Insurance: Travel Insurance

Most of us have probably got quite a few insurance policies for all sorts of different things depending on our precise circumstances. The trouble is that we get everything sorted out in this country and then do something silly like take a holiday or travel abroad and wham! The insurance that we so carefully put together is suddenly of no use to us at all.

In fact, it's not normally quite as bad as this. Your existing insurance arrangements are likely to cover some things while you're abroad, but they're unlikely to be enough, which is why travel insurance is worth thinking about.

So, before you do anything else, take a good look at your existing policies and see what you're already covered for. Your car insurance may already extend its full cover to driving abroad, for example, and you may also have a degree of protection against theft if your contents insurance covers you for loss outside the home.

When you know what's covered already, you're in a position to shop around for a suitable travel insurance policy. The ideal travel policy will fill in the gaps, but it's not possible (or at least it's very expensive) to design travel cover to suit your exact circumstances. The best you're going to be able to do is find the cheapest travel policy that covers the things that need covering.

Types of travel insurance policy

Geographical area

The policy may cost more or less depending on the risks and the costs of the place(s) that you're visiting. For instance, a travel insurance policy covering Europe and the Mediterranean for 15 days might cost up to about £30. For North America this might increase to about £50.

Activities

If you're planning to do something dangerous, like skiing, then you might have to pay up to twice as much as for a typical beach holiday. And be careful about saying you're doing one thing and then doing another. Travel insurance isn't much good to you if you're in breach of the insurance policy's terms.

Extended time periods

If you're a frequent traveller, it may make sense to take out a travel insurance policy that covers you for a whole year. If you go for this, then make sure it covers what you need it to. For instance, you can save money by not taking a travel policy that includes winter sports or other activity holidays. Of course, that's no good to you if adventure is your bag.

Different areas of cover

Medical expenses

This is perhaps the most important area of all. It's certainly something that can potentially cost a fortune and you're unlikely to find yourself covered sufficiently by a UK medical insurance policy. You certainly want to make sure that you have full travel cover here. A Foolish level of travel cover for emergency medical treatment is £10m. There's no NHS in the States, you know, and medical bills could be horrendous. You might expect to get at least £200-worth of cover for emergency dental treatment for relief of pain.

Make sure you get a travel insurance policy that pays for a flight home by air ambulance if necessary. This can cost £30,000 or more, so check that you get greater cover than that.

Other travel cover related to injuries or death includes:

• the cost of bringing back your family;
• reasonable travel and accommodation expenses for a friend or relative who on medical advice must stay with you; and
• repatriation of your body or ashes back to the UK or funeral costs paid abroad. You should expect £3,000 of cover for this.

The old E111 is out, but British citizens can now get a free European Health Insurance Card (EHIC). This covers basic illnesses and there are some hospitals in parts of the EU that are pretty basic too, so you might want to ensure you can get home easily! You certainly shouldn't consider the EHIC as a suitable alternative to travel insurance.

Pregnancy

Medical costs relating to pregnancy aren't usually included. In fact, if you're due soon, your travel insurance policy may not cover you at all, so check it out.

Insurance for the holiday itself

You can buy travel insurance that will refund you the cost of a holiday if, for a variety of reasons, you have to cancel. This can also be extended to cover delays in departure. Unless the cost of the holiday would really put a dent in your finances, insuring for this sort of thing isn't very sensible. You ought to be able to 'self-insure' and make sure that, if you book a holiday, you go on it!

Personal belongings

This covers your, er, personal belongings. Generally there is an overall limit on claims and a limit on what you can claim per item, so depending on what goes in your suitcase you should watch out for this.

Check where you must store your valuables, because some insurers are quite strict on this. You'll also probably get cover for a certain amount of cash, but this ought to be redundant. On holiday, it's probably best not to wander around with piles of money and, if your cards get nicked, call the card loss number (which you have with you, right?) at once.

Hire cars

Be very careful about this and know exactly what you're being covered for. It's possible to end up with even less cover than a standard British 'third-party only' policy and, when you're driving on the wrong side of the road, fully comprehensive is surely the way to go!

Another issue is the excess. You will most likely stand to pay the first £1,500 or so of any damage unless you pay extra on the policy. If this £1,500 is likely to make a big difference to you, or you're driving in a particularly dangerous part of the country, then you'll want to pay the extra.

Your own car

So what about if you jolly well take your own car abroad? Well it's a bit complicated, that's what.

First of all, if you're travelling to the EU plus a few other European countries, then all UK insurance policies automatically provide at least the legal minimum cover. However, the legal minimum, called 'Road Traffic Act' insurance, provides even less cover than third-party only policies.

Ask your insurer for the minimum cover to be extended to the same level of cover that you have in the UK. Some insurers will even extend it for a limited period without charge.

Finally, you should always call your insurer at least two weeks in advance to let them know you intend to drive abroad. Indeed, this is usually a requirement written into your car insurance policy. These days your insurers will often tell you a green card isn't necessary, but you must take your Certificate of Insurance with you.

Legal expenses

Ideally you want £25,000, although £15,000 is more typical. Often doesn't cover medical negligence, but your household legal policy may cover this. Check with your household insurer.

Personal liability

See if your legal policy taken out with your household insurance covers this.

In case I injure someone else: £2m.

The small print

As always, you should read the small print. It's agonising for travel insurance, to tell you the truth, but if you take your time it should be clear enough. Take note of the difference in levels of travel cover.

When comparing insurers take a look at the top three travel cover quotes, because their policy terms can be massively different. To take one example of many, one insurer will take two-thirds of your compensation if you have a personal injury claim, which means if you're awarded £1m, you'd just get £333,000! For £1 more you might get a travel insurance policy that awards you all the whole lot. So it pays to read the small print, doesn't it?

Compare travel insurance quotes

Published on December 8, 2006