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Your Money > Personal Finance Articles > Can you claim...
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By Naomi Caine
The recent terror alerts sparked chaos at airports across the country - they might also have caused chaos with travel insurance claims. The promises made by the airlines in the wake of the bomb threat are more generous than the legal requirements. The European Union introduced regulations last year to compensate passengers whose flights are cancelled, overbooked or delayed. But the airlines can wriggle out of payments if flights are disrupted due to circumstances beyond their control - and they include terrorism. It's as well the airlines have responded reasonably well to the crisis, because customers are unlikely to have much luck if they try to claim on their travel insurance policies. Most exclude any claims as a result of terrorism. Peter Gerrard of Moneysupermarket says: "Most insurers will not cover acts of terrorism and it is highly likely this will extend to delays, missed flights or cancellations caused by the threat of terrorism." However, some insurers have suggested they would pay out if your flight was delayed by more than 12 hours. Nervous flyers The news of the thwarted bomb plot will have done nothing to calm the nerves of jittery travellers. But you won't get much sympathy either from insurance companies if you don't want to travel because you are worried about your safety. They will only pay out if the Foreign Office advises people not to travel - and no such official warning has yet been issued. The best advice is to check your policy wording or contact your insurer or broker. You might also want to check the cover for valuable items. If you cannot take your laptop, iPod and other expensive kit on the plane as hand luggage, you might be on a sticky wicket if you have to claim. Most firms insist that you carry valuable items with you. Costly cover Holidaymakers might want to pay particular attention to the wording of their policies if they bought their insurance through a travel agent. The Treasury has recently announced an inquiry into the sale of holiday cover through travel agents - and it follows a damning investigation by Which?, the consumer campaigner. Which? went mystery shopping at branches of four big travel agents and found they failed to follow basic sales procedures. Almost two-thirds of travel agents did not ask about medical histories, even though undisclosed pre-existing conditions can invalidate a claim. Most agents also failed to explain the extent of the cover and any exclusions. The agents are not only accused of potential misselling; they are also on trial for flogging expensive policies. A worldwide single-trip travel policy for a family of four costs about £200 more if bought from a travel agent compared with the best buys available across the market, according to Which? The high premiums perhaps explain why UK travel agents earn up to £180 million a year selling holiday insurance. Rebecca Fearnley of Which? says: "It is often a very expensive way to buy insurance and agents often do not ask the right questions. Many policies could therefore be sold that are unsuitable for the customer and don't provide adequate cover." Treasury probe The Treasury is considering tighter regulation of the sale of travel insurance and will launch a formal consultation in the early autumn. Ed Balls, the Treasury minister, says: "Millions of British families have worked hard all year to pay for their summer holidays . . . and too many people will find they are not properly covered by their travel insurance. Our investigation will ask whether it's fair to put all the pressure on ordinary families to read the small print and ask the right questions to make sure they are properly covered." Travel policies sold by banks, insurers and brokers - but not by travel agents - are regulated by Financial Services Authority (FSA), which lays down strict sales guidelines. If there is a problem, consumers can also lodge a complaint with Financial Ombudsman Service - a free and independent service. The Treasury could force travel agents to come under FSA control and offer consumers greater protection. Get the right policy In the meantime, it's best to buy your travel insurance direct from an insurer, or through a broker. There are plenty of websites that let you compare prices and types policy. You can even apply online and get instant cover. Some bank accounts and credit cards include "free" travel insurance, but it's not always comprehensive, so check the terms carefully. You should also be wary of relying solely on the European Health Insurance Card - the old E111. The card entitles you to cheap or sometimes free medical cover in Europe, but it does not entitle you to free repatriation to the UK. Richard Mason of Insuresupermarket advises cover of at least £2 million for medical expenses, £1 million for personal liability, £3,000 for cancellation, £1,500 for baggage and £250 for cash. If your household insurance covers theft or loss of goods away from home and abroad, you might not need baggage cover for your holiday, which could reduce premiums by about 5%. The premiums will depend on your age and your holiday destination. Medical bills in the US, for example, are high, so expect to pay more for your travel cover if you are flying to America. If you are likely to indulge in a dangerous sport, such as bungee jumping or scuba diving, you will probably also pay a higher premium. And if you are over 65 or suffer from a medical condition you might have difficulty finding a cheap policy. Decent single-trip cover can cost from about £20 if you shop around, but if you plan more than one break a year, it's worth considering an annual policy. A family of four can get worldwide annual cover for about £120. But wherever you buy your policy and however much you pay, always check the small print. |
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