Travel Insurance – Do Your Homework Before You Leave.

Travel Insurance – Do Your Homework Before You Leave.

by Caleb James on 3 Aug, 2011

You’re on holiday and you’ve hired a bicycle to explore the coast on a gloriously sunny afternoon in Costa Del Sol. It’s been a perfect holiday until you’re knocked off by one of the locals in his “go-faster” mini cooper. Having broken your leg and been rushed to hospital, it’s about now that you start really thinking about your travel insurance.

The Foreign & Commonwealth Office quotes some eye watering figures when it comes to being repatriated back to the UK. For example, an air ambulance from the Canary Islands is up to £16,000 and from the USA’s East coast, you’re looking at up to £45,000!

The choice of cheap travel insurance online is endless but price is definitely not everything. Some recent research figures have revealed, for example:

12% do not cover extra food and expenses if your flight is seriously delayed or cancelled.

11% do not cover missed departures.

92% cover only up to £500 in lost or stolen money.

The best advice is to think carefully about your trip and what you are going to be doing. Most of this is common sense really and you need to ask yourself what cover you are expecting. The basics are listed below:

  1. You need medical and health cover for injuries and illnesses contracted on holiday.
  2. 24 hour emergency service and assistance.
  3. Personal liability cover – you may cause injury or damage to other people or their property.
  4. Your money, credit cards, valuables, and all other personal possessions you take with you.
  5. Additional (optional) cover for dangerous sports and activities that carry additional premiums.

You may need to return home early due to accident, illness, pregnancy (must be unknown when you took out the insurance!), an emergency at home, redundancy, strikes or even ash clouds! Not only will you need your policy to get you back home but also refund your holiday cost and any pre-paid excursions already arranged.

UKMM tip: only about 60% of policies cover terrorism so do check this carefully.

Shopping around online will be time well spent but remember that cheaper premiums for your trip are likely to mean less cover. If you travel several times a year, you should buy annual travel insurance to take advantage of insurer discounts. Not only does this make sense financially but it’s a lot less hassle too.

Pre-existing Conditions

It is your responsibility to advise insurers of any pre-existing medical conditions or those you have suffered from in the past. This is one of the most common causes of friction between insurers and policyholders.  People tend to learn to live with their existing conditions and can unintentionally forget to mention them when proposing for insurance. When it comes to claims, the insurers void the policy.  A long standing principle of insurance is that the proposer must disclose any information that could influence an insurer in assessing a risk – this dates back to the Marine Insurance Act 1906. This is known as ‘utmost good faith’ and of course, the onus here is on the proposer to speak up.

‘All change’ with the new Consumer Insurance Bill May 2010-11

This is currently going through parliament and intends to put the ‘shoe on the other foot’. It will, once passed, put the onus on insurers to ask all the questions they need when assessing insurance. The customer will still have to disclose all facts to the insurer as accurately and honestly as possible but it should prevent the deadlock whereby the insurer says “you should have told us” and the insured customer pleads, “I didn’t know it was relevant”.

There is more detailed information about the Consumer Insurance Bill at http://www.hm-treasury.gov.uk/8932.htm

About the Author

Caleb James


Caleb James is a financial advisor and journalist, who contributes regularly to financial blogs and industry publications.