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Insurance Guide
Choosing the right travel insurance
Updated: Friday 6 January, 2012
By Martin Fagan
If you are planning a holiday abroad, you’ll want to make sure you’re fully insured...
Anyone who’s had their belongings stolen, lost their luggage, or fallen ill abroad will testify that travel insurance is not an optional extra - it’s a necessity.
Not only statistics - but also sod’s law - says that you’re more likely to need the protection of insurance on holiday than at any other time of the year. And travelling without a valid travel insurance policy in place is not only a big risk, it’s also very foolish.
Travel insurance can be surprisingly good value if you shop around and, in this guide, we’ll look at how to find the most suitable policy at the best price and answer some common travel insurance questions.
- What cover do I need?
- How do I choose a travel insurance policy?
- Should I declare pre-existing medical conditions?
- Do I need an EHIC?
- What about credit card travel insurance?
- And finally...
What cover do I need?
You must consider your own individual needs and the specific activities you will be taking part in abroad, but you should ensure that any policy you take out covers the following as a minimum:
- Medical expenses - You’ll need cover for at least up to £1 million or £2 million if you will be travelling in the US.
- Personal liability - You’ll need cover for at least up to £1 million in case you accidentally injure someone else or damage their property while abroad.
- Cancellations and curtailment compensation - You‘ll need cover that matches the cost of your holiday so that if it is cancelled you will not be left out of pocket.
- Possessions and luggage - Most people will want a minimum of £1,500, but if you’re taking lots of items with you, ensure the limit you choose is adequate to cover them. It’s important to check the limit for individual items too and if you plan to take a very expensive item, for example a camera, that is more valuable than the limit, you may have to take out a separate policy to insure it.
- Repatriation - If you are travelling to a country which has poor hospital facilities then make sure your policy covers all repatriation costs to get you back to the UK. According to the medical travel insurance specialist AllClear, the average cost to bring holidaymakers home - including for apparently minor injuries or ailments - was £25,000.
How do I choose a travel insurance policy?
The most important aspect of the travel insurance policy that you choose is not the price, it’s the features. It’s crucial to check that the policy suits your individual needs. Some questions definitely worth asking are:
- What cover is offered?
- How much is the excess -could you afford this in an emergency?
- Will your insurer pay upfront or will you have to pay the bill and settle with your insurance company later - do you have the spare cash to pay a bill that may run into thousands?
- Does your insurer provide a 24-hour emergency hotline? Most companies do, but it’s worth checking as, due to time differences, this can be crucial.
It’s a good idea to shop around and compare insurance policies to find the best deal. Plus, if you travel more than twice a year (including short breaks), it’s worth looking at taking out an annual policy as this may work out to be cheaper.
Often the best value deals are found online. For example, you should be able to find a policy insuring a family of four for a two-week holiday in Europe for around £25.
Before you buy any policy, make sure you have checked carefully for any exclusions that may be relevant to your plans - for example, many standard policies won’t cover “hazardous sports” such as skiing, snowboarding and white-water rafting. See the Insurancechoices.co.uk guide to common travel insurance exclusions for other exclusions to watch out for.
Should I declare pre-existing medical conditions?
When taking out an insurance policy it is vital that you disclose any information about pre-existing medical conditions and check that your insurer will cover them. This may cost extra, but if you fail to declare a relevant condition and have to make a claim, it may be rejected by the insurer.
While some insurers will automatically exclude treatment for pre-existing conditions, many conditions such as diabetes or asthma are acceptable to insurers, but only if you tell them in advance.
There are companies which will offer specialist cover to people with illnesses, including cancer and HIV. However, if you are travelling against the advice of a doctor, insurers will not pay out on any claims.
Another factor to watch out for is if you’ve taken out travel insurance and, between taking out the policy and actually travelling, you develop a new illness. According to a survey in January 2012 by Which?, nearly a third of people who told their travel insurer about a new medical condition that had developed after they took out a policy had to pay a higher premium or had their cover removed due to "ongoing medical warranties" in the policies.
Even though the Financial Ombudsman Service ruled several years ago that it was not fair for insurers to refuse to cover new medical conditions that arose between the customer buying the policy and the start of the trip, the insurer will almost certainly ask for an additional premium payment to cover the new illness.
For example, one Which? Travel member took out insurance for a trip to the USA (with Staysure) but, three weeks before he was due to travel, he was diagnosed with chronic lymphatic leukaemia. Although his doctor declared him fit to travel, when he informed Staysure he was told that, on top of his original £118.41 policy, he’d have to pay an additional premium of £925.63 or cancel his trip and make a claim.
Tempting as it might be to not declare a pre-existing medical condition to your travel insurer in the hope of cheaper premiums, this is a false economy. If you fall ill on holiday and make a claim, your insurer will always cross-reference your claim with your medical records and if it finds an undeclared pre-existing illness, it will almost certainly void your insurance and leave you to pay any medical bills from your own pocket.
Do I need an EHIC?
If you are travelling anywhere in the EU, or to Iceland, Norway, Switzerland or Liechtenstein then you should definitely get a European health insurance card (EHIC).
You will need one for each individual traveller, including children. These cards are free and you can pick up the application form at the Post Office, request them by calling the automated service on 0845 606 2030 or apply online at www.ehic.org.uk. You will need a separate form for each person.
The EHIC will entitle you to state medical insurance on the same basis as an “insured” citizen in whichever country you are in. Because of variations between health systems, you may have to contribute to the cost of treatment. However, if you do pay and claim this on your travel insurance, many insurers will waive the excess because you've used the EHIC, so it shouldn’t cost you any extra.
On holiday, ensure you keep your EHIC on you at all times as you will need it immediately if you require treatment.
What about credit card travel insurance?
Some credit cards offer free travel insurance, but you often have to have booked the holiday using the credit card in order to be covered by the policy, so read the small print of your card to find out.
Furthermore, it is “travel accident insurance” that is offered by most cards, which is not the same as regular travel insurance at all - it only provides very limited medical cover and only covers you if you're seriously injured in an accident while actually “travelling” i.e. on some form of transport. It doesn’t cover you for any other accidents or illness and provides no cover for possessions or money once you’ve reached your destination.
A few credit cards do provide more comprehensive travel insurance, but make sure you read the small print from your card’s issuer and check the policy covers everything you require it to.
And finally...
Never fool yourself into thinking that the insurance industry willingly coughs up on claims. A little-known loophole it likes to wriggle through when you claim for cancelling a holiday is that the reason for the cancellation is a pre-existing one and therefore known in advance.
Basically, this is to do with how far in advance your travel insurance kicks in before your departure date. If you arrange for the policy to start at one minute past midnight on the day of departure, but two days prior to this date a calamity happens that prevents you from travelling, the policy won’t pay up.
This is because the calamity - striking French air traffic controllers, volcanic ash cloud, transport networks crippled because of bad weather, etc. - happened before the travel insurance starts and is therefore “pre-existing” and, as such, won’t be covered by the policy.
So, to avoid this, give yourself seven days grace between the policy starting and your departure date. If you choose an annual policy, starting it earlier than you need it shouldn’t cost you any extra. If you’re taking out a “single trip” policy, the extra time will hike the price slightly, but paying that small extra amount could save you a lot of grief and frustration should anything happen before you start your holiday - think of it as insuring your insurance.
Read the Creditchoices.co.uk guide to credit card travel insurance for more information.
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