Don’t trip up on your trip abroad

Mike Monk has seen it all. worked in the travel insurance industry for years, can recount hundreds of tales of ill-fated holidaymakers who went without cover.

There was the young woman who fell ill with appendicitis in North America and ended up with a medical bill for more than £10,000. Then there was the climber who went trekking in the Himalayas, fell off a cliff and had to be air-ambulanced to the UK.

Monk, who is now head of finance for the Association of British Travel Agents, says: “People don’t understand that travel insurance is not just covering the cost of your holiday; it’s covering any number of unfortunate possibilities that could happen to you while you’re away.”

Britons took more than 60.7m trips abroad last year, according to American Express Travel. Yet one in seven holidaymakers says they regularly travel without travel insurance.

“You forget that when you’re away, you’re doing things you don’t normally do – you’re eating different kinds of foods, you’re doing different kinds of sport, you’re living in a different climate, and this is precisely why you need to make sure you’re protected,” says Monk.

Travel insurance, which may be purchased for individual trips or as an annual policy, generally contains four types of cover – medical, cancellation or curtailment, personal liability and personal baggage.

Medical cover reimburses you for the cost of emergency medical treatment and pays for hotel and travel expenses arising from sickness or injury. A typical maximum payout is up to £2m.

“If you’re going on holiday to an exotic place, you need to ask yourself: if you were to fall ill, could you pay the hospital bill? Most often, the answer is no, which is why travel insurance a necessity and not just an add-on luxury,” says Malcolm Tarling of the Association of British Insurers.

The second component, cancellation or curtailment, provides reimbursement if your trip is cancelled or cut short due to certain circumstances – such as a family medical emergency, jury service or even a weather-related problem.

Some policies also cover cancellation arising from your being made redundant, or from a strike that affects your departure. Usual cover is for a maximum of £3,000 to £5,000.

“It’s vital you take out a policy as soon as you book your holiday. Then, if you have to cancel, you’re entitled to make a claim,” says Julie Owens, head of Churchill Travel Insurance.

The third component, personal liability, will cover your legal responsibility for accidental injury to any person or damage to their property.

Finally, baggage cover compensates you for lost or stolen luggage and personal property. There is usually a ceiling of £200 to £300 for lost money and a similar upper limit for any one item – with the maximum payout usually between £1,000 and £3,000. However Owens says: “Things like laptop computers or expensive jewellery are best left covered under your household contents insurance,” she says. “If you have this ‘away from home’ cover, be sure to speak up because you may be entitled to a discount on your travel insurance.”

The price of travel insurance is based on the traveller’s age, the amount of cover desired and the cost or length of the trip. A standard plan for up to 15 days’ cover in Europe and the Mediterranean will run to around £20-£30 for an adult, while for North America and the rest of the world it is around £40-£50 per adult.

An annual European policy sets you back £55-£65, whereas an annual worldwide policy is about £90-£100.

“Given the amount of money that people are willing to spend on their holidays, travel insurance is not that expensive,” says Monk. “It’s a false economy to travel without insurance.”

Even so, not all travel insurance is equal. Travel agents are required by law to advise you to take out insurance, and most package holiday companies won’t carry you without it. But their brand of insurance tends to be much more expensive than policies bought directly or through a bank or broker.

There is also a wide discrepancy in terms of cover. Many policies have strict limits and excesses – there are often exclusions for things such as existing medical conditions, acts of war and even acts of terrorism.

Moreover, claims arising from participating in potentially risky activities such as riding, skiing, scuba diving or even cycling may be excluded from standard cover.
You can, of course, pay extra to have these activities added to your policy. But like most types of insurance, above all you’re paying for peace of mind.

“Everybody takes out insurance in the hope that it’s a waste of money,” says Monk. “But you just hope you don’t have to find out the hard way.”

From article published at FT.com / Financial Times