Why budget travel insurance can be a false economyMany low-cost policies won't cover average holidaymaker

26 June 2016

You could be left out of pocket if you lose your baggage and have to claim on a budget policy

Many budget travel insurance policies will fail to cover the average holidaymaker if they need to make a claim, according to new Which? research. 

We reviewed 15 low-cost travel insurance policies and found that cover levels fell short in many cases. 

Some offered just £100 of cover for valuables, while others didn't include any cover at all for lost or stolen cash. 

What's more, many insurers impose high standard excesses that can take a serious chunk out of your claim. 

  • In our travel insurance reviews, we've scrutinised 200 policies to help you find cover that is both affordable and appropriate for your needs.

Covering your cash 

£200The highest level of cash cover among the policies we analysed

We scoured the major comparison sites for single-trip cover for a 50-year-old couple going to Spain for seven days to see whether low-cost insurance would meet their needs. 

The average price quoted across the 15 budget policies we looked at was just £14. But when we scrutinised the small print, cover for lost or stolen cash proved to be similarly low.

The highest limit on offer was £200 - from Coverwise's Standard policy, Cover for You's Emerald policy, Flexicover's Economy policy and Debenhams' Bronze. Tripsure and Insurance Republic don't cover cash at all.  

Protecting personal items

Baggage cover

According to research by LV, the average value of holiday luggage is £1,550, but just three of the budget policies we looked at – from Big Blue, Debenhams and Insure For – had high enough cover limits, offering £2,000 each.

When the single-item limit - the most you can claim for each possession - is applied, you could find yourself seriously out of pocket if you need to claim. Columbus Direct, Big Blue, Insure For and Flexicover all cap the amount you can claim for each personal possession at just £100 on their basic policies. This is unlikely to be enough to cover a camera, tablet or mobile phone.

£300The highest level of valuables cover among the policies we analysed

Valuables cover

AA’s policy had the highest limit for valuables, which usually includes items such as jewellery, watches and musical instruments, but it won’t pay out more than £300 (not including the overall baggage excess of £180). 

Meanwhile, the budget policies of Insure For and Big Blue cover only up to £100 worth of valuables.

Read the small print

The overall excesses on baggage claims can also cause issues. Flexicover's is a massive £250, wiping a third off the £750 limit. 

It's worth checking what items are covered by your policy too. Some only include cover for mobile phones, tablets and other handheld devices if you buy a gadget cover add-on. 

Cancellation and medical cover

Budget policies do much better at protecting you against holiday cancellation and medical claims. 

The average cost of a holiday to Spain is £708, according to Travel Supermarket, and all but two of the policies we looked at - Tripsure (£500) and OUL Direct (£700) - set limits above this amount. 

With medical cover ranging from £2m to £15m, all of the budget policies we reviewed would comfortably cover the average medical claim, which the Association of British Insurers puts at £903.

However, high excesses on some policies might make it difficult for you to submit low-value claims. Flexicover and OUL Direct, for example, both charge a £250 excess. 

Find out more: Claiming on your travel insurance - tips for making a successful claim

Five steps to finding affordable travel insurance

1 Avoid cover sold with your trip

When you buy your holiday you’re likely to be offered insurance, but it might not be suitable or cheap. Check the wider market to see if you can get better cover for less.

2. Check your bank account

Some packaged bank accounts come with travel insurance, so check before you buy. Review the terms to make sure it's suitable. If it isn’t, call your bank to see if you can extend your policy.

3. Check Which? Recommended Providers

We review standard policies from 200 insurers and take the feedback from thousands of customers into account to determine our Which? Recommended Providers.

All our policies have at least £1,500 for baggage, £3,000 cancellation and £2m medical for Europe (£5m worldwide).

4. Declare medical conditions

Insurers will ask you about your medical history so they can cover you correctly. Undeclared conditions won’t be covered, leaving you with a massive medical bill if you fall ill.

5. Remember your EHIC

A European Health Insurance card, which can be used in the EU, Iceland, Liechtenstein, Norway and Switzerland, entitles you to treatment in state hospital at the same price as locals.

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