News
Travel insurance - a buyers guide
Published: Aug 08, 2003 - 09:58 AM
Travel insurance is usually one of the most unconsidered financial services purchases that consumers make. Indeed 70% of consumers accept their travel insurance from the travel agent who sells them their holiday (Source: Mintel 2000), and there is often no real thought given to understanding what type of insurance the consumer has purchased.
This is a highly unsatisfactory state of affairs, and one that generally results in consumers paying more than they need to, and, in some cases, receiving less cover than they may require. So let’s break down the components of a travel insurance product and outline what you should be looking for when making a purchase.
Geographical coverage
The first thing to consider is the type of geographical coverage you require. This may sound obvious, but it’s very easy to select cover for the wrong regions, and therefore pay more than you need. For example, in some travel insurance policies, "European cover" means cover when traveling in countries belonging to the European union. In others, such as that provided by CostOut.co.uk, European cover is actually much wider and includes the Continent of Europe, west of the Ural Mountains, as well as those non-European countries bordering the Mediterranean (excluding some areas such as Lebanon and Libya). These basic definitions can mean the difference between buying a relatively low cost European policy or trading-up to a policy offering Worldwide cover.
In addition to this, some companies simply provide a choice of European or Worldwide cover. Others will provide a wider choice and offer cover for different regions. For example, at CostOut.co.uk, we provide a policy that covers Australia and New Zealand. In this case customers can benefit from a cost saving by avoiding the need to buy the more expensive Worldwide cover.
Policy Excesses
Excesses are a common feature of most travel insurance policies. They were introduced to help reduce the cost of premiums because insurers often found themselves paying a large number of small claims. Excesses of around ?45 are normal for most types of claims, with the exception of Personal Liability or Legal Expenses claims, with excess levels of around ?150.
When evaluating excesses you should bear in mind that the whole reason you buy insurance is to protect you in case an unforeseen event occurs. So ask yourself two questions:
(i) if you have to make a claim, would the excess represent a large proportion of your claim?
(ii) how much extra are you being asked to pay for a policy which has no excess requirements, compared to those which have a small excess?
Let’s look at an example. If you purchased a super plus level of cover from CostOut.co.uk you would receive, amongst other things, ?2,000,000 of cover to protect you against having to be sent home in an emergency. There is an excess of ?45 on this feature. Clearly, this feature provides significant protection against the costs involved with having to be repatriated, and the claim value may be well in excess of ?45. If it were half of the ?2,000,000 then the ?45 excess would pale into insignificance.
Turning to point (ii), if the extra cost of purchasing a policy with no excesses is significantly higher than the policy with an excess, then all you are really doing is paying for your potential claim in advance.
Levels of Cover
The level of cover you should consider depends upon a number of factors, these can be described as:
(i) Where are you traveling?
(ii) What other insurances do you have?
(iii) Your attitude to risk
(iv) Whether you intend to travel for the main purpose of partaking in adventure sports
Let’s take each in turn:
(i) Where you are traveling?
A travel insurance policy is basically a collection of a range of insurance policies. A very basic travel insurance policy will generally consist of Medical Expenses; Emergency Assistance; Sending you home in an emergency; and Personal Accident.
This type of policy is pretty basic, but covers the main costly elements of insurance cover. It is generally not particularly suitable for travel to, for example, the United States, because it does not include Personal Liability cover, or legal expenses. Given the high level of personal liability lawsuits in the United States, it is generally regarded as unwise to travel without such cover.
(ii) What other insurances you have
At the other extreme of the travel insurance policy spectrum, you may be offered a fully comprehensive or super plus type of cover. This may include, for example, cover for personal belongings, lost luggage and so forth. For many individuals this type of insurance has already been purchased through your Home Contents insurance policy. Before selecting your cover you should check to see if this is the case because there is obviously no point in paying for the same insurance twice.
(iii) Your Attitude to risk
Your attitude to risk should be a major factor in your choice of insurance. It is generally regarded as unwise to travel without any insurance, but you may be inclined to simply make sure that you are covered for the things that would cause you severe financial stress or even ruin. Here it is simply a case of working out how much peace-of-mind means to you.
You might find that the cost of upgrading your policy is not as great as you might think. This can be demonstrated using a policy from CostOut.co.uk as an example. For a single person under the age of 69 traveling to Europe for a 10-day break, the difference in price between an Economy policy and a Super Plus policy is only ?1.80. The key differences between the two policies are shown in the table below, and many people would consider the small increase in cost well worth the increased peace of mind provided - even if they do have a risk-accepting mentality.
(iv) Whether you intend to travel for the main purpose of partaking in adventure sports
If you intend to partake in adventure sports such as skiing or white-water rafting, then it is absolutely essential that you have the right level of insurance cover. Costs of medical treatment can be very expensive, and could ruin your holiday. So make sure you are covered to the full. In particular give consideration to features such as Piste Closure; Avalanche cover; and ski hire.
How much cover should I take?
This is a difficult question to answer, but put simply, you should take as much cover as you need to give you peace of mind. In particular if you are traveling to the United States you should make sure that you have at least ?2million of medical cover, and ?1million of Personal Liability cover, as well as over ?20,000 of legal expenses. These types of costs can quickly escalate in countries such as the United States and so should not be compromised. The same rules apply to other countries with poor or no levels of National Health Service or equivalent, and to those with well-developed litigation systems.
In conclusion
You buy travel insurance to give you peace of mind against the occurrence of unforeseen events. So make sure that the travel insurance you buy will provide you with the protection you need in such an unforeseen event. You can obtain high-quality travel insurance at the best prices in the UK from CostOut.co.uk. Make sure that you are not one of the 15 million UK holiday makers who pay too much for their travel insurance and receive less cover than they need.
By Colin Caddamy, from http://www.CostOut.co.uk
Geographical coverage
The first thing to consider is the type of geographical coverage you require. This may sound obvious, but it’s very easy to select cover for the wrong regions, and therefore pay more than you need. For example, in some travel insurance policies, "European cover" means cover when traveling in countries belonging to the European union. In others, such as that provided by CostOut.co.uk, European cover is actually much wider and includes the Continent of Europe, west of the Ural Mountains, as well as those non-European countries bordering the Mediterranean (excluding some areas such as Lebanon and Libya). These basic definitions can mean the difference between buying a relatively low cost European policy or trading-up to a policy offering Worldwide cover.
In addition to this, some companies simply provide a choice of European or Worldwide cover. Others will provide a wider choice and offer cover for different regions. For example, at CostOut.co.uk, we provide a policy that covers Australia and New Zealand. In this case customers can benefit from a cost saving by avoiding the need to buy the more expensive Worldwide cover.
Policy Excesses
Excesses are a common feature of most travel insurance policies. They were introduced to help reduce the cost of premiums because insurers often found themselves paying a large number of small claims. Excesses of around ?45 are normal for most types of claims, with the exception of Personal Liability or Legal Expenses claims, with excess levels of around ?150.
When evaluating excesses you should bear in mind that the whole reason you buy insurance is to protect you in case an unforeseen event occurs. So ask yourself two questions:
(i) if you have to make a claim, would the excess represent a large proportion of your claim?
(ii) how much extra are you being asked to pay for a policy which has no excess requirements, compared to those which have a small excess?
Let’s look at an example. If you purchased a super plus level of cover from CostOut.co.uk you would receive, amongst other things, ?2,000,000 of cover to protect you against having to be sent home in an emergency. There is an excess of ?45 on this feature. Clearly, this feature provides significant protection against the costs involved with having to be repatriated, and the claim value may be well in excess of ?45. If it were half of the ?2,000,000 then the ?45 excess would pale into insignificance.
Turning to point (ii), if the extra cost of purchasing a policy with no excesses is significantly higher than the policy with an excess, then all you are really doing is paying for your potential claim in advance.
Levels of Cover
The level of cover you should consider depends upon a number of factors, these can be described as:
(i) Where are you traveling?
(ii) What other insurances do you have?
(iii) Your attitude to risk
(iv) Whether you intend to travel for the main purpose of partaking in adventure sports
Let’s take each in turn:
(i) Where you are traveling?
A travel insurance policy is basically a collection of a range of insurance policies. A very basic travel insurance policy will generally consist of Medical Expenses; Emergency Assistance; Sending you home in an emergency; and Personal Accident.
This type of policy is pretty basic, but covers the main costly elements of insurance cover. It is generally not particularly suitable for travel to, for example, the United States, because it does not include Personal Liability cover, or legal expenses. Given the high level of personal liability lawsuits in the United States, it is generally regarded as unwise to travel without such cover.
(ii) What other insurances you have
At the other extreme of the travel insurance policy spectrum, you may be offered a fully comprehensive or super plus type of cover. This may include, for example, cover for personal belongings, lost luggage and so forth. For many individuals this type of insurance has already been purchased through your Home Contents insurance policy. Before selecting your cover you should check to see if this is the case because there is obviously no point in paying for the same insurance twice.
(iii) Your Attitude to risk
Your attitude to risk should be a major factor in your choice of insurance. It is generally regarded as unwise to travel without any insurance, but you may be inclined to simply make sure that you are covered for the things that would cause you severe financial stress or even ruin. Here it is simply a case of working out how much peace-of-mind means to you.
You might find that the cost of upgrading your policy is not as great as you might think. This can be demonstrated using a policy from CostOut.co.uk as an example. For a single person under the age of 69 traveling to Europe for a 10-day break, the difference in price between an Economy policy and a Super Plus policy is only ?1.80. The key differences between the two policies are shown in the table below, and many people would consider the small increase in cost well worth the increased peace of mind provided - even if they do have a risk-accepting mentality.
(iv) Whether you intend to travel for the main purpose of partaking in adventure sports
If you intend to partake in adventure sports such as skiing or white-water rafting, then it is absolutely essential that you have the right level of insurance cover. Costs of medical treatment can be very expensive, and could ruin your holiday. So make sure you are covered to the full. In particular give consideration to features such as Piste Closure; Avalanche cover; and ski hire.
How much cover should I take?
This is a difficult question to answer, but put simply, you should take as much cover as you need to give you peace of mind. In particular if you are traveling to the United States you should make sure that you have at least ?2million of medical cover, and ?1million of Personal Liability cover, as well as over ?20,000 of legal expenses. These types of costs can quickly escalate in countries such as the United States and so should not be compromised. The same rules apply to other countries with poor or no levels of National Health Service or equivalent, and to those with well-developed litigation systems.
In conclusion
You buy travel insurance to give you peace of mind against the occurrence of unforeseen events. So make sure that the travel insurance you buy will provide you with the protection you need in such an unforeseen event. You can obtain high-quality travel insurance at the best prices in the UK from CostOut.co.uk. Make sure that you are not one of the 15 million UK holiday makers who pay too much for their travel insurance and receive less cover than they need.
| The insurance | Economy Cover | Super Cover | Super Plus Cover | |
| Medical expenses and repatriation | Ј2 million | Ј2 million | Ј10 million | |
| Emergency Assistance | Unlimited | Unlimited | Unlimited | |
| Emergency Repatriation | Ј500,000 | Ј500,000 | Ј2,000,000 | |
| Personal accident | Ј10,000 | Ј10,000 | Ј25,000 | |
| Personal Liability | Nil | Ј2,000,000 | Ј2,000,000 | |
| Legal Expenses | Nil | Ј2,000,000 | Ј25,000 | |
| Missed Departure | Nil | Ј500 | Ј1,000 | |
| Personal Effects/Baggage/Money | Nil | Ј500 | Ј2,000 | |
| Cancellation/Curtailment | Nil | Ј1,000 | Ј3,000 | |
| TravelDelay | Nil | Nil | Ј300 | |
| Hospital benefit | Nil | Ј500 | Ј2,000 | |
| Mugging | Nil | Nil | Ј100 | |
| Hijack | Nil | Nil | Ј2,000 | |
| Disaster | Nil | Nil | Ј500 | |
| Domestic Pets | Nil | Nil | Ј200 | |
| Concierge service | Unlimited | Unlimited | Unlimited | |
Winter Sports | Economy | Super | Super Plus | |
| Piste Closure | Nil | Nil | 200 | |
| Avalanche | Nil | Nil | Ј100 | |
| Ski Hire | Nil | Nil | Ј300 | |
Business Cover | Economy | Super | Super Plus | |
Replacement staff | Nil | Nil | Ј1,500 | |
Business Samples | Nil | Nil | Ј500 | |
By Colin Caddamy, from http://www.CostOut.co.uk