When you see an ad for 'cheap travel insurance' what is your gut reaction? Are you immediately suspicious, assume there must be a catch and quickly move along? Or do you look no further than the cheap price and tick another boring detail off your holiday 'to do' checklist?
The wise traveller will look a little deeper than the price to ascertain the levels of cover included. It may well be that cheap travel insurance is sufficient to cover the necessities and planned activities for your trip, but always check to see exactly what you are – and are not – getting for your money. Cheap travel insurance may be adequate for one type of trip, but totally inadequate for another. It is important to:
- Know what you need
- Understand what it all means
- Then shop around
For example, if you were planning a ski trip to Colorado cheap travel insurance alone would not be adequate – especially without the addition of winter sports cover. Check to see if the policy includes ample cover for medical expenses and emergencies, as well as mountain rescue, air ambulance and repatriation. Also check the amount of excess you are required to pay (known as 'deductible' in the US) which is your contribution towards any claim. Medical care in the United States could be financially devastating without insurance. For example, air ambulance costs to bring you back to the UK from America could set you back anything up to 50,000 (GBP -Pounds Sterling) and from Australia up to 20,000 (GBP). If you do not have adequate insurance no one else is going to pay these costs for you – they are your responsibility. Yes, a frightening thought!
Insurance companies tend not to get a lot of sympathy. However, one fact that many travellers may not be aware of is that although the underwriter has to accept any losses associated with claims, it also reflects negatively on the insurance broker who sells the policy. If a large amount of claims are made, causing the underwriter to make a substantial loss, that loss is usually passed along, either in an increase in fees to the insurance broker to renew the contract or, in extreme cases, refusal to renew the broker's contract. Perhaps you can understand why many companies are nervous about insuring certain types of travellers and activities.
Cheap travel insurance is offered everywhere these days, by retail chains, banks and credit card companies, to name a few. However, before you give in to a tempting offer, stop to see if it is really a bargain. The media is bombarded with clever advertising for the many insurance comparison websites, and they do provide a valuable service – as long as you remember to check the levels of cover provided. Companies have to pay a commission to the hosting website, so take into account the fact that they have probably cut levels of cover somewhere in order to make it worth their while. Always check the excess / deductible, and levels of cover for medical expenses, personal accident and personal liability.
An amazing amount of travellers still set off on trips thinking they do not need travel insurance. Perhaps they are not bothered if they lose their luggage and would just replace it. But what many do not realise is that they are leaving themselves wide open to financial loss and legal nightmares in the event of an accident and potential third-party claims.
For example, imagine you are abroad and browsing in a gallery. You trip and knock over an expensive sculpture. The sculpture falls and breaks the assistant's toe, and a chunk of it splinters and hits you in the eye. This scenario presents an expensive can of worms, both medically and legally. This is just one rather extreme example of why it is important not to forgo travel insurance.
The truth is that cheap travel insurance is not necessarily a rip-off, but it varies from company to company. Some smaller companies are able to offer a cheaper price without cutting the levels of cover by keeping their advertising expenses and overheads to a minimum.
It is not always necessary to pay more for travel insurance to get better cover. A cheap policy with another company may genuinely offer the same levels of cover for less. The bottom line is that however much you pay for your travel insurance, it is important to make sure you have adequate levels of cover and a substantial cushion to fall on if the worst should happen!