Travel Insurance: Holiday necessity?
As summer approaches, many Brits are not taking all precautions to guarantee they are protected if their travel does not go as planned - failing to purchase travel insurance.
Planning a getaway should always include purchasing travel cover, many experts are warning. Simply carrying an EHIC card or assuming your belongings are covered under your home insurance policy could leave you paying large expenses out of pocket.
Johanna King examines the different types of travel insurance and uncovers what you should be looking for in an insurance policy to make sure your holiday doesn't end up costing you extra.
Why travel insurance?
Comparison site Moneysupermarket.com found nearly two-thirds of Brits would not take out travel insurance when going on holiday. Other estimates put that number as high as 80 per cent of travellers.
Maxine Baker, travel insurance manager at moneysupermarket.com said: "I'm shocked at the amount of Brits willing to travel uninsured.
"We are all looking to cut down our outgoings at the moment, but forgoing travel insurance could be a costly false economy and certainly not something I would recommend as a way to save money."
Insurance experts agree that a policy for your holiday can be invaluable, for a variety of reasons.
Malcolm Tarling of the Association of British Insurers (ABI) says: "Travel insurance is very important. It provides a wide range of cover at very competitive cost. It covers the key misfortunes that could befall travellers.
"Medical treatment abroad alone is a good reason for taking out travel cover; the cost of medical treatment overseas can easily run into the thousands, especially in the USA"
Janet Connor, managing director of specialist insurer RIAS, agrees: "Travel insurance, should be considered an essential purchase, as important as arranging visas, vaccinations and currency."
Mr Tarling adds: "Travel insurance also covers other risks, including loss of your possessions and cancellation of your travel arrangements."
Most policies will pay out if a trip is cancelled, if luggage goes missing or is stolen, or if the holiday service provider - be it an airline, hotel, or excursion company -goes bankrupt, in addition to providing assistance for a medical emergency.
Even when taking a trip somewhere closer to home, insurance might be necessary. For example, the rules governing medical care for Brits in the Channel Islands has recently changed.
Ms Baker said: "With changes to medical treatment for British holidaymakers in the Channel Islands coming into force at the beginning of April, travellers who assume they are already covered could be left to foot unexpected medical bills."
Types of insurance
There are two basic types of travel insurance, single trip and annual, or multi-trip, policies. Generally, they are equally popular choices.
Mr Tarling says: "In 2007, some 20 million travel policies sold, split 11.5million single trip, the remainder annual trip."
Single-trip insurance costs for a family or four taking a week-long holiday could be about £10, depending on destination and the amount of cover. For a couple, that price could be as low as £7.
As for annual policies, one including baggage protection and cancellation cover for a couple costs around £26, while a similar family policy runs about £34.
But decisions should not be made on price alone. Customers need to carefully examine what kind of cover they are buying, and the potential cost item that are not covered.
"When buying insurance consumers should think of a policy as something they need to tailor, rather than buying a one-size-fits-all product," Ms Connor says.
If taking a ski break or participating in other outdoor adventures, the fine print of the policy must be read to assure these more rigorous activities are included.
"It is essential to be familiar with the terms of the policy in order to know exactly what cover you are getting for your money," Ms Connor says.
A good product will cover you from time of purchase and have limits that are higher than the value of the holiday.
Also, be sure to check the cancellation terms and conditions as they vary.
Before buying cover, check your household insurance policy to see if your personal belongings are covered - including money and documents. If they are, there is no need to add this to your travel insurance.
Personal liability cover is also important - if someone is injured or his or her property is damaged by you or something belonging to you, a claim could be filed against you.
Furthermore, check if your policy covers you for both in and out patient cover.
Many policies only cover for admission to hospital and will not assist with out-patient treatment or repatriation (being returned to the UK).
Ask if the company you buy from has English speaking representatives in your country of travel and 24-hour emergency assistance - both are invaluable in case of an emergency.
It also as advisable to considered scheduled airline failure insurance (SAFI) if travelling independently and are concerned about costs if the airline or travel company goes bust.
But exactly how much cover do you need? Moneysupermarket recommends at least the following level of cover:
£2 million for medical expenses,
£1 million personal liability,
enough cancellation to cover the total cost of your holiday,
£1,500 for baggage and £250 for cash.
EHIC - it's not enough
European Health Insurance Card (EHIC) is a free card that allows its holder to receive reduced cost or free healthcare at any state healthcare facility in all EHIC-participating countries, but it's not an insurance replacement.
Chris Blackman, head of product development at insurer AllClear says: "At a time when the number of people going on holiday without travel insurance is increasing, there are some that are not properly informed.
"Those who think being covered by EHIC means not having to worry should seriously think again."
However, if the infrastructure of the country leans towards private medical care, EHIC will cover none, or at best very little, of the costs.
Also, if you are travelling to a non-EHIC country - generally those outside the EEA - the card will be no help at all.
GMTV doctor and Department of Heath campaigner Hilary Jones explains: "If you're travelling in Europe, it is vital that you carry a valid EHIC, as well as comprehensive travel insurance.
"The last thing you want to be thinking about when you're on holiday is paying unnecessary medical bills, which could cost thousands of pounds."
A major medical expense the card does not cover is returning to the UK. The Foreign & Commonwealth Office highlights the cost of an emergency air travel from various destinations.
It would cost upwards of £40,000 to take an air ambulance from The United States East coast to England and from the Canary Islands it would cost £12,000 to £16,000. A flight, stretcher and doctor escort from Australia could cost up to £20,000.
The card is still good to have in addition to insurance because many insurers will waive the excess fee on their travel medical cover if the policyholder has an EHIC.
Basically, travellers can't assume EHIC, home cover, or ATOL protection will be enough in every situation. It's important to read the fine print and buy adequate cover to protect yourself and your holiday.
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