Travel insurance explained
By Simon Miller
Travel insurance explained
Get to grips with the basics of travel insurance, from the different types of cover to the most important features.
Travel insurance is designed to cover major mishaps while travelling abroad and when you're on holiday.
Travelling without cover is very risky and could leave you massively out of pocket if the unthinkable happens.
But what is travel insurance and what does it cover? Here are the basics you need to know before you buy.
Types of travel insurance
The type of cover you buy depends on three things; how many trips you are making within the next 12 months, where you are going and who you are travelling with.
How often do you travel? Single trip and annual trip
Depending on the number of trips you are making in the next year you have two options; annul trip and single-trip cover. Annual cover is usually the cheapest option if you are making more than two trips in the next 12 months, while single-trip cover can usually be more cost effective if you are taking one or two holidays.
Where are you going? European and worldwide cover
The distinction between European and worldwide cover might seem simple, but some travel insurers have different ways of classifying your journey. For example, some European travel cover includes African countries, such as Egypt, Morocco and Tunisia. Meanwhile, some insurers have two types of worldwide cover, one which will include the US and some which will exclude it. Make sure you check your policy carefully before you buy to make sure your chosen destination is included.
Who are you travelling with? Individual, couple or family cover
If you are travelling with your partner or your family, you have the option of covering everyone under the same policy. This might work out cheaper but, if one of the travellers in your party needs specialist cover due to their age or medical conditions, it may bring the cost of the policy up. Some insurers let you travel independently on a group policy, but check with your provider before you travel.
Find out more: Finding cheap travel insurance
Benefits of travel insurance
Travel insurance policies have a number of features that help cover you and your belongings while you're on holiday. Here are some of the most important.
Emergency medical cover
Cover you'll need: £2m for Europe and £5m worldwide
Medical cover is a crucial part of your travel insurance policy. The amount you need may sound huge but the cost of hospital treatment abroad could be many hundreds of thousands of pounds. With no travel insurance, you would have to pay your own medical bills in a country like the US – and this could be very expensive. Also, make sure to inform your insurer of any pre-existing medical conditions that affect you or a family member travelling with you, even if it seems minor or irrelevant.
By not being 100% clear (even if it involves a relative with a medical condition in the case of cancellation cover), you run the risk that your insurer may refuse to pay out. You'll also need to inform your insurer about any conditions that develop between taking out your policy and making the trip.
Find out more: Medical conditions travel insurance reviews
Cancellation, curtailment and missed departure
Cover you'll need: £3,000
Travel insurance will usually pay you compensation if you have to cancel or cut short (curtail) your trip for reasons such as illness or bereavement. It's always important to check the terms and conditions of your policy to see exactly what is covered, however, as the circumstances in which you can make a cancellation or curtailment claim can be restricted.
You should look for a policy that offers cancellation and curtailment cover of at least £3,000, which will include cover for any excursions you have already organised and paid for. Your cover should also include the cost of getting you home. Missed departure will cover you if you miss your flight/ferry due to public transport failure or an unexpected delay.
Personal belongings and money
Cover you'll need: £1,500
Travel insurance normally covers you up to a certain limit for lost or stolen baggage and belongings. As well as an overall limit for lost and stolen belongings, most travel insurance policies will limit what you can claim for single items and all valuable items. The maximum most companies will pay out is between £200 and £500 per item, so be sure to bear this in mind when packing for your holiday.
You may want to top up your home contents insurance for possessions away from home if you're taking expensive gadgets, such as smartphones and tablets, watches or jewellery away with you.
Travel insurance policies also tend to limit the amount you can claim for lost and stolen cash, and travellers cheques. Often the maximum is between £200 and £500, so check the terms and conditions of your policy and refrain from carrying too much currency around with you.
Personal liability cover
Cover you'll need: £1m
Personal liability is an important, if rarely used, feature of travel insurance. It covers you in case you face legal bills, which might arise should you accidentally injure someone else or damage their property while you’re abroad.
Other policy elements often contained in travel insurance products include personal accident cover, legal expenses insurance, sports equipment insurance, and cover for disasters or unexpected events.