The holiday season is upon us, and the travel insurance industry is gearing up for another bumper year.
Insurance analysts The Research Department estimates that UK customers spend around £550m a year on travel insurance. We are spending about £250m more than we need to, because four fifths of us still buy policies through travel agents.
During the 1980s and 1990s, many of us fell foul of a scam in which travel agents offered "discounted" holidays, but the bargain price only applied if you bought overpriced travel insurance from them.
The law changed in 1998 to stop agents making the purchase of their expensive travel insurance a condition of purchase. But many still insist you provide them with a travel insurance policy number (to ensure you have "adequate travel cover") before they will confirm booking.
If you don't have an alternative policy already set up - which is likely, especially if you're booking a last minute break - it can seem easier to take out the travel agent's policy. But they are often vastly more expensive, sometimes costing between £100-£200 for the same cover you might find elsewhere for £25-£50.
The Research Department say travel agents are the most expensive place to go for travel insurance policies, followed by banks and high street retailers. In research carried out last summer, they found the best premiums were available from insurance brokers or by buying direct.
We obtained quotes from ten different sources for a family of four taking a fortnight's holiday in Spain. We found that, even without buying insurance through a travel agent, premiums varied enormously (see below), with quotes ranging from £22 to £55.
You shouldn't buy insurance simply on the basis of price, though. The level of cover can differ significantly and it's important to read the small print before you buy to avoid ending up with a policy that, in terms of meeting your particular needs, is not worth the paper it's written on.
If you're likely to go away more than once during the year, you may want to consider an annual policy. For longer trips you might need special, extended cover - often marketed towards backpackers. Some insurers provide cover designed specifically for single parent families.
If you're going skiing or plan to take part in other dangerous sports, most insurers will accommodate this for a higher premium.
Many travel policies will exclude you if you have a pre-existing medical condition, so always disclose such illnesses in advance.
Some insurers limit what they'd pay out if you have to cancel or curtail your holiday to such a low level that it would hardly cover the cost of getting home. Many also have limits on the amount they'll pay per item lost or stolen - an average might be £250 or £300 per item, but some may specify just £100. There will be a limit on the amount of currency they'll replace, and valuables like jewellery and cameras will be covered up to a maximum value. Unless you specify a larger limit, few policies would go far towards replacing your Rolex or Cartier.
Some policies will only pay out the second hand or market value of anything you've lost, rather than replace them "new for old". Some require receipts for everything - which is no use if you've lost something years old, or that was bought as a present. Some have particular exclusions, like spectacles.
Insurers have different ways of applying excesses too - sometimes an excess kicks in for each claim; sometimes it applies for every section of a claim. So if you lost a suitcase containing clothes and valuables you'd have to pay an excess for the baggage, another for the clothes and another for the valuables.
The Consumer's Association recommends you go for a policy which includes as a minimum: £2m medical cover, including air ambulance, 24-hour medical helpline and legal expenses cover; £1,500 for baggage and belongings; cover for the cost of the holiday and getting home if you have to cancel or curtail the trip; £1m personal liability cover; and the right to take the insurer to the Financial Ombudsman Service.
Extra features like cover for the cost of emergency car hire, or unforeseen vets' fees or kennel charges, are available with some policies.
Whichever policy you choose, take a copy of the policy documents on holiday with you and leave the originals with someone back home. Have the insurers' helpline number handy, and keep receipts in a safe place, separate from the items to which they relate.
Single trip cover for Europe for family of four:
Leading Edge £22 (up to 17 days)
Direct Travel £31.50
Sainsbury's Bank £38
Churchill Insurance £38 (up to 18 days)
Marks and Spencer £38.28 (up to 17 days)
Boots £42 (up to 17 days)
Expedia £42.62
The Post Office £46 (up to 90 days)
World Cover Direct £46.94
AAm £55
Useful contacts
The Association of British Insurers publishes a travel insurance consumer guide, available via www.abi.org.uk The Foreign Office provides up to date advice on traveling danger zones at www.fco.gov.uk Ask your Post Office for an E111, which entitles you to free or reduced cost emergency treatment in other European Economic Area countries. The leaflet also lists entitlements elsewhere and gives advice on immunisations.
