Is Cheap Travel Insurance Really Cheap?

It’s possible to get single trip travel cover for as little as £5.49 per week abroad – but could these cheap travel insurance policies actually leave you out of pocket if you need to make a claim?

In an era when we often equate lowest price with best choice, experts warn that we may be doing ourselves a major disservice by choosing the cheapest alternative. In the case of travel insurance, you may find that your £5.49 gets you absolutely nothing when you go to file a claim. Multiple excesses, exclusions of the most common types of injuries and a strict interpretation of “existing conditions” could rule out the majority of potential claims you could make against your policy. It’s no wonder that nearly 10% of all complaints received by the Financial Ombudsman’s Service concern travel insurance.

Why Cheap Isn’t Always Better

There are many reasons why the cheapest policies aren’t always your best choice. Here are just a few of the things that could make your travel insurance policy virtually useless when you need it most.

• Multiple Excesses
  Typically, you’ll absorb a specified excess before the policy will cover your loss. If you lose your suitcase and your purse was in it, you would expect it to count as one loss, but your insurer might see it differently. In their eyes, your loss could count as two items, so you’ll have to pay the excess twice when they calculate the amount of your loss.
  
• Low Single Item Limits
  Many cheap travel insurers place a very low limit on the amount that they’ll reimburse you for any single item loss. If the policy states a £150 limit on single item reimbursement and you lose your £400 camera, the most you’ll be reimbursed is £150. After they take off the excess against it, you may end up with only £75 for your trouble.
  
• Trip Cancellation Policy
  If your travel insurance includes reimbursement or payment if you cancel your trip due to unforeseen circumstances, you should be aware of how the insurer interprets “unforeseen”. In many cases, if you cancel your trip because of illness in the family, the company will reject the claim with the reasoning that you should have been aware of the family member’s health when planning the trip.
  
• Cover Exclusions
  One of the most important parts of the policy to read is the section that lists excluded cover. It’s a real eye opener. You may find, for instance, that your policy excludes coverage for any item with a value over a specific amount, that it will not pay for the loss of items left on the beach or deck while you’re swimming, that any injury that happens while you’re intoxicated is not covered, and you’re not covered for the cost of replacing your eyeglasses since you should have had the foresight to bring along an extra pair.

How Much Should You Pay for Travel Cover?

According to a recently released report by the research group, Defaqto, you should expect to pay between £18 and £25 per week for travel in Europe, and £35 to £50 per week for travel in the U.S. The report also suggests that you can usually save money by opting for multi-trip annual travel insurance rather than buying single trip cover.