How Does Travel Insurance Work?

Travel insurance is there to provide you with financial help and support in the event something goes wrong when you’re on holiday. This is so, if things don’t go as planned you will find yourself back in the same financial position you were in when you took out the policy. If for example, you accidently injure yourself whilst you’re away, your travel insurance will cover the cost of any emergency medical treatment you may need. People often question whether travel insurance is really necessary but without it you could find yourself heavily out of pocket.

Travel insurance first came about in 1863 when James Batterson founded the Traveller’s Insurance Company to insure travellers against “loss of life” and “personal injury travelling by rail or steamboat”. Now, over 150 years on, the travel insurance industry has evolved to cover medical emergencies, lost luggage and so much more.

Healthcare abroad can be very expensive so if you fall sick on holiday and need medical assistance, you could be facing fines that will be enough to drain any money you brought with you for the trip, and then some. Which is why it is so important to make sure you have a suitable travel insurance policy before you leave home. Although private hospitals may seem like the safer option when you’re abroad this couldn’t be further from the truth. Private hospitals are known for extorting patients with many being overcharged as well as charged for procedures they didn’t even need. You never know what can go wrong abroad and it’s better to be safe than sorry.

All travel insurance policies will come with a document known as the Policy Wording. This is your guide to understanding your insurance policy and what you are covered for. We understand that things like ‘excess’ and ‘curtailment’ are hard to get your head around, so we’ve broken everything down over at Policy Wording Explained.

The cost of travel insurance will depend on your destination, the length of your journey and your personal requirements.  When calculating the cost of your travel insurance provider will often take into account how old you are, where you are travelling to, the type of trip and if you have an existing medical condition. The price will then be based on the perceived risk of you making a claim.

If you needed to make a claim on your travel insurance, you would first submit a claim and provide all of the necessary documents (flight tickets, hotel confirmation etc) – once the claim is approved, your travel insurance will pay out for any financial losses covered under your policy. If, for example, you’re away; a family member suddenly falls sick and you desperately need to come home, your travel insurance would cover the cost of cutting short your trip under the ‘curtailment’ section of the policy. You would be covered for flights to come back early and pre-paid expenses such as excursions and transportation.

Most travel insurance policies will cover you for cancellation, curtailment (coming home early), personal possessions and medical expenses. It’s worth noting that policies have different cover levels, and some will offer a greater level of protection and less restrictions compared to others. Here are some of the main things you should be looking out for when buying your travel insurance:

Cancellation cover: most travel insurance policies will cover you for cancellation if the following events occur; death, injury or illness of you, a  travelling companion or a close relative who is not travelling with you, you or a travelling companion are made redundant, your home becomes inhabitable or if you are called for jury service. There are a few travel insurance policies that include ‘cancellation for any cause beyond your reasonable control’ however, these policies are few and far between and you should read your policy wording carefully to see if you have cover.

Curtailment: if you have to cut short your trip you will undoubtedly be faced with financial loss of excursions, the remaining days in your accommodation and any other pre-paid expenses. Similar to cancellation cover, most travel insurance policies will limit the reasons you can claim for curtailment – unless you have a policy that will cover curtailment for any cause.

Medical expenses: if you do find yourself in the unfortunate position of needing medical attention when you’re on holiday, your travel insurance will be there offer medical assistance and pay most invoices related to treatment.

Personal possession: if your personal possessions are lost, stolen, damaged or delayed you will be able to submit a claim to your travel insurance company. Make sure you check that the single article limits are enough to cover the possessions you are planning to take with you. Remember, gadgets may not be covered as standard.

Repatriation: If you’re stranded abroad and need to be bought back home by alternative means than originally planned, depending on the circumstance, your travel insurance will cover the costs of an additional flight home.

Departure delay: Departure delay – if your travel is delayed you will be entitled to a small amount of compensation from your travel insurance company. The eligibility and amounts will differ between insurers but for example you can claim £50.00 for each 12-hour period you are delayed up to a total of £300.00.

Missed departure: if something prevented you from reaching the gate on time and you missed your departure you may be able to claim back the cost of an alternative flight from your travel insurance provider. Generally speaking, this cover is available if there was a public transport strike that was not announced prior to you leaving for the airport, the car you are travelling in breaks down or you are involved in an accident. Only a few policies will cover if there is a traffic jam on the way to the airport, so always ensure you leave enough time to make your journey and allow for disruptions.

Although your travel insurance covers you for most things, there are some things that policies do not cover as standard. Cover for financial failure, force majeure and industrial action are generally available as add-ons or extensions.

Once you have chosen your policy, you will be asked to complete a medical declaration. It’s important that you declare any existing medical conditions, no matter how long ago they were diagnosed, when prompted to. Usually you will be asked a set of ‘ever in your lifetime’ questions and a set of ‘in the past two years’ questions. If you are unsure whether a medical condition needs to be declared, speak to the travel insurance company directly. Failure to declare your medical conditions may invalidate your travel insurance policy which means that you could end up with an unsuccessful claim.

Where to find a travel insurance policy that is right for you:

Surprisingly, there are over a thousand travel insurance providers to choose from, some of which include well-known insurance companies, banks, retailers and supermarkets, travel agents and holiday companies. Comparison websites provide easy access to hundreds of travel insurance policies and are widely used by customers to pinpoint the cheapest policy. However, the cheapest policy may not always be the best one for you; cheaper polices generally offer lower cover levels and more restrictions. By checking the travel insurance policy wording, before you buy your policy, you will be able to ensure you are getting the cover you need so if you make a claim, you know it will be covered.

If you have a medical condition, for example, it may be easier for you to contact a specialist travel insurance company or broker directly to discuss what cover may be available. There are hundreds of travel insurance companies that do not appear on comparison websites, so do not restrict yourself by just looking on these.

What are Exclusions?

Exclusions are things that you will not be covered by your travel insurance. Typically, exclusions include; terrorism, natural disasters, strikes, war and incidents related to alcohol consumption or drugs as well as the following:

Your possessions are stolen because you left them unattended –

It’s worth noting you will not be covered by your travel insurance if you leave your possessions unattended and they are lost, stolen or damaged. All possessions should be kept on your person, and any valuables/gadgets should be locked in a safe.

Disinclination to travel:

You will not be covered if you simply decide you no longer wish to travel. this is referred to as ‘disinclination to travel’ and is excluded from all travel insurance policies.

Ignoring government issued warnings:

The Foreign, Commonwealth and Development Office (FCDO) offer travel advice to holidaymakers for all destination. They will also advise against travel to a country if they deem it to be unsafe. If the FCDO changes the status of a country from ‘safe’ to ‘do not travel’ and you travel to the country anyway your travel insurance will be void.

Incidents related to alcohol or drug consumption:

Most travel insurance policies will have an alcohol limit in the policy wording. If something was to happen and you were to be found to be over the set limit during the incident then your claim may not be covered. There are some travel insurance policies that are more lenient that others, so if you are planning on having a tipple or two make sure this is something you check. Drugs, however, are a big no-go and will invalidate your travel insurance claim.

Although some things may be covered as standard, most travel insurance policies will offer add-ons and extensions. Some of which include:

Cruise Extension:

A cruise holiday may be covered as standard on your travel insurance policy; however, a cruise extension will offer cover for cabin confinement, missed ports and missed excursions – as well as medical costs if you need to be air lifted from the ship or repatriated back to the UK.

Winter Sports Extension:

If you are taking part in any winter sports activities, you will need additional cover. Most winter sports extensions will also cover loss, delay and damage of either your own or hired equipment for these activities as well as if you lose your ski pass, piste closures, etc.

Sports and Equipment Extensions:

Most policies will offer a sports and equipment extension which will cover you for loss, damage and delay of your specialist equipment i.e. golf clubs, bicycle, etc.

End Supplier Failure/Scheduled Airline Failure:

Most travel insurance policies now include end supplier and scheduled airline failure as standard, however if it is not included it will be available as an add-on or extension. This cover will protect you from financial loss if your tour operator or airline goes bust either before you are due to travel or whilst you are abroad.

Force Majeure:

Hurricanes, tsunamis and wildfires are incredibly unpredictable. Having force majeure cover on your policy means you can claim for cancellation if the incident affects your destination before you are due to travel. It will also cover you to come home or move to a safer region if the event occurs whilst you are on holiday.

Gadget Cover:

Surprisingly, gadgets are not covered as standard under most travel insurance policies. Instead, gadget cover can be added to the policy. Be sure to check that the cover limit is high enough and that your gadget fits the criteria. If not, it is worth taking out separate gadget cover or checking to see if they are covered under your home insurance.

Activity Packs:

Some of us want to step outside of our comfort zone on holiday and try something new. If this is you, make sure you are covered for the activity under your travel insurance policy. Some activities will be included as standard, but those that are a little riskier will require an activity pack. Most policies will allow you to add these on during your holiday – perfect for those spontaneous moments! It’s worth noting, if you are planning to ride a motorcycle or moped, you must hold the correct UK license for the vehicle.

It’s important to buy your travel insurance policy as soon as you have booked your holiday. By having your travel insurance cover in place, if something was to happen before you are due to travel and you need to cancel your holiday you will be able to claim your money back – provided the reason for cancellation is not excluded from the policy. Buying your policy a few days before you are due to travel will leave you at risk of being out of pocket.

Check your cover levels:

You should always check the maximum amount you can claim for on your travel insurance policy is suitable for you. If, for example, your watch is stolen on holiday and it’s worth £700 but the maximum cover under personal possessions for valuables is £200, you will find yourself £500 out of pocket.

Get familiar with your policy before you leave:

Making sure you know the correct process if you need to make a claim or if there is a medical emergency abroad is essential. For most claims you will need a police report and any other evidence that you feel would support your claim i.e. witness statements, photographs, etc. In medical situations, you will be asked to contact your travel insurers emergency team and provide any medical reports, invoices and receipts. It is a good idea to make a note of the emergency numbers and your policy number too.