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Chartered Insurance Institute
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Travel insurance

This article was last updated by the author in October 2016.

A brief introduction to travel insurance.

Contents

Overview

Individuals travelling within the UK or overseas face various risks. Some of these risks commence before the journey starts; such as the risk of losing any monies paid if the holiday has to be cancelled. For other risks, cover only commences once the journey begins; such as the risk of needing medical treatment or having some property stolen.

Two types of policy are available:

  • single trip; cover must be arranged each time a trip is undertaken
  • annual; cover is automatically provided for all trips undertaken within a twelve month period (subject to a limited number of days per trip or per year)

Typical cover provided

The majority of policies include at least the following basic sections of cover:

Personal accident benefits

Cover is provided for capital sums following death, loss of limbs or sight, or permanent disability caused by an accident whilst on holiday. Some insurers also include weekly benefits for temporary total disablement or temporary partial disablement.

Medical and associated expenses

This section includes cover for expenses reasonably incurred in respect of:

  • emergency medical treatment including surgical fees, hospital charges and emergency dental fees
  • additional hotel and travelling expenses of the patient, a friend or family member remaining with or accompanying the insured, where advised by a doctor or medical adviser
  • the additional cost of bringing home the insured person, including the use of an air ambulance where necessary. In the event of death abroad, the cost of bringing the body or ashes to the UK or burial abroad is also included
  • additional expenses of those in the traveller's party who are delayed as a result of the injury or illness.

A 24-hour multilingual helpline is usually provided to give advice, organise the necessary medical treatment and make arrangements to bring the insured person back to this country if required.

Cancellation or curtailment

Cancellation cover provides for the reimbursement of deposits and payments made for transport and accommodation booked, but not used by the insured person. This must be due to the necessary and unavoidable cancellation of the holiday prior to the date of departure, as a result of causes beyond the insured person's control (such as illness, unemployment or being called for jury service). The possible causes may be specified in the policy or may be limited through policy exclusions.

Curtailment cover provides for a holiday having to be cut short part way through. It reimburses the costs of travel and accommodation, in proportion to the amount that the insured person has not been able to use.  Like cancellation, the curtailment of the holiday must be necessary and unavoidable. 

Baggage, personal effects and money

Cover is provided for loss of or damage to:

  • personal baggage including clothing and personal effects, taken with the insured person, or purchased during the trip, or sent in advance
  •  money as defined in the policy.

Some personal effects, such as contact lenses specifically excluded, as they are considered to be high risk.

Personal liability

This section covers the insured's legal liability for injury to third parties or damage to third party property while on holiday, including the legal costs of both the insured and the claimant.

Each section of cover is subject to a limit of liability/sum insured and sometimes an excess.

Optional extensions

In addition to the basic sections of policy cover, some or all of the following extensions may be available, depending on what each insurer has decided to include in its particular package of cover. Some may be automatically included; others may require the payment of an additional premium:

  • Hospital cash benefit: provides for a daily benefit whilst the insured person is confined to hospital.
  • Delayed baggage: provides monies to make essential purchases of clothing and toiletries needed as a result of baggage being delayed for at least twelve hours.
  • Travel interruption: covers the additional cost of accommodation and travel due to the failure of public transport to deliver the insured person to the departure point, on either the outward or the return journey in time to travel. Some insurers may extend cover to include delays caused by the insured's car breaking down or being involved in an accident.
  • Travel delay: covers the delay of the aircraft, ship or train on which the insured is booked to travel for at least twelve hours, due to strike or industrial action, adverse weather conditions or mechanical breakdown or structural defect. A fixed benefit is paid for each twelve hours' delay. Alternatively, the insured can cancel the trip after twelve hours delay and cover is provided for the resultant charges made by the tour operator or carrier.
  • Pet care: a benefit is provided for each 24 hours that a cat or dog receives in-patient veterinary treatment as a result of suffering an injury, whilst being cared for whilst the insured is on holiday.
  • Hijack and mugging: provides cover where the insured is delayed in reaching their destination as a result of the transport they are travelling on being hijacked. Cover is also provided if the insured receives in patient treatment following mugging.
  • Loss of passport: cover is provided for the additional travelling and accommodation costs to obtain a replacement passport following loss or theft. Cover also includes the cost of a temporary replacement passport.
  • Legal expenses: covers the legal costs in pursuing claims for death or bodily injury to the insured person whilst on holiday, caused by the fault of a third party. A legal helpline is also provided.
  • Business travel: cover is extended to include travelling on business for clerical and administrative tasks only. Liability arising from business trips is not covered.
  • Winter sports; covers the winter sport activities listed in the policy booklet. Cover usually extends to include loss of or damage to winter sports equipment, delays to the insured's arrival or departure from the resort caused by an avalanche, piste closures and accidental injury or illness during the trip, with inner limits applying to each element of cover.
  • Catastrophe or disaster cover: provides cover if the insured cannot stay in their pre-booked and pre-paid accommodation because of a 'disaster', such as fire, earthquake, tidal wave, avalanche, hurricane, medical epidemic, etc.  Cover includes the necessary extra travel and accommodation expenses to allow the insured to continue with their trip or to return to the UK if they cannot continue with their trip.

Each section of cover is subject to a limit of liability/sum insured and sometimes an excess.

Key exclusions

The main exclusions which apply to travel policies include:

  • taking part in hazardous activities
  • participation in manual work
  • travel against the medical advice or to get treatment
  • travel to a country or area which the Foreign and Commonwealth Office or World Health Organisation has advised the public not to travel to
  • pregnancy or childbirth
  • self-inflicted injury, solvent abuse, alcohol and the use of drugs
  • loss of:
    • luggage caused by confiscation
    • baggage, personal effects and money when left unattended or where the loss is not reported to the police within 24 hours
    • contact lenses, medical and dental fittings
    • camping equipment

Rating factors

Most insurers require the applicant to confirm they meet the requirements of a health declaration. If these requirements are not met some insurers will automatically decline cover. Other insurers will refer the applicant to a confidential medical helpline, where an underwriter will take further details of the medical condition and will advise whether the risk is to be declined, or it is acceptable but with special terms applied.

The premium charged is primarily based on the duration of the visit and the country(ies) being visited. The most common limits used by insurers are:

  • the UK
  • Europe, countries bordering the Mediterranean, Madeira and the Canary Islands
  • worldwide, excluding North America, the West Indies, the Bahamas and Bermuda;
  • worldwide.

Age may also be a rating factor, with discounts for children and increased premiums for those over a specified age.

Additional premiums are charged if cover is needed for taking part in hazardous pursuits.     

Product providers

The demand for travel insurance and the scope of cover provided has increased in response to the worldwide expansion of air travel and the growth in popularity of holidays abroad. Cover used to be almost exclusively arranged by travel operators under schemes held with specific insurers. There is now a whole range of suppliers, including traditional intermediaries, banks, internet comparison websites, motoring organisations, clubs and associations, as well as insurers selling direct to the public. It is increasingly common for travel insurance to be purchased over the internet.

Some paid-for bank accounts and credit cards offer free 'on-going' travel insurance. However, cover levels can be poor and there may be exclusions which mean you are not covered, such as if you may not be covered if you're over a certain age or have an existing medical condition.

The market for travel insurance is very competitive, not only on price, but also through a wide range of innovations to cover. Apart from the typical cover described here, specialist policies are also available; for example, for back packers, for those taking part in hazardous pursuits, for those going on round the world cruises and for those with particular medical conditions. 

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