Travel Insurance – A look at policy wording, coverage types, and at the best travel insurance companies offering excellent cover at the most reasonable prices
You might have already checked out my Diving Insurance Companies article, but I felt it necessary to cover general travel insurance as a separate entity of interest altogether. This because while diving insurance is a specific kind of coverage with relatively fixed parameters dictating the kind of coverage it entails, travel insurance is a bit more of a general subject. With generalisation comes ambiguity, and it is this ambiguity that can often confuse the prospective holiday-goer/traveller, leading to insufficient coverage, and in some cases, being out of pocket by a very significant amount of money.
This article’s intention is to attempt to un-cloud the decidedly muddy waters of travel insurance. It will firstly cover the basic kinds of insurance policy, running through what they do cover, and perhaps more importantly, what they don’t. This article will then aim to go into specifics about policy wording, including what to look out for and highlighting the most common pitfalls/linguistic ambiguities common to most travel-insurance policies, as well as looking at whether it is worth splashing out the extra cash for extended/superior cover as opposed to the minimal coverage. In the latter section of the article, I’ll go into detail and recount some personal experiences with obtaining quotes directly from insurance sites as well as comparison sites.
Introduction to Travel Insurance: Why it is Required, and Why Words are Important
I won’t go on at length about why travel insurance is a good idea. Suffice it to say that medical expenses in any country besides the UK can be extremely costly, and that’s before you even consider the cost of the emergency flights required to transport you back to the UK. Purchasing travel insurance is effectively handing out a bit of your money to receive a significant boost to your peace of mind when travelling.
What does warrant talking about, however, are the levels of travel insurance, as well as the wording of policies. Though many holidaymakers have claimed without issue, the wording of your travel insurance policy, as well as the level of the cover you choose to pay for, can have a dramatic effect on the ease of making a claim, and whether you’ll be able to make a claim in the first place. Your policy details can mean the difference between being fully covered and receiving absolutely nothing because of an overlooked technicality.
It should go without saying, then, that you should pay close attention to the wording of your policy, even if you’re paying for extra levels of coverage. The wording of your policy and its relation to the kind of activities in which you may be engaging on holiday could make the difference between bank or bust – this is the reason you should make a special point of reading the Policy Wording section below.
A Minefield of Risk and Ambiguity: Policy Wording and Common Pitfalls
If you’re to look at the many reasons why some policy holders fail to receive payment from their insurance companies, a significant quantity of these non-paid claims will come as a result of the failure of the customer to read the actual wording of the policy. One of the biggest mistakes you can make is to purchase a policy, whether comprehensive or basic, and simply assume it will cover any and all eventualities on your holiday. The wording is there for a reason, and often times this will only become apparent to a customer when they’re staring at the business end of a financially-devastating
One of the most common mistakes is being content with purchasing the cheapest cover. This is a very general statement, but specifically speaking, it is a common mistake for people to go for the most basic policy because it is the cheapest. This is a mistake, because basic/cheap policies tend to be extremely restrictive with their conditions, excessive with their excesses, and in many cases don’t cover essentials such as missed connecting flights, holiday cancellations, and stolen valuables exceeding (in most cases) paltry sums. This BT Lifestyle article quotes a staggering figure 49% of insurers failing to cover valuables exceeding the value of £250 – that’s barely going to cover the cost of ¼ of the latest iPhone!
Another common pitfall for people travelling abroad is not purchasing the appropriate cover for their activities. Though many travel insurance policies cover standard holiday activities such as swimming, trips to the beach, and activities like beach sports and the like, it is again a mistake not to check the policy wording to ensure that all of your activities are covered by the policy. One of the big exclusions that you will find common to many policies are winter sports, extreme sports, and participating in sports on a professional basis. Moreover, in light of recent events regarding terrorism, you’ll find that many policies won’t pay out for claims arising from the result of terrorist activities or civil unrest. If this is something that you may worry about (depending on your destination), there are companies such as Essential Travel that provide terrorism travel insurance.
A third essential factor that often leads to claim trouble is a customer’s failure to declare a pre-existing medical condition. If you declare your medical conditions, you can ensure that they are written into the policy wording. This AXA Travel Insurance Policy Wording, for example, contains the common policy of not paying out for any claim arising from medical conditions that aren’t declared when the policy is taken out. Failure to declare even the mildest medical condition – asthma or even hayfever, for example – could result in the voiding of your policy.
Finally – and this covers a lot of bases – it is simply a mistake to not check the wording of your policy, no matter how comprehensive you think the policy may be. This is particularly relevant when looking at things like excess amounts and what is covered, but just as relevant when looking at exclusions (extreme sports, pre-existing medical conditions). Checking the wording can also allow you to avoid the mistake of assuming that all of your activities are covered. After all, some of the activities that are most likely to get you injured – wake boarding, cliff diving, or rafting, for example – often fall under extreme sports as part of the policy wording. Reading your policy, particularly the exclusions, is essential.
Example of Coverage: The Look of a Healthy Insurance Policy
Now you know to avoid going for the cheapest policy available as well as to read the policy wording before you agree to it, let’s have a look at what should be essential to your policy, as well as what is favourable, and what extras would be handy should the worst happen.
The consensus that seems common to many insurance-advice websites, including Money Saving Advice Services. is that your policy should cover these items as a minimum:
- Medical expenses (emergency medical & surgical) up to the value of £1million for Europe and £2 million for the USA
- The cost of repatriating you following any medical issues
- Cancellation/curtailment of the trip up to the value of at least £2000
- Missed Departure, £500 minimum
- Unexpected Delay - £200 minimum
- Personal Liability – up to £2 million
- Travel Abandonment - £2000 minimum
- Baggage Cover - £1000 minimum
Further desirable inclusion to look out for in a decent policy are: dental emergency cover (£250 minimum), lost-money insurance (minimum £500), cash (£200 minimum), passport loss, and as mentioned above, full terrorism cover without exclusions.
Finally, there is coverage available to cover ‘Scheduled Airline Failure’, which will cover your flight in the event of your chosen airline going out of business. This is less essential of course, but can be a nice bonus if this unlikely event does happen.
Cheap Isn’t Necessarily Cheerful: Is it Worth Spending More for Extra Coverage?
The short answer to the question posited in the title of this section is that going for the cheapest option isn’t the smart thing to do. In fact, it’s the kind of false economy that could lead to insufficient coverage, and in many cases, a complete lack of coverage entirely.
If you check the wording of the budget, minimal-cover travel insurance policies, you will find that they are packed full of exclusions which in many cases lead to having no cover whatsoever; other companies have claims processes that require almost unattainable levels of documentation before a claim is paid out. A prime example of this can be seen on the TripAdvisor Forums, warning people to stay clear of budget insurance company 1Cover due to the excessive level of evidence required to claim back missed-flight expenses, with a tedious claim process also marring the experience.
When choosing the cheapest option for travel insurance, you will invariably discover that at very least you will be facing expensive excess charges before you can even make a claim, and even worse you’re likely to be getting very minimal cover for personal possession loss, loss of cash, missed connections, if any at all. For example, having gone through the usual comparison site process, I found a 2-week trip to Canada can cost as little as £15. This was a “Super Saver” policy, however, which has exclusions that mean you won’t get any compensation for delays, and the excess for claims ranges from a hefty £200 to £350.
The additional cover provided by spending a little more on your travel insurance policy will inevitably leave you with less excess to pay as well as having the peace of mind that comes from having extra coverage for delay, missed flights, personal liability, and extras such as winter sports/extreme sports coverage.
From Personal Experience: A Look at Specific Companies, and Do Comparison Sites Work in your Favour?
Comparison sites can definitely be beneficial if you’re looking for a competitive quote. If you’re not sucked in by promise of super-cheap insurance (often to your financial detriment if you do have to make a claim), it can pay to browse the hundreds of insurance companies that the comparison sites will inevitably bring up. Moreover, using GoCompare.com’s travel insurance quote-finder allows you not only to view hundreds of big and small companies in easy-to-compare list format, it also displays independent financial researcher Defaqto’s rating of each insurance company (inevitably the cheapest quotes tend to be rates with 2-stars whereas the more expensive and comprehensive insure
rs/policies tend to have 3 stars next to their name.
Utilising comparison sites will therefore allow you to view quotes side-by-side, as well as viewing the levels of excess you’ll have to pay Vs. the level of payment you will receive should you have to make a claim. This is a very attractive prospect for prospective policy holders.
On the other hand, there are certain companies whose competitive quotes aren’t crawled by sites like GoCompare or ComparetheMarket.com. Going direct to a highly-rated travel insurance provider can be beneficial, too. For example, choosing M&S bank travel insurance brings with it benefits such as 15% discount on new policies when you apply online, as well as the option to include additional cover like travel disruption and winter sports on the policy.
As a small test, I obtained a quote from M&S Ba kfor an adult male aged 28 travelling to Canada for 2 weeks with additional extras such as winter sports cover and baggage/cash-loss insurance, and was greeted with a reasonable quote of £153. This is more expensive than the ultra-cheap budget policies you’ll find on comparison sites, but the comprehensive nature of the cover and the increased level of customisation you get with the policy is astounding. The policy also includes coverage for a wide range of extreme sports as standard, with the option to add in more exotic pursuits via the policy-customising interface found on the M & S Bank Travel Insurance website.