You wouldn't go on holiday without your tickets or your passport, but many people for some reason happily set off without travel insurance. Purchasing an adequate travel insurance policy for both yourselves and in the case of dependents, those you are travelling with, can be the most important purchase you make when travelling away from home.
You need to ask yourself, what happens if you fall ill before you travel or when you are overseas and need medical treatment? Or maybe you have to cancel your holiday in the UK because you are made redundant or a member of your family is taken into hospital. If you don't have the right insurance cover in place, your holiday could turn into a nightmare - with bills running into tens of thousands of pounds.
You should ensure you purchase the best cover for your individuals needs. This will depend on the type of travel you are about to undertake and the cheapest policy might not necessarily be the best for you.
Travel insurance - the basics...
Travel insurance premiums can vary a great deal and, whilst it's important that you are getting good value for money, it is equally important that you are choosing the level of cover that suits your needs. Extras can be added on but a basic policy should include the following levels of cover:
Cancellation and curtailment - From the moment you make your booking and pay a deposit you should ensure you have adequate travel insurance cover in case you have to cancel or cut short your holiday, perhaps because you lose your job and can no longer afford to travel, or if a relative falls ill while you are away and you need to come home early. The recommended limit is £3,000, or the total cost of your holiday. Pay attention to the small print, though. If you cancel your holiday because your best friend falls seriously ill, you might reasonably expect the insurance to pay out. But you could be disappointed. Your insurer might refuse the claim if they are not a member of the family, so always check the policy definition of 'close'.
Delay - you should be compensated if your ferry or flight is delayed for longer than 12 hours. To avoid any problems in receiving this compensation ask the ferry company or airline to confirm the delay in writing and keep any receipts of anything you have to purchase due to the delay.
Baggage and belongings - the policy should pay out up to £1,500 if your luggage or personal possessions are lost, damaged or stolen. Many travel insurers also put a limit on the payout for individual valuable items, such as cameras and laptops. The limits vary between insurers but are typically either £250 or £500. If someone steals your cash while you are on holiday, the payout is again usually limited to £250 or £500. To read more about baggage cover click here.
Personal liability - if you injure someone, perhaps on the ski slopes, or you damage their property, they could make a claim against you. It is therefore a good idea to have personal liability cover up to £1m.
Emergency assistance - many insurance companies offer a 24-hour emergency helpline, which can be a lifesaver, particularly if you are in a different time zone.
Medical cover - you don't want to end up with a big medical bill if you are taken ill or have an accident while on holiday. Most experts recommend a minimum £2m of medical cover if you are travelling abroad, which should include repatriation in case you need to be flown back to the UK. Some policies come with more generous limits but you have to ask yourself how much cover is really necessary. If not, you could be paying over the odds for insurance that you don't need.
What if you have a pre-existing medical condition?
A standard travel insurance policy is unlikely to cover any pre-existing medical conditions. In other words, if you have asthma and suffer an attack on holiday that requires medical treatment, your policy will not pay out. But you should always declare any health issues when you apply for insurance because failure to disclose any relevant details could invalidate the policy. Some specialist policies will cover pre-existing conditions, though the higher risk of a claim is usually reflected in a higher premium.
European Health Insurance Card
If you are heading to Europe, you can apply for a European Health Insurance Card (EHIC), which entitles you to medical treatment in state run hospitals in the EU, plus a number of other countries including Iceland and Norway. The EHIC replaced the E111 in 2006 and can be useful in an emergency, but it is not a substitute for insurance. Holders of an EHIC will pay the same cost for their treatment as a local, so if it's free for the country's residents, you will pay nothing. But if the locals pay towards healthcare, you too will have to stump up the cost. You should also remember that the EHIC usually only covers treatment in state-run hospitals - and in some countries the standard of state hospitals is poor. You will also have to pay any repatriation costs as the card does not include the cost of a flight home if you fall ill or have an accident while on holiday. The EHIC is free and you can apply online and over the phone (0845 606 2030) If you do need medical care, many travel insurers will waive the excess if you use the card.
How the excess works on a travel insurance policy
It's important to understand how the 'excess' works on your travel insurance policy, so that you don't get caught out. The excess is the amount that the policyholder pays towards any claim. So, if you put in a claim for £500 and the policy excess is £100, the insurer would pay out £400. But some policies charge an excess per section, and the costs can quickly add up. For example, if you were mugged, you could be charged a £75 excess for medical costs, plus a £50 excess for loss of personal effects. Other policies charge just one excess per claim, which can work out much cheaper.
Do you have existing cover?
If you are thinking of buying travel insurance, you should first check any existing cover. For example, your home contents policy might include insurance for your personal possessions when you are away from home. If so, you don't necessarily need baggage cover on your travel policy, so could save some money on the premium. A number of premium bank accounts and credit cards also include travel insurance. But check the level of benefits because the 'free' cover might also be very basic. And beware packages that include free travel accident insurance, which normally only covers serious injury in an accident. It does not pay out if the policyholder needs any medical treatment if they are ill, or for loss of baggage, cancellation or curtailment.