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Holidays can unfortunately be a prime time of year for things to go wrong, as resources are tested and often stretched to their limits. Anything can happen, from the family car breaking down to fracturing your arm on the ski slopes, getting food poisoning or having all your belongings stolen. That’s why it is a very good idea to have travel insurance in place before you set off. How does it work?If you go on holiday more than once a year it can make financial sense to take out an annual travel insurance policy (see below). But if your travel is sporadic it can be cheaper to buy cover as you go along. Either way, the best place to start is often the internet, where you can search for the most competitive policies offered by lenders or insurance brokers.
Travel agentsIf you are using a travel agency it will always try to sell you its own insurance, but this rarely turns out to be the cheapest option. Although a travel agency can make insurance a condition of their package holiday, they cannot legally insist that the policy has to be their own version. Beware also of agents claiming that the insurance is ‘free’ with the holiday. Of course nothing is free, and you will pay for it somewhere else in the price. Any insurance sold by travel agents is also not regulated by the Financial Services Authority (FSA) - although the rules change in January 2009.
Sports and activitiesNot all holidays are the same in terms of risk for the insurer, and standard travel insurance cover will understandably exclude ‘hazardous pursuits’, which includes skiing. But, as the sport has become so popular in recent years, separate ‘winter sports’ travel insurance is available to buy for the purpose. The higher premium this type of travel policy carries will prove well worth paying should you need to claim – breaking an arm or leg in another country can cost a fortune if you do not have the appropriate insurance in place.
Other ‘hazardous pursuits’, which range from anything from pot-holing to white water rafting. will have to be specified separately in any standard travel insurance. Again, this will hike up the premium to reflect the risk.
Other types of coverAnnual policies cover you for an unlimited number of trips, as long as no one trip lasts for more than 90 days. Some annual policies will not cover you for winter sports, so check the small print carefully. Some credit card providers – although the number is decreasing – offer automatic cover for travel. This may only apply, however, if you bought the holiday with the card and it may also entail several exclusions. Again, check the policy carefully – trying to keep your premium down by omitting details on the application will prove a very false economy!
ExclusionsIt is standard that no travel insurance policy will cover contracting HIV whilst abroad, or any fluctuations in exchange rates. You will also not be covered for items confiscated at Customs, or even if your tour operator or airline goes bust.
On any travel policy there will be some level of excess to pay, so you will need to find out what this is. It’s also worth checking if the excess is payable on each single claim or the collective claim – for example, if you break your arm falling from a ski lift and lose your sunglasses, do you pay for one lot of excess or two?
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