
With mini-breaks the latest casualty of the recession, millions of people forced into 'staycations' could be overpaying on their insurance.
A report by data provider Defaqto found that instead of jetting off several times this year, many people will be committing to just one holiday in the summer.
Brian Brown, head of insight at Defaqto and author of the report, says: "The number of overseas trips is showing a decline for the first time in two decades with fewer trips to many of the usual destinations."
This means consumers may be better off with single-trip insurance, rather than paying extra for annual cover. "For most customers taking just one overseas trip a year will mean that purchasing a single-trip policy makes more sense," Brown explains.
This makes a reasonably striking difference for individual policies. A competitive single-trip policy, according to moneysupermarket.com, could cost as little as £4.11, compared to annual cover, which starts at around £25.
The difference in cost is much narrower in the family market, where single trip cover to the US starts at around £35, while annual worldwide cover can cost as little as £40.
Michael Taylor, money mentor with moneytactics.co.uk, says it’s also an opportunity for anyone with a packaged account to revisit whether it’s worth having, as many people will have bought into a deal for the free annual travel insurance.
He says: “This will make these packaged accounts an even poorer deal. If you are paying £12.50 a month or more for an account like this for the free annual travel insurance, it may have seemed a reasonable offer. Once you can meet your travel insurance needs for as little as £5, the scandalous over-charging becomes more obvious.”
In addition, he warns: “Insurance available through these accounts can be very poor. Some don’t cover anyone over the age of 49, for example, while others force you to pay the first £2,500 of claims, so however you buy, you need to check the key facts to make sure you are properly covered.”
Although costs will be a priority when hunting for cover, it’s worth sticking to certain minimums, says Maxine Baker, travel insurance manager at moneysupermarket.com. These include at least £2 million for medical expenses, £1 million for personal liability, £3,000 for cancellation, £1,500 for baggage, and £250 for cash.
A current account that charges a monthly fee in return for a “package” of additional services, such as travel insurance, credit card protection, mobile phone insurance, identity theft insurance, car breakdown cover or a “concierge service” that will book airline and theatre tickets or restaurant tables. However, many consumer experts say the features are overpriced and that more competitive deals exist elsewhere in the market and that very few packaged account holders actually take advantage of the features.