Avoiding travel insurance trauma

Thousands of holidaymakers fail to take out travel insurance when going abroad. But this can prove a financial nightmare if you are involved in an accident – an air ambulance from the USA's East Coast can cost around £45,000.

Even if you don't need anything quite so drastic while abroad, there are still plenty of things to go wrong – sometimes before you even get there. The top three claims received by Tesco Personal Finance in 2007, were baggage loss (40 per cent); medical treatment (30 per cent) and cancellations (20 per cent).

Mishaps on holiday can end up costing more than you might expect – Halifax has worked out that losing your passport while on holiday could cost £131 per person in rescheduled flights and extra nights' accommodation.

Although some problems can be covered in other ways – using your credit card to book your flight will enable you to claim against the credit card company if the airline goes bankrupt and cannot fly you home, for example – an insurance policy can give you broad cover against a range of problems.

And with travel insurance cheaper than ever, taking out a policy won't add much to the cost of your trip.

However, like any insurance product, it is worth shopping around and knowing what you are looking for.

What to look out for…

According to the Foreign & Commonwealth Office, a good policy should include the following:

• Medical and health cover for an injury or sudden illness abroad
• 24-hour emergency service and assistance
• Personal liability cover in case you're sued for causing injury or damaging property
• Lost and stolen possessions cover
• Cancellation and curtailment (cutting short your trip) cover
• Extra cover for activities that are commonly excluded from standard policies, such as jet skiing.

One important thing to take into account when buying your policy is the excess payment. Agreeing to pay an excess when you claim will make your policy much cheaper, but consider whether you will be able to afford it if you do have to claim.

You should also check you have enough cover for what you plan to bring. Policies will only pay out to a certain limit on items that are stolen or lost, so if you are planning on taking jewellery or an expensive camera make sure you have enough cover.

Obviously different types of holiday carry different risks, so if you do want to go jet skiing, make sure you buy a policy that is suitable for your trip, esure advises. According to their research, one in ten Brits (wrongly) believe standard insurance policies cover adventurous activities such as scuba diving and white water rafting.

"With a surge in the popularity of, and access to, more adventurous sports and activities at holiday resorts across the globe, it's crucial for holidaymakers to take out travel insurance and check they're covered before they try out the likes of white water rafting in Australia or shark-feeding in the Bahamas.

"Get injured and the medical bills could turn a paradise trip into a nightmare," says Mike Pickard, head of travel insurance at esure.

Esure recommends reading your policy carefully, and ringing your insurer if you have any questions. If you are not covered, your insurer can often add sports onto your policy, so it is worth a call.

…and what is normally excluded

Tesco Personal Finance advises you should always check you have the right cover before going away. Insurance policies have exclusions which can invalidate your cover, so make sure they do not apply to you.

"Quite often policies do not cover pre-existing medical conditions," a Tesco spokesperson says.

"Those with pre-existing medical conditions like asthma and diabetes must ensure they ring us. Anyone on medication, or who is going to have medical treatment, should get in contact if in any doubt."

Tesco added that you can still get a quote if you have any pre-existing medical conditions.

Age is another typical exclusion for travel policies, so again, check before you buy.

How to find a good deal

"If you are going to go on more than two holidays in a year it is almost always cheaper to buy annual travel insurance," James Harrison from insurancewide.co.uk says.

Annual multi-trip policies are great for spur-of-the-moment trips, and may be good value for those who regularly take short breaks.

He advises to think carefully about what you want from your policy, "then go on a comparison website like insurancewide.co.uk – and make sure that what you want is covered in the policy."

Travel insurance is generally a very cheap type of insurance, especially if you are holidaying in Europe, but policies do differ in price and quality so it is still worth comparing a few.

Most people do not think about the benefits included in their policy – until they come to claim – but you should go for value for money, not necessarily the cheapest you can find.

"If you are taking your wedding ring with you, which is worth £10,000, then make sure your policy covers £10,000," Mr Harrison says.

"If you are going to Sri Lanka and are worried about a bomb going off, check what the policy says about cancelling your trip."

A little bit of research to check what you need in this case can go a long way, Mr Harrison says, so work out what you need then shop around for the best deal.


What to do if the worst happens…

Tesco Personal Finance says "prevention is better than cure" when on holiday.

"Ensure you look after yourself, make sure you eat and sleep well while abroad. If you do fell ill, write down your symptoms and check to see whether anyone else in your party is feeling the same.

"Monitor your temperature regularly and get to a nurse or doctor who speaks English. If you are distressed, contact the emergency services."

Your insurance policy should come with a 24-hour emergency number, so call your insurer if you need any treatment and they will be able to give you advice on what to do.

Take your policy and follow its instructions if you will need to claim. Keep any documentation so you can back up what you say and make sure you take your European Health Insurance Card if you are travelling in Europe – it entitles you to the same medical treatment as locals and your insurer will probable require you have it.

Sarah Routledge