Guide to buying Travel Insurance
Some useful info and pointers to help you make an informed purchase
Travel Insurance is probably one of the most complex insurances to understand, we all know that we should have it when we travel, but do we really know what we are buying?
It is also very difficult to make comparisons between one travel insurance and another – so do not be falsely lulled into thinking they are all alike. The old adage of what you pay for is what you get - does bear true. The art is in knowing what you need and making sure you have this well and truly covered.
This simple guide will hopefully provide some insight and information that you will find useful and serve to put some of the more common misbeliefs into the history books. The words in bold are terms used in travel insurance policies. At the end of this article is a guide to what these words mean in a travel insurance policy.
From the moment you have booked your holiday/trip you should be insuring yourself against having to cancel your plans. An amazing 4% of policies sold create a cancellation claim, invariably because of health issues, be it someone named on the travel insurance policy, or a dependent who becomes significantly unwell. Make sure that your chosen travel insurance provides enough cover to pay you back what you are committed to pay for your entire trip. This is not necessarily what you pay as a deposit, you need to think about the full amount you will have to pay because you may need to cancel the day before you travel, by which point you will not be able to avoid paying what you have been contractually bound to pay and you may not be entitled to any refunds.
Cover for cancellation starts the moment that you incept your policy. The first popular misconception is that it is cheaper to incept a policy for the same date as your date of travel. If you do this you immediately prevent yourself from making a cancellation claim if you find you cant travel. So rule number one is to make sure the inception date of your cover is the same date as you buy your travel insurance irrespective of when you will be travelling. Be sure your policy has included cancellation cover, because some policies offer this as an optional extra and it is unfortunately easy to make a mistake and not realise this. Look carefully at the optional extras on a policy, it may be cover you thought would be included!
Pre-existing medical conditions are the Achilles Heel of the traveller and the travel insurer. It is really very simple to ensure your travel insurance has you comprehensively covered – tell the insurer about everything. Be meticulous about this. Think, before you do any medical screening, think about what medications you take and what treatment you have had in the last 10 years. Too often well controlled hypertension/diabetes/IBS/high cholesterol and the many commonly treated conditions get forgotten about, they need to be covered. The best plan if you have quite a few medical conditions is to ask your GP to give you a list of what is on your medical records. The reason for this is because if you make a claim which has anything to do with your health, then your medical records will be requested before a claim will be paid – and if you have omitted anything, even something not related to what has caused you to make a claim, you may find that you have lost the right to make a claim. Simply because had the insurer have known you had more conditions than you declared, that they would never have offered you the insurance in the first-place.
There is a ceiling for the acceptance of medical conditions on every travel policy, and some will accept only a few “low-scoring” conditions and others will accept a lot more. Acceptance varies depending upon where you are travelling to and how long you are travelling for too.
If your health changes once you have incepted your policy and before you travel, then you must tell your insurer straight away – too often this is forgotten about.
Your policy documents will include a list of the health questions you were asked and the answer that you gave at the time you bought your policy. Check carefully that the answers on record are still current. Don't leave advising a change in your health until the day before you travel either, because if the change is significant it may need to be referred to the Underwriter and this can take time, further information maybe requested before a decision will be made. If you leave it too late then you may find you are travelling without that specific condition being covered, or worse without any cover agreed at the last moment.
If you are travelling with your wife/partner then make sure the policy has you both named on it. Frequently we are asked to insure a couple separately on individual policies. This makes no sense at all. It is also in the long run more expensive.
The reason that this request is made, is in the belief that if one of the two persons is either significantly older, or has much poorer health that it will be cheaper. The reason why this is a more expensive and an incorrect belief is two-fold: firstly a policy for a couple is normally about 20% less than a policy for two individuals, it's a misnomer in the history of insurance because the risk is double so the premium technically should be double, but it isn’t with most insurers. It may well be because there is less administration in setting up the policy though.
Secondly, by having both people on the same policy there is cover for the person who does not create a cancellation or medical claim. The policy would treat them as if they were the person creating the claim too. Let me explain more: if one of the couple became ill and could not travel, then the policy would pay for both persons cancellation, in the same way if one because ill whilst travelling and needed hospitalisation and ultimately a different return flight home at a later date than scheduled, the policy would pay for both travellers to return home later together and it would pay for the additional accommodation required by the traveller who was not hospitalised, so they can stay with their partner.
If you are travelling with friends or in a group – Group policies make good sense, because if one of the group have a problem and cant travel, or becomes ill whilst you are away, the policy will financially protect everyone named on the policy. These types of policies are also cheaper than everyone buying their own cover too. Typically savings of around 20/40% can be made with a group policy compared to buying individual policies, if more than 6 people are travelling together. Group policies are for unrelated travellers. Two unrelated people travelling together can buy a group policy. Usually a group policy will cover up to 10 people and will allow for up to 6 children per travelling and insured adult.
Often couples go away together, in the instance of two couples travelling as a foursome, because there is a relationship (husband/wife x 2) a group policy is the answer for your trip..
Medical cover you need to look at very carefully on every travel policy. Sums insured of £10 million are NOT more valuable or more expensive to buy than a policy showing £5 million of cover. Why? well in the history of the Universe there has never (yet) been a medical expense claim for more than £1.5 million is one answer. However if you are travelling to America then you need more than £1 million of cover, because medical costs in the States are eye-wateringly expensive. So much so in fact that most travel insurers retain and use the services of Cost Containment firms based locally to the hospitals in the States, to negotiate terms of settlement and tariffs of charges. In one state an MRI scan – routinely used in the USA as a diagnostic tool - might cost $45,000 and in another $98,000. A hospital bed for a day could cost $25,000 compared to $45,000 in another State. You can see why it is feasible for very large claims.
However in the Section of Cover for Medical Expenses will also be the cost for medical repatriation and there are other benefits which are important. Cover for hospital benefits if you have an overnight stay in hospital, mobility aids, dental treatment and funeral expenses should all be covered.
If you are in Europe you should have your EHIC card to hand, not only will you not have the Policy Excess applied when you produce it, it should also provide emergency medical cover free of charge, so show it to your treating Dr. If the hospital say they wont accept it then get on the phone to your travel insurer ASAP. Do not fall into the trap of paying a penny upfront unless your travel insurer has agreed to reimburse you. There are too many medical facilities that will tell you that they will contact the insurer on your behalf, don't fall into this trap either, because some will say they have not been able to make contact and so want you to pay them now, then recover the money from your insurer at a later date.
Getting an EHIC card does not cost a penny. It is simple to apply for too, either online or at a Post Office. Don't be conned and find yourself paying a fee for it either, as some unscrupulous websites simply act as middlemen and charge for their services.
So what happens if you are flying to somewhere to get onto your International flight – residents of the IoM, Jersey, Guernsey and sometimes Scotland and NI all have to take a flight to connect with their International departure – some policies include cover for missed connections, others and I have to say the cheaper policies, don't provide this cover at all – either way at the time of writing the highest amount of cover I can find is £1,000 – not really sufficient for a Business class flight to anywhere, so think about this in advance and allow plenty of travel time to get to your international departure point.
Save some money and look at the baggage cover carefully, sometimes called personal possession cover, does your home insurance provide cover for items on an All Risk basis, in other words - cover for items taken outside the home? If so look for a policy where this is optional, or where the values are low – you wont be paying for something you don't need.
Other optional covers that can be really helpful are: An Excess waiver – every policy has an amount of excess (the amount of any claim that you have to pay) to certain sections, so by buying the excess waiver option when you take out the policy, this waives your cost and will cost only a few pounds. Remember the excess will be charged to both travellers, so it is not a cost per policy it is a cost per person making a claim.
Natural Catastrophe cover - this will insure against Volcanic Ash, a troublesome and increasing risk for travellers now, no fewer than 3 volcano are erupting at the time of writing, all three causing problems for air travel. It should also provide cancellation cover in case of Volcanic Ash – so if you are affected then you can elect to not travel. Or if you have already travelled and get caught up - then your travel insurance will pay for additional expenses and replacement accommodation, or if only delayed then compensate you for delays to your travel.
Natural Catastrophe cover also protects you for fire, flood, earthquake, explosion, tsunami, landslide, avalanche, hurricane, cyclone and storm. Don't assume all policies will protect you this way, this is usually an optional cover found on the better policies.
Finally, before you travel fish out your travel insurance Schedule, photocopy it, or ask for a second copy and take one away with you. Also take with you the phone number which will be in your Policy Document (or Policy Wording) for the emergency assistance company, keep this safe. If you need it you don't want to be hunting around for it.
Whilst most travel is trouble free, it's a fact that the older you are the more likelihood there is for you to make a claim. The better the policy in terms of the cover, the better chance there is for the claim process to be trouble free too. Skimping to save a few pounds and buying inferior travel insurance can leave you with a host of problems you were not expecting later on.
We all think we are invincible but sadly it’s just not true. So please travel protected and travel safely.
Terms used within this article.
Cancellation – pre-travel decision to NOT travel
Dependent – immediate family
Incept – to start
Inception date – the date your cover starts
Cover – the benefits of a policy for which you have cover
Pre-existing medical conditions – medical conditions that you have now and have had in the past.
Couple – husband, wife, co-habiting partner
Individual – a single traveller
Medical claim - any claim related to the treatment of a medical condition
Section of cover – each benefit will be mentioned within a section of your policy
Repatriation – assisted return of an insured traveller to their home location.
EHIC – European Health Insurance Card; part of the reciprocation agreement between EU countries, to provide emergency medical care to residents outside of their home country.
Missed connection – happens when you can’t get on to your scheduled flight after having taken a prior method of transport to reach your international departure point.
Baggage cover – same as personal possession cover, covers loss and theft of the things you take with you when you travel, however not breakage unless by a criminal act against you.
Personal Possession cover – same as baggage cover
Optional covers – these are the benefits which are available to you to buy but are not included within your policy, unless you have elected them and paid an additional premium.
Excess Waiver – the removal of the excess on your policy.
Excess – the amount you will pay when you make a claim.
Natural catastrophe – volcanic ash, fire, flood, earthquake, explosion, tsunami, landslide, avalanche, hurricane, cyclone and storm – this may vary from policy to policy.
Schedule of Insurance – the document which carries your policy number and your name and address, it also details what cover you have bought and how much you have paid.
Policy Document – this is likely to be a booklet, containing the terms of your insurance and what is and is not covered, it will also detail how to make a claim and a complaint.
Policy Wording – same as Policy Document.
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