There’s a lot more to travel insurance than you might think. To a lot of people, taking out insurance for their holiday means little more than covering them for lost luggage.
To which the attitude is often, why bother?
COVID-19 has done a lot to dispel these misconceptions. Tens of thousands of holidaymakers have suffered last-minute cancellations because of a positive test. Travel insurance has been rightly recognised as the surest route to getting your money back.
But even cancellations aren’t the most pressing reason to take out holiday insurance. If you happen to fall ill or have an accident while abroad, medical treatment costs can be ruinously expensive. As with COVID cancellations, travel insurance has you covered.
In short, holiday insurance protects you from a wide range of financial risks associated with travel, from losing your luggage to cancellations to the cost of being admitted to hospital in another country. It fills in gaps where there is little or no chance of getting your money back any other way.
An important question to ask when buying travel insurance is – how much is enough? How do you know you are getting all the protection you might need, at an appropriate level?
Holidays are expensive things, and what they cost can vary considerably depending on where you go, who’s going and what you do. If you are going to take out holiday insurance, you want to know it gives you the right level of cover for your trip.
Here are the three main areas of cover travel policies provide, and what you need to consider when choosing the right one for you.
Medical cover (including if you have a medical condition)
All travel insurance policies include medical cover. As noted above, this is the most valuable part of any policy, because the costs of medical treatment for foreign visitors can be so high.
So how much is enough? Many travel insurance policies have seven-figure medical payout limits minimum. If that’s made your jaw drop, it’s to take into account the worst case scenario of you suffering a catastrophic accident or illness, needing life-saving treatment and then either having to spend months in hospital or be flown home with medical support. Either way, it’s expensive.
Bear in mind that medical costs vary considerably around the world. That’s why it’s important to specify the region you are travelling to when buying a policy. Medical care is notoriously expensive in the United States, for example. Travel policies for the US therefore have higher medical limits.
It’s also important to know that buying travel insurance is different if you have a pre-existing medical condition. You are considered a higher risk of making a medical claim, and standard insurance policies will not cover any treatments specifically related to your condition. You’ll find a lot of insurers will either decline to sell you cover or else put a big premium on it.
Your best bet is to look for a provider that specialises in policies for specific medical conditions. You will get a better deal and you will get targeted cover for any treatments associated with your condition.
Cancellation, curtailment and missed departure
There are many reasons why your holiday might have to be cancelled last minute, ranging from illness/positive COVID tests to airlines or travel firms going bust. For some of these you will automatically be covered under consumer protection laws – any people affected by the recent spate of flight cancellations due to airline staff shortages are entitled to a refund, for example.
Other reasons are at best a grey area. If you test positive for COVID or fall ill last minute, you might find you’ve fallen outside the cancellation window your airline or travel agent offers. If you miss a flight because you were stuck in traffic, or you have to cut short your holiday because of a family bereavement, you’re unlikely to be entitled to any money back.
Travel insurance can cover you for all these eventualities, although it’s important to read the small print on individual policies. Make sure any cancellation and curtailment clauses have pay out limits higher than the total cost of your holiday, travel and accommodation. Missed departure policies vary – you’re unlikely to get the full cost of your holiday back, but pick cover with a high enough payout to cover the cost of catching the next flight.
Baggage and personal belongings
Finally, baggage and belongings cover is fairly self-explanatory. It pays out on the value of any losses if your luggage is lost in transit, or if you have any belongings damaged or stolen.
The common sense rule here is, if you have expensive tastes and are carrying designer clothes and jewellery in designer suitcases, make sure you pick a policy with a payout limit that reflects the total value of your possessions.
Be aware that many gadgets and electronic devices, smartphones included, will be exempt from personal belongings cover. You’re likely to have to insure these separately as a paid-for extra.