Anatomy of a Travel Insurance Policy: What Exactly Am I Covered For? – Travel insurance still mystifies a lot of people. You are told you should never travel to another country without it. But what does it actually do? Have you or anyone you know ever had to make a claim against it? What exactly do you get for your money?
If you’re wondering what’s the point of travel insurance, it’s helpful to dig into how a travel policy works. Because travel insurance is one of the broadest forms of insurance available in terms of all the different things it covers you for. If something goes wrong while you’re away, there’s a very good chance your travel policy will payout.
Let’s take a dive into the details.
What does travel insurance cover?
The specifics vary from provider and provider and even policy type to policy type. But whatever product you buy, you can be certain of getting cover for:
Medical costs if you or someone in your party falls ill or has an accident
Cancellations, including COVID-related cancellations if someone tests positive just before you travel
Lost or stolen personal items, including money and passports.
In addition, it’s common to be covered for things like having to cut your holiday short (because of a family bereavement, for example), missing your departure and your airline going bust (if you haven’t purchased through an ATOL supplier).
What are the pay-out limits and excesses on travel insurance?
These vary depending on the level of cover you buy. Low-cost budget insurance might be cheap upfront, but it will have lower pay-out limits and a higher excess. So, you could still end up with a sizeable bill when you make a claim.
More expensive premium policies, on the other hand, will offer higher pay-out limits and, in many cases, zero excess. So, you get complete financial protection.
Pay-out limits also vary depending on the area of cover. Medical cover, for example, has very high pay-outs, reflecting the fact that, in the most serious cases, the cost of medical care and repatriation from another country can be very high indeed. Most medical cover offers seven-figure pay-out limits as a minimum, rising to unlimited on premium policies.
By contrast, personal baggage limits usually range from around £500 to £5000 depending on the level of cover, cancellation cover £1000 to £10,000 and so on.
When is a travel insurance policy valid?
A standard travel insurance policy, also known as single trip insurance, is valid from the date of departure to the date of your return. You are asked to provide these when you buy. Within these dates, you can make claims for lost luggage, medical costs, stolen property and so on.
Things work differently for cancellations, however. As a trip could in theory be cancelled at any time from the moment you complete booking and payment to the moment you are due to depart, cancellation cover is valid from when you purchase your insurance policy.
If you buy annual travel insurance, your cover is valid for 12 months from the moment of purchase and for multiple trips within that period.
Is there anything that will invalidate my travel insurance?
As with all types of insurance, travel policies are sold with a range of terms and conditions in the small print. It’s important to read these for any policy you intend to buy to understand clearly what you can and can’t do, and therefore what is and isn’t covered.
But some of the common exceptions you can expect to find on most policies include:
Injuries arising from ‘hazardous’ activities, including sports. The classic example here is skiing and other winter sports. You need to buy special travel insurance to cover the cost of potential injuries if you are going skiing.
Pre-existing medical conditions. Again, you can get travel insurance if you have a medical condition, but you need a dedicated policy. If you buy standard insurance and don’t declare a medical condition, your policy will be void.
Injuries that occur following ‘excessive’ alcohol consumption.