Don't let cheap travel insurance ruin your holiday
Failing to read the small print on travel insurance policies could leave holidaymakers out of pocket and at risk.
A study of over 700 travel insurance products by comparison website comparethemarket.com found nearly half (45%) of products only offer cover for cancellation of any prepaid travel or accommodation expenses costing less than £3,000.
Almost half (49%) of products only cover valuables worth £250 or less, and just over one in 10 products offers cover for valuables of £500 or greater.
Holidaymakers often carry laptops, iPads, expensive cameras and mobile phones, but due to their policy restrictions many will be unwittingly travelling with uninsured valuables.
Over one in ten policies provide no cover for missed flights and almost a third (32%) of products will not pay out for missed connections within the UK. Even if your policy does cover missed flights, customers often have to undergo a lengthy process to make a claim including getting confirmation from the appropriate travel authorities.
Terms and conditions of travel insurance policies are on average 26,392 words, the longest of any insurance product, which highlights the difficulty customers face in understanding the details of their policy. On average, travel insurance terms and conditions would take 88 minutes to read – which may be offputting for consumers and encourage them to skip reading the small print and noticing important exclusions.
Moneywise’s top travel insurance tips
- Never buy insurance from an agent or tour operator without comparing prices and cover online first.
- If you have travel insurance included as part of a packaged current account with your bank, check what is covered and buy top up insurance if needed. Be warned that some packaged account travel insurance only covers you up to a certain age – so do check this.
- Cover yourself from the moment you buy your holiday.
- Make sure your policy includes at least:
- £2 million medical expenses.
- £1 million personal liability cover.
- £3,000 cancellation cover.
- £1,500 baggage cover.
- £250 for cash.
Moneywise’s most trusted travel insurance provider
This is the shortlist for the UK’s most trusted travel insurance provider 2016, as voted for by 24,000 readers of Moneywise.co.uk, in our Customer Service Awards survey. The winner will be announced at our awards ceremony on Thursday 9 June.
- First Direct
- M&S Bank
- Nationwide Building Society
Gemma Sonfield, head of travel insurance at Compare the Market, says: “Despite the fact that they are designed to provide reassurance, travel insurance policies can result in substantial costs for those who fail to read the small print. Terms and conditions can be lengthy, but failure to read them means many people may assume they are covered in all instances when they are in fact not.
“Many fall into the trap of buying insurance at the last minute which means that they may not receive a penny if they had to cancel their holiday unexpectedly in the run up to going away, and a proportion of products offer no cover for often unavoidable misfortunes such as missed flights.
“Cheaper policies may look attractive but often have higher excesses and rigid exclusions.”
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An account opened with a clearing bank (few building societies offer current accounts) that provides the ability to draw cash (usually via a debit card) or cheques from the account. Some pay fairly minimal rates of interest if the account is in credit. Most current accounts insist your monthly income (salary or pension) is paid directly in each month and they offer a number of optional services – such as overdrafts and charge cards – which are negotiable but will incur fees.
This is a mutual organisation owned by its members and not by shareholders. These societies offer a range of financial services but have historically concentrated on taking deposits from savers and lending the money to borrowers as mortgages, hence the name. In the mid-1990s many societies “demutualised” and became banks. One academic study (Heffernan, 2003) found demutualised societies’ pricing on deposits and mortgages was more favourable to shareholders than to customers, with the remaining mutual building societies offering consistently better rates. In 1900, there were 2,286 building societies in the UK; in 2011, there are just 51.
Association of British Insurers
Established in 1985, the ABI is the trade body for UK insurance companies. It has more than 400 member companies that provide around 90% of domestic insurance services sold in the UK. The ABI speaks out on issues of common interest and acts as an advocate for high standards of customer service in the insurance industry. The ABI is funded by the subscriptions of member companies.