Is travel insurance worth buying?

Thousands of travellers who were affected by the volcanic ash cloud have been left out of pocket because they aren’t covered by their travel insurance.

Couple taking in scenic view

While some insurers have said they will cover the costs their policyholders incurred due to the recent flight ban, others have said they won’t be paying out. As a result many people are questioning whether travel insurance is actually worth buying.

In fact, a poll on the moneysupermarket.com website found more than 33% of people said they had been put off buying travel insurance as a result. Of the 200 respondents, more than two in 10 said providers do all they can to avoid paying, while a further 10.8% said they were put off because the cover didn’t seem to protect against every possible issue.

Should you still buy cover?

Rather unsurprisingly, we believe that insurance is still vital. Although it might not provide cover for every once-in-a-blue-moon event like erupting Icelandic volcanoes, it does protect travellers against rather more common problems.

If you fell ill abroad and needed to be hospitalised; if you broke a leg sightseeing and had to be airlifted to hospital; if a close relative died and you had to cut your break short – these are all relatively frequent events that the majority of policies will cover.

All policies are not equal

It’s important to bear in mind that the cheapest policy you can find may not be right for you. Different travel insurance policies pay out on different things, making it really important that you compare cover and find a level of protection that you’re happy with.

You can’t insure against every possible event, but you can buy a premium policy that protects you against a wider variety of situations.

Bob Atkinson, spokesman for travelsupermarket.com, explained: “Travel insurance is now firmly on the agenda for British holidaymakers, although sadly for many not for the right reasons.

“Recent experiences highlight the importance of choosing the right policy for your needs and although we have seen a 27% increase in visitors looking for travel insurance through our site, we have seen a significant shift in the number looking for 'premium' policies too - quality policies that offer more comprehensive levels of cover, and insure for trip delay and scheduled airline failure and end supplier failure, for example; it's certainly not just about price anymore for travellers.”

If you’re planning to take part in adventurous sports, maybe you’re planning to go skiing or kayaking down the Amazon, look for a specialist insurer that definitely covers you when you’re taking part in activities that insurers consider high-risk.

Minimum cover we recommend

You should find a policy that includes medical and health cover, 24-hour emergency service and help, personal liability (in case you cause injury or damage property and are sued), lost and stolen possessions, cancellation and curtailment, and cover for any adventurous activities you plan to take part in.

Depending on what you can afford and your plans, it may also be worth extending your cover to include legal expenses and financial protection in the event your airline or supplier goes under.

moneysupermarket.com recommends at least the following levels of cover:

  • £2m for medical expenses 
  • £1m personal liability 
  • £3,000 cancellation - or enough to cover the cost of your holiday 
  • £1,500 baggage 
  • £250 for cash 
  • Policy excesses under £100 
  • Cover for scheduled airline failure and end supplier failure as desirable 
  • Delay cover (e.g. £20/hour for first 12 hours).

What is definitely not covered?

If you’re involved in a drink or drug-related incident, for example, most policies will not protect you. Likewise, if you fail to take reasonable care of your possessions, you’re likely to be left short by your insurance provider.

The good news is that, according to the Foreign Office, 60% of policies now include cover if you have an incident resulting from an act of terrorism.

What other protection do I have?

There is some other cover in place that you ought to be aware of – although these should not be seen as an alternative to travel insurance, more as a compliment.

If you’re holidaying in the European Union, you should pick up a European Health Insurance Card (EHIC) before you travel. It means you’re entitled to state-provided healthcare in any European country you visit, although it won’t meet additional costs such as getting you home, so you mustn’t rely on it. Having said that, some travel insurance policies demand that you have one of these or they won’t meet your additional costs.

When you buy a package holiday, you receive Air Travel Organisers' Licensing (ATOL) protection. That means the provider is part of a financial guarantee scheme that pays out to customers if a company goes bust. You're also protected by the European Package Holiday Directive if you become stranded by events like the ash cloud, meaning you wouldn't have to pay out for additional accommodation.  

That means that holidaymakers on package deals during the volcano crisis spent their delay relaxing in their hotels instead of forking out for accommodation at the airport. They may have been inconvenienced but at least they weren’t out of pocket.

In addition, if you pay for your travel with a credit card, the Consumer Credit Act makes the card provider jointly liable. Although that doesn’t help if you become stranded and have to pay for extras, it does mean that you have another place to demand a refund if your supplier goes under.

You only get that cover if you spend at least £100 but it’s a good additional layer of protection.

Bob’s final thoughts

Travel expert Bob added: “I implore travellers not be put off taking out travel insurance as a result of their recent bad experience or stories of others difficulties. No matter what you think of the product, travelling abroad without insurance is madness.

“Although it may not necessarily cover unexpected events like the volcanic ash cloud, the probability of these natural disasters happening is relatively low, but making a claim for loss of baggage/belongings or emergency medical treatment are more regular occurrences and can add up to thousands of pounds in extreme cases.

"If the individual doesn’t have appropriate cover in place, they’ll be solely responsible for these huge costs.”

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