Insurance in depth

Get the best travel insurance

June 2007

Travel insurance, like any other type of insurance, is there to cover you when things don’t quite go according to plan.

According to recent research from Halifax Travel Insurance, 13 per cent of travellers still venture abroad without taking out the necessary cover, with 16-24 year olds being the most likely to take their chances.

But when faced with the choice of single trip or annual cover, this simple task can become somewhat murky, and that’s not even taking into account other types such as winter sports cover and backpacker or long-stay insurance.

Single trip insurance

Since the introduction of ‘no-frills’ airlines and low cost holidays, many people are jetting off more than once a year. But for those who stick to one main holiday a year, a single trip insurance policy is often the better deal.

According to Halifax, single trip policies still account for over 50 per cent of all travel policy sales, leaving many people out of pocket or without the necessary cover if they take more than one holiday a year.

However, consumers buying travel insurance have been warned not to base their decision just on the cost of the policy.

Analysis of leading financial research company, Defaqto’s, Aequos database of 986 travel insurance policies found that there are 30 separate single trip policies that charge £10 or less for a week’s travel to Europe, with one quoting £5.49 per person.

Defaqto believes the Government and the insurance industry need to do more to educate consumers about the risks of traveling overseas without adequate cover.

If you opt for a single-trip policy, make sure you know what you are covered for as over three quarters of holiday makers have no idea whether their travel insurance is offering them the right protection.

Single trip insurance doesn’t often cover winter sports, and if you are going backpacking or think of yourself as a bit of an adrenaline junkie, it is probably better to look specifically for insurance policies that are designed for these types of holidays.

Annual insurance

Contrary to popular belief, the price difference between a single trip policy and an annual trip policy can be very small. In fact, for some foreign holidays it works out cheaper to get an annual trip policy than a single trip policy.

Paul Birkhead, Halifax Travel Insurance’s underwriting manager, said: “The proliferation of low-cost, no frills airlines, has had a significant impact on our holiday-taking habits. More and more of us are taking short breaks to destinations in the UK, Europe and further-a-field, making annual travel insurance a more attractive proposition.

“The main benefit of annual cover is that you only need to take out your policy once a year to be insured for as many trips as you like, within a 12 month period, both within the UK and abroad. Many people are also unaware that annual cover will also include trips in the UK, so long as they are in pre-booked accommodation for at least three days.”

According to MoneyExpert.com, the cost of annual travel insurance for a family of four going to Europe is on average £113.86. So if a family goes away for more than three weeks a year it can be worth getting annual cover. And of course annual cover works for the whole family.

The cheapest annual travel insurance is however as little as £35 for a family of four so it can be cheaper to get annual travel insurance than it is to get single trip insurance.

However, it is the quality of cover is what counts - not just the price. You can save a few quid by buying the cheapest available but that can cost you in the long-run if it comes time to make a claim.

The cost of medical care is very expensive and varies in each country, for example, in Spain it would cost about £9,000 to treat a broken leg and an air ambulance in South Africa is £18,000.

But, you only find out if an insurance policy is good value for money when you make a claim - if it doesn't pay out when you need it then it's a waste of money.

Cut out the middle-man

Research undertaken by Alliance & Leicester has shown that UK holidaymakers pay 1.3bn more than they need to on travel insurance each year. This is despite the fact that travel insurance appears to be relatively cheap – normally around £25 for each week abroad.

About 60 per cent of holiday makers in the UK take the ‘easy’ option and use travel agents to attain insurance at the same time as booking a holiday. In fact, insurance sold through agencies helps them boost their profits and can be up to five times the cost of buying it separately. In some cases travel insurance is promoted as a ‘free’ add-on with the package – but the reality is that you will be paying for it somewhere along the line.

Over the past year, insurance companies have been taking advantage of the internet, making it much easier, and often a lot cheaper, for people to buy travel insurance online.

Research from online insurance specialist, swiftcover, shows that travel agent policies cost a small fortune. Two single trip policies of one week each will cost you a total of £199.92 with Thomas Cook, £172 with First Choice and £193.74 with Expedia.

Covered by a card?

The E111 form was replaced in January 2006 by the European Health Insurance Card (EHIC) which entitles you to a reduced-cost, sometimes free, medical treatment in a European Economic Area (EEA) country or Switzerland.

However, the treatment can often be limited and holidaymakers without insurance may find they have to pay a substantial amount of the costs themselves.

The EHIC should not be treated as a substitute for travel insurance, but as an addition to a policy and each member of your family should have their own card.

The EEA consists of the European Union (EU) countries plus Iceland, Liechtenstein and Norway.

You can pick up the EHIC form from your local post office or directly from the Department of Health (www.dh.gov.uk/travellers).