Travel insurance: our money saving tips
Updated: Quarterly (latest update: April 2008)
Savvy holidaymakers will shop around to make sizeable savings on flights, package holidays and accommodation. However, many of them overlook travel insurance (also known as 'holiday insurance') and simply accept it as an add-on. This is an expensive mistake because some travel agents in the UK can make more profit from selling travel insurance policies than they do from the holidays themselves.
This money saving article will examine how you can save cash on your travel insurance whether you should choose an annual or single trip policy, where to go for cheap travel insurance and more.
Quick links:
- What do you need to cover?
- Annual multi-trip or single trip travel insurance?
- Play your cards right
- Specialist insurances
- Comprehensive cover for less
What do you need to cover?
Before you think of what you need to cover you might ask 'do I need cover at all'?
Though travel insurance is not mandatory, it is advisable to take out a policy as complaints about lost baggage are a common occurrence and medical bills in foreign countries can be astronomical for non-citizens. For example a heart attack in Spain could set you back £35,000 and a car accident in South Africa could cost you £146,000. Medical expenses also escalate if repatriation is necessary to around £11,500 in Greece and £8,000 in Spain. When a good travel insurance policy can cost as little as £10 is it really worth taking the risk of leaving home without one?
The levels of cover available vary greatly from policy to policy and there's no point paying for something you don't need. Consequently here is our recommendation for the level of cover you should take out on a typical travel insurance policy:
- Medical expenses (£2m)
- Personal liability (£1m)
- Cancellation (£3,000)
- Baggage (£1,500)
- Cash (£250)
- Also make sure the travel insurance company has a 24hr emergency line and cover for legal costs.
Bear in mind however, that the amount of cover you need depends on your circumstances. For example, if you are taking a low cost flight for less than £50 is there really any point in securing cancellation cover? By the time you have paid off the excess you might only be claiming back £10. Additionally, be wary of ridiculous amounts of medical expenses cover some will offer as much as £20m, when £2m is nearly always adequate.
It's also important to take out travel insurance as soon as you book your trip particularly with the cancellation stipulation in mind. If you book your holiday months in advance but plan to wait until the last minute to secure your insurance then you won't be covered if you are forced to make a cancellation perhaps due to a family bereavement or illness. So book your travel insurance immediately after booking your holiday to give yourself peace of mind.
Annual multi-trip or single trip travel insurance?
A lot of savvy travellers assume that annual multi-trip travel insurance always offers a better deal than single trip travel insurance largely because travel agents often charge ridiculous rates for single trip insurance. However, this isn't always the case. In fact there are many single trip policies that start as cheap as just a few pounds. A good rule of thumb is that if you make more than two overseas trips a year (or one short-haul trip and one long-haul trip) you are better off with an annual policy as it will generally work out more cost effective. However, single trip travel insurance is a good idea if you're only going to go away on a short-haul trip once or twice a year.
For those looking to travel to the USA, annual policies often work out cheaper than single-trip policies. This is because medical cover in the USA is high and so buying specifically for this country will increase your premium.
Play your cards right
If you are travelling in the EU (or Switzerland, Iceland, Liechtenstein or Norway) make sure you have a European Health Insurance Card (EHIC). Remember, this will only cover your medical bills in limited situations and does not provide cancellation cover, liability cover, baggage cover or any of the other benefits of travel insurance. Therefore you should pick up the EHIC alongside a travel insurance policy not as an alternative.
Specialist insurances
There are a number of specialist travel insurance policies tailor-made for your needs. Among the options available are:
- Family travel insurance - Combining policies for couples or families generally works out cheaper as the costs are higher 'per trip' than 'per person'.
- Over 65s travel insurance - The likes of Select Travel Insurance, Flexi Cover Direct and Travel Insurance Discounts offer great packages for over 65s that compete with big guns like Saga. Prices vary depending on your age group, ie 65-69, 70-75, 75-80 and over 80. Use our over 65s travel insurance price comparison tool to compare policies for over 65s.
- Gap-year travel insurance - Also known as backpackers' insurance or long-stay insurance, these specialist policies can offer incentives that regular policies can't, including cover from three to 24 months. Furthermore, it can also cover working overseas, which is usually necessary for an extended trip and should cover you for cancellations if you fail your exams.
- Pre-existing conditions - If you have a serious medical condition (or have had one in the past) you could find yourself receiving a huge travel insurance quote, especially in countries where medical treatment is high. There are a number of specialist insurers out there that will offer assistance such as Direct Travel, Help the Aged, Columbus, Saga and more. If the costs are through the roof it may be an idea to get a quote excluding these pre-existing conditions - though that is obviously at your own risk. Be careful about the judgment you make in those circumstances.
- Winter sports insurance - This is an optional extra on a number of policies, but there are also specialist polices available that are ideal for skiing and snowboarding enthusiasts. Remember the cheapest might not be the best check the cover policy to ensure all of your needs are covered - for example equipment, different sports, search & rescue, off-piste activities, etc.
To read more about the different types of travel insurance and what they cover read our in-depth travel insurance guide.
Comprehensive cover for less
As stated earlier DO NOT treat travel insurance as an after-thought. If you accept what the travel agents give you, you are likely to pay excessively on your premium. The table below illustrates the savings that can be made by shopping around with a typical travel agent compared with the cheapest travel insurance cover found through the travel insurance comparison tool - in this case, Columbus Direct.
Not only is there a saving of £82.26, but also the Columbus Direct policy offers more comprehensive cover for medical expenses, personal liability and baggage cover with the cancellation cover offered matching that of the travel agent. These results emphasise that you can find better or equally good cover at significantly lower prices if you shop around.
| Travel insurance cost for a family of two adults and two children spending two weeks in Spain | |||||
| Medical cover | Personal liability cover | Cancellation cover | Baggage cover | Total Cost | |
|---|---|---|---|---|---|
| Typical travel agent | £2m | £1m | £3k | £1k | £95.96 |
| Columbus Direct | £10m | £2m | £3k | £2k | £13.70 |
* Sourced by moneysupermarket.com on April 18, 2008. Family of four featuring parents aged 35 & 30 with children aged 10 & eight at the time of the return. Statistics correct for the period May 02-16, 2008.
In case you're thinking this is a one-off example and that short-haul family travellers are the only ones that can benefit, think again!
There are huge savings to be made for all types of travellers using the travel insurance comparison tool, including single travellers looking to make lengthy trips abroad. Take a look at this example for a single male traveller spending 21 nights travelling across the USA:
| Travel insurance cost for a single male traveller, spending 21 nights in the USA | |||||
| Medical cover | Personal liability cover | Cancellation cover | Baggage cover | Total Cost | |
|---|---|---|---|---|---|
| Typical travel agent | £2m | £2m | £5k | £1k | £63.99 |
| Club Direct - Worldwide | £10m | £2m | £3k | £2k | £17.23 |
* Sourced by moneysupermarket.com on April 18, 2008. Based on a single male traveller aged 26 at the time of the return, travelling from June 10-July 01, 2008.
Again, the savings to be made are large the travel agent's cover is more than three times as expensive as the cheapest policy through the travel insurance comparison tool. Though the travel agent's cover does offer a higher level of cancellation insurance, Club Direct offers higher levels of both medical cover and baggage cover and meets our recommendation for the level of cancellation cover offered. Remember to think about the value of your trip and the level of cover you really need before picking the right policy for you.
Using the price comparison tool only takes minutes and it could save you a sizeable amount, as the tables above illustrate. Consequently you should not accept travel insurance as an add-on to a flight or holiday package treat it as a separate entity and don't accept anything less than the right cover at the right price.
From everyone at moneysupermarket.com, have a wonderful and safe trip!
