By: Adam Giles
“What do you mean I’m not covered?”
It’s a dark moment if ever you find yourself having that conversation with your travel insurance company. But sadly it happens.
My view of travel insurance used to be simple – I’d book a holiday for a week or two, I’d purchase a policy based either on price (cheaper the better) or from a (random) brand I trusted, and I’d take my trip living in a bubble of assumed-insured protection. Everything was wonderful and the world was good until one day I had the misfortune of reading the small print.
I didn’t really pay much (read: any) attention to the detail of the policies when I was buying travel insurance until I decided to take a longer trip. Checking out the detail seemed a sensible measure given I’d be away for some time and undoubtedly engaging in more risky activities than just sitting by a pool. Plus, as I began to look for a suitable policy, I couldn’t fathom the significant price variance between them – the cheapest policy I found was around £300 but the most expensive was more than twice that at £700 with policies hitting every price point in between (same for European cover – prices range from £12 to £60 for a two-week break.) Where on the spectrum of protection did I need to be?
For medical cover alone the payout levels ranged from £2 million to £15 million and while I had no desire to pay for a platinum plated policy when bronze cover would do, if the difference meant getting my toe sewn back on if a camel decided to bite it off versus being given a pair of crutches, I’d happily pay the extra.
My inner (ex)-lawyer instincts piquing, I decided to find out. Whether you’re buying travel insurance for a two-week break, looking at an annual, multi-trip policy or, like me, after long-term travel insurance, here’s my advice for finding the best travel insurance policy and making sure you don’t get screwed but the small print.
Blah, blah, blah, disclaimer: I’m no lawyer (any more), financial adviser or able to guarantee you’ll get your toe sewn back on if you take my advice. Oh, and this is about UK policies…though the same points must surely apply elsewhere? Right, think that covers me?
What to consider when buying travel insurance
Ultimately, the kind of policy and level of cover you need is going to depend on the kind of trip you take. Two weeks on a beach is likely to offer a different level of risk compared to crossing the Darien Gap (one day…just one day I’ll do this).
Whatever your trip plans, it helps to understand the types of cover offered in travel insurance policies as well as the level of cover you might need.
Don’t buy just based on price
In almost all other buying scenarios price is usually directly linked to quality – the more you pay, the better you get. But that isn’t always true when you’re buying travel insurance. When I was doing my research I saw two policies that had the same headline levels of cover (medical insurance, personal liability and baggage) yet there was a £300 price difference between them.
It seems that some insurance companies are simply more expensive than others.
Okay, it may be that the more expensive policy has a significantly superior level of service if something goes wrong. In my (fairly limited) experience, my bank insurance was much easier to claim on than a cheaper policy I’d bought elsewhere. The problem is you can’t compare this aspect of your policy before you buy…which means you need to look at other factors beyond price.
Hope for the best, insure for the worst
I’ve met many travellers who don’t have travel insurance on the basis that their belongings have such little value…but that isn’t the main reason to buy a policy. The thing that is most likely to lead to financial ruin faster than a New York minute, isn’t theft, it’s injury – to you or to somebody else, caused by you.
For that reason, the most important areas to get adequate protection are:
Medical expenses
I know from my own travels that something as simple as a sore throat can cost $500 in medical expenses and boy was I glad I had good medical cover when I got sick overseas. If you get injured or become ill while you’re away, you’ll be relying on the medical system of the country you’re in to get you better and it’s guaranteed to cost you money. How much will depend where you are but step foot in the US of A, infamous for some of the world’s most expensive medical care, and you’re going to want full protection.
But what does that mean? I’ve seen policies offering from £2 million to £20 million worth of cover and where you want to be on that spectrum is going to depend on where you go and what you do. Which?, a highly regarded UK consumer advice company, recommends travellers buy a policy that offers a minimum of £2 million cover in Europe and a minimum of £5 million cover worldwide. With that level of protection you should be more than adequately protected. That said, any level of cover is going to be better than nothing.
However, there are a couple of extra things to look out for:
- skiing accidents account for the largest value of claims made each year. Consequently, most companies insist that you buy additional cover.
- pre-existing conditions are automatically excluded and that list of conditions might be broader that you think (e.g. varicose veins and asthma). You can usually add cover for a pre-existing condition but, unsurprisingly, it’s gonna cost ya.
Activities
By: Pete Bellis
Insurance companies are very diligent at listing what activities are and are not included in your policy and that list may not be what you expect. For example, one policy I looked at included white water rafting as part of its standard list of included activities but horse riding, something I’m much more likely to get involved with, was excluded. Overall, I found that the policies varied quite broadly in terms of what they included so shop around to find one that suits your trip. Once again, you can usually add excluded activities but… again, it’s gonna cost ya.
Personal liability
This was an aspect of cover I’d never given much thought to despite being an accident prone idiot.
Personal liability insurance covers you if you injure someone else while you’re away. Whether you’re cantering your out of control horse over your horse riding instructor or knocking a granny under a bus while you’re on a Segway, you’re going to be liable for the damage you cause and the associated financial fall out.
How much cover do you need? In high-claim countries where medical expenses and other losses like salary can be significant (ahem, USA), your exposure is higher and you’ll want your cover to match it accordingly. Think worst case scenario: severely incapacitating a CEO who is the breadwinner for him, his wife and seven children who have expectations of a new yacht each Christmas. Yep, expensive. £1 million should be enough in most countries but consider upping your cover to £2 million if you’re off to the USA.
Beware:
Personal liability protection shouldn’t be confused with personal accident protection. The latter is paid to you if you get injured and is commonly just a nominal amount between £5,000 and £25,000. Hardly seems fair if you lose a leg, but the policies I looked at were very similar with their low levels of pay-out.
Legal expenses
If you find yourself in the middle of a personal liability claim (aforementioned CEO) or you get into other legal strife while you’re away, you’ll want your legal expenses to be covered, especially if you’re in a place that has pricey lawyers…USA, again! Even outside the US, lawyers in Europe, Australia and New Zealand are going to cost you – I know a fair bunch of legal advisors who charge close to £500 for just one hour’s advice. £5,000 will probably get you what you need in developing nations while closer to £20,000 or £30,000 is more realistic for (legally) expensive countries.
Repatriation
If you do get injured while you’re away, your next stop (after emergency treatment) is likely to be home and if you’re unable to cram your head to toe body cast into economy class, the price of getting back is going to cost you way more than a standard flight.
The UK Foreign and Commonwealth Office quote the following indicative costs for repatriation:
- £35,000-£45,000 for an air ambulance from the USA East Coast.
- £12,000-£16,000 for the same deal from the Spanish Canary Islands.
- £15,000-£20,000 for a standard flight but with a stretcher and doctor escort from Australia.
In a word: expensive, so keep these figures in mind when you look at policies. (Note: some policies bundle repatriation into medical expenses.)
What doesn’t kill you could still ruin you (financially)
Insuring for the worst case scenario is your starting point when you’re buying travel insurance but you should also make sure your policy covers you for the non-life-threatening stuff that could still kill your budget.
Cancellation and curtailment
When I flew to Ecuador in 2010 I’d bought an expensive around the world ticket and booked a tour that included my trek permit for Macchu Pichu. If something caused me to cancel my plans or come home early, it would have cost me a lot…which is where cancellation and curtailment cover becomes useful.
These days I tend to buy the cheapest one-way ticket I can find, don’t pre-book expensive accommodation or tours and if I’m off to Europe, my upfront costs are usually under £50. In those circumstances I’m less concerned about cancellation cover.
Most policies include at least some level of cancellation and curtailment cover but the level of protection can vary. Tot up what you’ve paid out for your trip and choose accordingly.
Documents and cash
I’ve met a surprising number of travellers who have misplaced their passports and without wanting to curse myself, I’m astonished I’ve made it this far without doing the same. Money doesn’t seem much easier to keep hold of.
Although losing your passport or some cash is unlikely to send you broke (unless you’re carrying ALL of your travel funds in your money belt – please don’t), but passports are not cheap documents and loosing a good chunk of cash just hurts.
Fortunately most policies provide enough protection to replace your passport as well as a nominal level of cover for cash. Note the word nominal: a few hundred pounds.
Baggage cover – or not
I’m dealing with baggage cover under a separate heading because I was simply staggered at how little protection travel insurance policies actually afford.
When I used to compare insurance policies, I would look at the headline level of cover and, because I travel with a lot of electrical items, pick the highest one – around £2,000. I was a sum that would go a long way in replacing my Macbook, camera and iPhone if I got robbed. Or so I thought, until I read the small print.
It turns out that all travel insurance policy have a series of exclusions that significantly restrict the level of payout if you part company with your valuables.
First off, you’ll find there is a cap on what you can claim per item – this is usually as little as 10% of the overall baggage cover. So, on a £2,000 baggage cover policy, the most you can claim if you lose your Tiffany diamond earrings (or iPhone) is around £200.
Not cool.
And it gets worse…
As well as the single item cap, there is usually an overall cap for all valuables, i.e. if you lose your bag containing your Tiffany earrings, necklace and bracelet (or iPhone, laptop and camera). Shockingly, this upper limit is not the amount of your baggage cover (£2,000 in my example) but often between £250 and £500.
Not what I expected when I read that my policy covered me for £2,000 worth of baggage.
And yet still it gets worse…because let’s not forget about excess.
Most policies have a requirement that the first amount of your claim is covered by you. This is often around £50 but can be as high as £200.
So where does that leave you when you take your valuables overseas? Not in a good position is the answer.
The worst (but not uncommon) policy that I looked at quoted £1,000 of baggage cover. On the face of it, that should have been enough to cover replacement of a smart phone and everyday consumer camera. However, looking closer at the exceptions, the policy had a single article limit of £150 and a total valuable limit of the same amount. And let’s not forget the excess, which on this policy was £50. The result? Lose something like an iPhone and camera and you’re only getting £50 back – hardly enough to replace your loss. Ouch.
That being the case, who does benefit from policies that offer £2,000 worth of baggage cover? The answer – people who pack expensive clothes and shoes in expensive luggage; i.e., not me.
The upshot: If you are travelling with valuables, you will need to try and find cover elsewhere (see below).
Other things to watch out for when buying travel insurance
To use a cliche, the devil of travel insurance policies really is in the detail and there are a few extra things to pay attention to besides the level of financial cover provided.
Excess
I’ve talked about this under baggage but most policies won’t pay out for the first portion of your claim. This amount can be fairly nominal (£50) or can be higher (£200). If that amount is deducted off a baggage claim, that might be fine, but if you’re expected to hand over the first £200 of a medical bill, you will want to make sure you can afford it. Some policies offer a lower premium in exchange for higher excess charges. Weigh up the costs and risks before you buy.
The basic requirements
Probably one of the easiest parts to overlook in your policy is what lawyers call “boiler plate” clauses – essentially the boring list of requirements at the beginning and end of your policy. However, as boring as these details might seem, they can make the different between your policy being valid (and claims paid out) or not.
These beginning clauses often list a string of requirements that you must comply with for your policy to be valid and can range from basics like your age (lower and upper limits), to something more obscure like being registered with a doctor in your home country.
Don’t skip past this detail because if there is even the slightest opportunity to void your policy and not pay out your £1 million medical, personal liability and legal expenses, your insurance company will take it.
Destinations and Government Travel Guidelines
When you book your insurance you most likely tick a box that has a rather vague description of your destination – Europe, Worldwide excluding the USA and Worldwide including the USA. I generally like broad categories with simple descriptions, because they are east on my tiny brain, but you should still double-check the small print to see exactly which destinations are covered.
On a good note, I was pleasantly surprised to see that my policy for Europe included a whole bunch of places that are not strictly ‘Europe’. However, there are some countries that will be excluded despite falling into the broad destination categories simply because they are deemed too risky.
Although most of those excluded countries/areas might be easy to identify (Darien Gap springs to mind), it’s worth noting that many polices automatically exclude cover for countries that feature on the Foreign and Commonwealth Office’s ‘don’t travel’ list. As that list is subject to change (a few months ago it included Egypt, now it doesn’t), make sure you check before you book and fly.
Length of cover
I get excellent, free travel insurance with my bank. It used to cover me for 90 days outside the UK, worldwide. And did I mention it was free? Oh, how I miss life before the economic crisis. These days the same free policy only covers me for a 31 day trip. Great if I’m off on holiday for a week or two but not, obviously, for longer trips – check the details of any off-the shelf policies or free bank cover if you plan to rely on them.
Annual travel insurance policies can also be a bit confusing – they usually cover you for an entire year but have a limit to how long each trip can be – often 1-3 months.
Ability to extend
If you’re in the slightest bit prone to changing your plans, make sure that your policy can be extended while you’re away. I found this out the hard way when I was 12 months and 1 day into my one-year policy and tried to pay to extend my insurance on the eve of flying into the Middle East…while the Arab Spring was in full swing.
The simple answer from my insurance company was that I couldn’t extend my existing policy. This left me with little choice but to i) fly home to buy a new policy (most insurance companies require that you be in your home country when you buy a new policy) or ii) spend the next couple of months without cover. I took route ii), something that played on my mind for the rest of my trip. Fortunately my worries didn’t become reality but it was a risky decision that could have been avoided if I’d bough a policy that permitted me to extend while I was away.
Other insurance options for valuables
By now you may be filled with a bit of doom and gloom about the adequacy of your travel insurance policy, particularly in relation to valuables. As someone who travels with a lot of kit, I certainly felt that way, but there are some alternatives to consider:
Home insurance
If you have home insurance, you may get better protection for your valuables than on a travel insurance policy. However, be aware that most policies will exclude mobile phones.
Gadget cover
I’ve looked into gadget cover and again it looks more attractive on the packaging than it is in reality (for me, at least) because there is usually a maximum time you will be covered overseas (1-3 months) and your gadgets need to be close to new (under 18 months old). These policies aren’t cheap and are charged on a per gadget basis, so do study the small print before you buy.
Mobile phone insurance
Many networks offer mobile phone insurance. It’s rarely the cheapest option but from the policies I’ve looked at, they tend to provide good cover and in some cases come with minimum exclusions. Yay! The catch is that you need to be have bought your phone from the network, not just have a network plan with the company and you usually need to have bought the cover at the same time that you bought your phone.
Photography insurance
I started this article off the back of having bought specialist photography insurance with that I was very happy with because it covered all of my gadgets including my laptop. It was a separate policy with Photoguard and therefore came with a cost in addition to my travel insurance, but I was ok with that.
Unfortunately, the company has since contacted me, post payment (!) to say it will not cover my iPhone (poor iPhone – constantly being excluded). The reason: the camera is not the fundamental purpose of the iPhone. Fair point, perhaps, but the argument is at odds with their agreement to insure laptops. Most annoyingly, there isn’t a single reference on their site to camera phones being excluded (trust me, I read every single page).
The conversation with that insurer is going to continue… as will my ongoing quest to find decent travel insurance where I don’t get screwed by the small print.
Do you ever read the small print of your travel insurance policy? Were you surprised by any of the information in here? Do you have any other tips for buying insurance?
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