Travel Insurance

Why do I need travel insurance?

Like all types of insurance, travel insurance never seems like a good idea until you need it. That means the question of whether to buy it comes up regularly and there are plenty of internet, press and industry articles about why you should buy it.

So instead of repeating these pieces of advice here which you can read through the links above, we wanted to highlight some of the myths and misconceptions about travel insurance that will help you get a better deal for the money that you pay.

Forget baggage cover

OK, so 'forget' baggage cover is perhaps a bit strong, however it is a fact that baggage claims are the minority of money that insurers pay out. Even the Association of British insurers doesn't talk about baggage cover in its headline answer to the 'why travel insurance' question. This seems a little unfair but when considering the circumstances of possible claims, it starts to become clear why. The worst case is that you have lost all of your luggage - this scenario is most likely to be because your transport company or airline have lost the luggage, misplaced it, or sent it to the other side of the world by mistake. As a result, the first port of call for you is to make a claim from your transport company, not from the insurer. In fact many insurers will, perhaps fairly, refuse to pay out unless you have tried to claim compensation from the company whose mistake it really was.

Thinking about minor incidents and claims - lets say you wallet containing the equivalent of £50 is stolen from your bag while you are sitting at a bar. In this instance, you can be required by an insurer to get a police report evidencing the theft (again, perhaps fairly otherwise a lot of false claims would be made), however the practicality of interrupting your holiday and obtaining an accurate police report if you don't speak the local language can be a big barrier.

As a result, baggage cover is the lowest cost for an insurer, and medical or cancellation / curtailment costs are the most significant claims they pay. So in sense, if you are worried about the financial costs of problems abroad, medical and cancellation covers are the most relevant ones to consider.

Medical expenses are high but not that high

It follows from the above that Medical and Cancellation cover are somewhat more important as these make up the majority of claims paid and hence are the most significant potential losses for travelers. As a result, travel insurance policies can contain enormous amounts of medical cover - the even most basic policies can provide £1,000,000 of cover, heading up to even £20,000,000 for more expensive policies.

These seem staggering amounts although it is well known that more expensive countries like the USA and Canada can charge rates for medical attention that are indeed staggering to us Brits who are used to the NHS.

When you start to look at the potential costs of a medical emergency abroad, the amounts also seem small by comparison - examples from the Association of British Insurers include £11,000 to treat a broken arm in Spain, £40,000 for a broken leg in the USA and finally £86,000 would treat a heart attack with ambulance transport back to the UK.

Sainsbury’s Finance looked at the costs for less severe situations including showing that the average cost of inpatient treatment for gastroenteritis is as high as £1,200, or £200 for an insect bite and £275 for an ear infection.

There are some extreme situations where the very high medical limits can be relevant - in some cases travelers have suffered severe illnesses and have been too sick to travel, resulting in long-term treatment at expensive rates. So whilst there may be a place for the £20,000,000 policies for those who are very cautious, it is fair to say that the £1,000,000 policies will cover the vast majority of incidents comfortably.

The EHIC isn't all that

Many people will consider travel insurance redundant when they are carrying an EHIC - after all, the European Health Insurance Card was created by European governments to allow you access to medical services in other countries. It's worth bearing in mind though that this card only entitles you to the same levels of treatment that a local would get. Depending on the country you are in, this can vary enormously from the situation the UK NHS provides which we take for granted at home. For example, in France, just like every local, you would have to pay £20 just to see a GP. In other countries emergency treatment can be free, but the ambulance service to get you to hospital isn't, and so on. In short, the EHIC does cover some events but not all, so it isn't a replacement for insurance and you would still need to buy insurance to be fully covered. However, the good news is that insurers recognise the benefits of the EHIC when they create their policies - that's one of the reasons why a travel insurance policy is much cheaper to Europe - because they often won't cover the costs of treatments that an EHIC would.

So... should I buy travel insurance???

It's an individual decision. Most of Bought by Many's staff travel with insurance (not that this should influence your decision!) - what's another £10 on top of the several hundred that a week away will cost? With the ABI stating that 5,000 British holiday-makers claim on their travel insurance after falling ill, every week, we prefer to spend time finding the right policy for us, rather than wondering if we need it at all.

Some people will not buy on the grounds that they can't find affordable or suitable cover or they can't understand what the industry is saying - hopefully at least with these problems, we can do our bit to help.