Five holiday insurance mistakes to avoid

Don’t get caught out by insufficient policies and rising premiums

A S WE approach the summer holidays, travel insurance is hitting headlines again. Rising unemployment in southern Europe has led to higher crime rates, with tourists prime targets for petty theft. And the travel association ABTA has found that 24 per cent of holidaymakers now run the risk of not taking out travel insurance. Here’s how to avoid getting caught out.

Before you get started, check whether your home insurance covers personal possessions away from the home. You may find it offers “away” cover of up to £3,000. But with many policies “not covering the full costs of everyday items like smartphones, it is worth consulting your provider,” says Richard Lloyd of Which? You can pay to extend it – but make sure this won’t cost more than taking out a new policy altogether. In addition, it may only cover you for items stolen or lost – similar to baggage cover – rather than medical care or cancellations.

The warmer weather may have tempted you into a staycation, but Which? Money recommends checking policies carefully if booking a UK holiday this year. “If you don’t book your accommodation ahead, or your trip is less than 25 miles from your home, you may find your policy is invalid.” If it’s a weekend break you’re planning, be aware that many insurers require a minimum two night stay, with some – like ETA – requiring three. Similarly, some insurers set a maximum number of days’ travel for each trip – be sure to check your policy document so you’re covered for the duration.

Research from the Association of British Insurers revealed that the average cost for medical treatment overseas in 2012 was £2,040. The European Health Insurance Card (EHIC) will give you access to free or reduced cost state healthcare in Europe. But it won’t extend to private treatment or repatriation, so should not be viewed as an alternative to insurance. And, says Greg Lawson of Columbus Direct, “across Europe this year there have been reports of hospital cutbacks, with some hospitals trying to recover treatment costs directly from overseas patients rather than with the EHIC.” So upon arrival, find out the location of your nearest state hospital, and have copies of your EHIC at hand at all times.

With travel agents accounting for less than 17 per cent of sales in travel insurance, consumers are increasingly turning to comparison websites. “They are often cheaper,” says Lawson. “But there is usually a good reason. The cover might be minimal, or the excess might be higher, often up to £300.” And prices are on the rise for older travellers. Comparison websites can help, but it may be worth consulting specialist insurers like Saga. “And as you get older, it may be better to take out a single trip policy, which often goes up to 85,” Lawson says.

It is not just older travellers who are suffering from rising premiums. But the advice is simple: shop around, get an annual policy (if you’re travelling two or more times each year, it’s more than worth it) and make sure you read the small print. Buy insurance at the time of booking, as this will protect you if you are suddenly unable to go. And remember: a cheap policy will likely mean exclusions. Dan Plant of Moneysavingexpert suggests £2m medical, £1,000 cancellation, and £750 baggage cover. But that all hinges, of course, on how much risk you’re willing to take.