Summer holiday essentials: travel insurance

Everything you need to know, every day this week

Older travellers may find premiums increase more for annual cover than for single trips (Getty Images)

The dreariest part of planning any holiday? Travel insurance. You research, and spend money on, a product you hope never to use. No wonder so many people don’t bother - or mistakenly think that credit-card accident cover, a private health policy or home insurance is sufficient.

In very specific circumstances it can be rational to decide not to insure - notably where you are travelling to a country covered by the European Health Insurance Card (EHIC), or one of the other nations with whom the UK has a reciprocal health agreement. If your age or personal health means a policy would be extremely expensive, you could choose to rely on the local health service. But otherwise, grit your teeth, be prepared for yards of small print and set about choosing the right policy.

Travel insurers are reasonable folk offering good-value policies that will sharply reduce your risk exposure - so long as you follow the rules.

To make a sound decision, divide the cover offered by travel insurance into three segments: medical, cancellation and everything else.

Medical

By far the most important element of insurance is cover for illnesses and accidents, because medical care can involve costs way above the price of the holiday. While the EHIC covers most elements of care in public hospitals in most European countries, it does not include benefits such as medical evacuation. In some nations beyond Europe, particularly the US, Canada and the Caribbean, in extreme cases hospital bills can soar to millions of pounds. And the medical emergency services used by insurance firms usually deliver outstanding care.

Off-the-peg insurance policies generally offer good levels of cover, with the only variable being the amount of “excess” - the first £50, £100 or £200 of a claim which the policyholder must meet.

If you are lucky enough to be healthy, with no major scares in the past such as cancer, then an off-the-peg policy is probably all you need. But if there is any issue that could increase your risk profile - such as high blood pressure, heart issues or breathing difficulties - then it is your responsibility to inform the insurer. They may decide to raise your premium, or to exclude claims arising from previous illnesses or conditions. Note that pregnancy is not regarded as a medical condition, so long as you are not travelling against a doctor’s advice or against the rules of the transport provider.

The other dimension that affects medical cover is what you intend to do on your trip. If you have anything planned beyond normal holiday activities - even something as mild as cycle touring, you need to declare it. Some policies, for example those aimed at gap-year travellers, are more generous, and will allow a number of activities such as whitewater rafting or bungee jumping without the need to notify the insurer. Skiing and snowboarding carry extra risks, and almost always require an augmented policy.

Two more issues to be aware of: even though the UK is soon to leave the EU, many insurers expect you to carry and, if necessary, use the EHIC card in Europe. And in countries where some health-care providers have a history of overcharging, you might find that the patient’s family is put under pressure by the hospital to settle medical bills and then reclaim them - only to discover that the insurer refuses to pay. Refer all such requests to the medical response firm handling the patient.

Cancellation

The other potentially big-ticket item is cover if you need to cancel your holiday. With travel costs rising and horizons expanding, the cost of a holiday can easily run into thousands of pounds. Limits on cancellation cover can be low - for example £1,000 per trip - and excesses can be high, such as the first £200 of any claim. You can seek out policies that are more generous, but they will be more expensive.

Cancellation cover generally pays out in the event of the ill-health or death of travelling companions or close relatives, but not if the person whose condition triggers the cancellation has a history of medical problems. For that reason, if you have a relation in poor health, consider carefully before you commit a long time ahead for an expensive holiday. I hear many sad stories of trips cancelled because of illness or death in the family, in which the insurer refuses to pay out because there was a pre-existing medical condition. Very often the trip has been booked many months in advance for a time of year when late bookings are possible and good value. In other words: if a close relative is frail, don’t book a November trip to Mexico a year ahead; you will still get a good deal a week ahead.

Everything else

The most frequent claims are for lost or stolen valuables. Insurers are taking an increasingly hard line to try to eliminate fraudulent or exaggerated claims. So if you do lose something, besides providing a police report you may also be asked for original receipts for the items lost. Many policies apply both a substantial excess (which may rule out claiming for smaller losses) and a low maximum value for individual items.

Most of us won’t claim for the niche events covered by some policies, such as hi-jacking (as a victim, not a perpetrator) or being called for jury service. But if you are planning an expensive and/or complicated trip, you should check that you are happy with the cancellation cover offered. A couple of airline-related issues are not of such concern: delays and cancellations entitle you to care and (often) compensation directly from the airline responsible; and delayed or lost baggage is again, an airline issue that is covered by the Montreal Convention.

Annual or single-trip travel insurance?

If you plan two or more holidays in a year, then an annual policy makes more sense than buying individual cover for each trip. Be aware of three things, though:

1 Should your circumstances change during the course of the year (e.g. a medical condition is diagnosed), you are obliged to notify the insurer.

2 If you are booking a trip a long way ahead, and your annual policy expires before the holiday, you will need to renew with the same insurer to be sure of cancellation cover.

3 Older travellers are often annoyed by the way premiums surge more for annual cover than for single trips. For example a single-trip policy for a healthy 75-year-old might cost twice as much as a 60-year-old, but an annual policy could cost three or four times as much. This is simply a reflection of the fact that the older you get, the more time you are likely to have for holidays and the greater your exposure to risk.