Updated: 11/11/2011

Cheap travel insurance isn’t always the best type to get if you want to be covered for any eventuality- as we’ve seen time and time again with volcanic ash clouds, snow blizzards, tsunamis and protests.  All sorts of things can go wrong on holiday – and if, due to no fault of your own, you find yourself needing to shell out for things like extra hotel rooms, car hire and so on, it won’t necessarily be covered by your travel insurance. It depends on your policy. Here’s how you decide what travel insurance you should go for.

• Compare travel insurance deals across the market
• What you need to know about travel insurance
• Find out what your policy should cover
• Get the best deal

It’s far too easy to get fleeced by travel companies who sell expensive policies that don’t cover all your needs when you book your holiday. Just spend 15 minutes comparing travel insurance deals and you can get the cheapest deal for your needs. However, the cheapest deal on the market doesn’t necessarily mean that your needs will be covered. To get full cover for things like strikes and tour operation collapses you may need to pay more. With insurance, cheap doesn’t always mean cheerful! Make sure you get the best value but don’t be undersold.

Types of Travel Insurance

There are two basic types of travel insurance:

• Single trip travel insurance
• Multi trip, annual travel insurance

Multi-trip

If you travel twice or more per year you should opt for a low-cost annual multi trip policy. If you’re a frequent traveller you’ll be saving lots of money and time with an annual multi trip policy rather than taking out single trip policies each and every time you travel.

Another benefit to annual cover is that you can be spontaneous and take advantage of any last minute deals without worrying about buying insurance.

Single trip

If you don’t travel often a single-trip policy may be better. There isn’t much point paying for cover throughout the year if you only go away once.

With single trip insurance you can tailor your policy to match the type of holiday you take. So, for example, if you want to take one specialist holiday e.g. one that includes winter sports, you can pay the add-on for that single trip and change it again for your next trip.

Costs

Of course, with both single and multi-trip policies, the amount you pay will also depend on what you want to do on holiday and where you want to go. If you don’t plan to travel too far afield you can get annual European insurance which will obviously be cheaper than worldwide cover.

If you plan on travelling to an unstable region of the world i.e. Middle East, sub-Saharan Africa and some parts of South America, the premiums will be a lot higher than if you decided to travel to Whitby for the week. A holiday picking mushrooms at a remote village in Yorkshire will be cheaper to insure than a trip to the Amazon jungle bungee jumping.

Most insurers will expect you to pay an excess – a set amount of money towards particular claims – which you should make sure you are aware of when you take out the policy. Some insurers may offer you the chance to pay a higher excess for lower premiums. Watch out for this though – the premium might seem very reasonable, but if the excess is high and you do have to make a claim you’re going to end up paying for a fair chunk of it yourself.

What should be covered

The following are the basic costs a travel insurance policy should cover:

• Medical expenses: This is probably the main reason for taking out travel insurance as it covers you in the event of a medical emergency or accident whilst on holiday, but they won’t pay out for an accident or injury if you were drunk or on drugs so think twice before that second jug of sangria!
• Personal belongings: To cover you for the loss or damage of your belongings. Remember there is likely to be a limit on claims and certain rules that your insurers will have for storing valuable items so make sure know exactly what they expect of you in order to be able to claim.
• The holiday: A good insurance policy will cover the cost of cancelling or cutting short the trip due to unforeseen circumstances like a home emergency or accident. You will not be covered if you have to cut your holiday short due to business/contractual commitments. Nowadays you should also make sure that you are covered in case the airline or tour operator you book with goes bust before or during your holiday.
• Yourself: Personal liability cover protects you if someone makes a claim against you for an injury or damage to his/her property.

Travel insurance will NOT cover you in the event of war (although some may cover terrorist attacks), mental/nervous disorders, or self-inflicted injuries.

Extra cover

According to the Foreign & Commonwealth Office any good insurer should offer you a minimum of £1 million to cover medical expenses in Europe and at least £2 million for the rest of the world.

There will probably be insurers offering you astronomical levels of cover to lure you in but there is very little point paying extra for a policy that offers far more cover than you will ever realistically need. One thing that is not normally covered, unless you are on a package with an ATOL (Air Travel Organiser’s Licensing) bonded operator, is the financial failure of your airline, hotel, car hire company etc. If you are worried about losing out, particularly given the financial problems currently facing the travel industry, Protectmyholiday offers financial failure insurance for all aspects of your trip away.

Here are some special circumstances that may require an add-on or separate insurance package:

• Winter sports: Winter sports like skiing and snowboarding can be covered as an optional extra on insurance policies. Make sure you’re covered for piste rescue and repatriation (sending you back home) and check the policy details to see if you’re covered when off-piste. You can also buy insurance for winter sports as a separate product which may be better if you plan to take on the slopes regularly.
• Adventure sports: As with winter sports insurance, you can usually buy cover for dangerous activities as an add-on to a basic travel insurance policy. Several companies give activities a “risk rating” and the cost of buying an add-on to cover particular activities will depend on which category of risk they fall into. Check with the insurance companies to see what activities are excluded from their basic package and tailor your policy to ensure that you are covered for anything you might end up doing. If you do make a claim you’ll need to prove that you took all the correct safety precautions necessary so make sure you’re wearing the right protective gear and have a qualified instructor.
• Gap year: Often called backpacker insurance, many insurers offer this as a separate policy to annual multi-trip insurance so that you’re covered for a set amount of time of continuous travel e.g. six or  twelve months. Backpacker insurance should include cover for outdoor activities so think about things you’re likely to want to do on your gap year like scuba diving and bungee jumping, and check that your policy covers them.
• Scheduled Airline Failure Insurance (SAFI): Unfortunately not many insurers will cover you if an airline goes bust – something which has become more of a concern for travellers after recent events. It’s something to look out for on your policy if you are worried, but policies which do provide this kind of cover are often expensive. Alternatively if your trip is a package holiday (as long as the provider is ATOL protected) you’ll get a full refund. Or for single trips you can buy SAFI separately from Protectmyholiday for as little as £5 a person.
• Age restrictions: There are some providers that simply won’t cover people over a certain age because they are at a higher risk of having an accident or falling ill. Age UK and Saga offer specialist policies for older people but do check other providers as the upper age limit varies from company to company. Marks & Spencer have no age limit on their single trip insurance except for people over 80 travelling to USA, Canada and the Caribbean Islands. Direct Travel are also an extremely reputable company for reasonable insurance across the sectors – and many seniors, even those on medicine, swear by it!
• Pre-existing medical conditions: If you have a pre-existing medical condition you will have to pay higher insurance premiums but that doesn’t mean you can’t find a good deal.  There are specialist travel insurers like Travelbility and Karma Insurance who cover people with pre-existing medical conditions, disabilities or special needs but again it’s really important to shop around so that you can compare prices. You must be completely upfront with insurers about any illnesses because they won’t pay out on claims if you withhold information.
• Natural disaster cover: With such an unfortunate turn of events of late, this has been a popular add-on for travel insurance. Companies like Direct Travel offer it at a reasonable price. You can get useful coverage for disasters including volcanic eruptions, floods, tsunamis, earthquakes, landslides, hurricanes, tornados and wildfires, like up to £6000 for trip cancellation and £2000 if you’re stranded abroad.

Family travel insurance

A family policy allows you to save money by covering yourself, your partner and your children rather than take out policies for each individual member of the family. Again you can either cover the family for a single trip or for several trips within a year.

Some insurers will set their premiums according to the number of children you have, and others will have a flat rate for any number of children so if you have a large family go for the latter option.

Travel Insurance for the Over 60s

For the older generation getting travel insurance can be costly and complicated. It doesn’t need to be though – now more and more retired people are living longer and travelling more, policies are becoming more competitively priced.

Our article dedicated to insurance deals for the over 60s will take you through how to get the very best deal on your travel insurance.

The European Health Insurance Card (EHIC)

Formerly known as the E111 form, the EHIC covers any emergency medical treatment that is necessary during your trip within Europe, because of either illness or an accident.

It also covers any treatment you need for a chronic disease or pre-existing illness. Note that it only entitles you to state-provided healthcare and you may have to make a contribution to the cost of your care e.g. for medicine and the bed.

The EHIC is NOT a substitute for travel insurance. You will still need private travel insurance to cover any contribution which cannot be reimbursed and other eventualities not covered by the EHIC.

You can get an EHIC completely free on the EHIC website or at any Post Office.

The Best Deals

It goes without saying really that the best insurances deals are invariably found online – there are always discounts and special offers running.

• Look at Confused.com or Money Supermarket for the best value travel insurance deals

At the moment new customers can save 15% on standard premiums at Marks & Spencer. Halifax offers online customers a discount of up to 10%. Always read the small print and check the excess that you will have to pay for each claim. Most insurers have policy documents that you can download on their websites so do take a look so that you know the details of your insurance.

Check your existing insurance policies

Look carefully at any policies you’re already paying for, like your home contents insurance and car insurance. You may find that these policies already cover you for certain things like driving abroad and loss of belongings outside of the home.

This way you can work out what you do and don’t need to have covered by your travel insurance and it may mean that you can pay lower premiums.

All UK car insurance policies must automatically provide, by law, the minimum cover required in that European Union country. However this is only third party cover which means it doesn’t cover your losses, so it’s probably worthwhile extending your current cover to protect yourself fully.

Check to see exactly what your car and breakdown insurance policies cover. Some policies include cover in Europe as standard but do check the small print so that you know exactly what you’re covered for.

Useful Links

• Our travel comparison service
• Department of Health
• Foreign & Commonwealth Office
• Insure and Go
• Protectmyholiday
• Direct Travel Insurance
• Marks & Spencer Travel Insurance
• Travelplan Direct
• Travelbility