Travel Insurance

What does travel insurance do?

Travel insurance is usually purchased as a standard combined package of covers designed to protect you from a variety of adverse events that could occur while you are on holiday.

These typically include:

• Providing some financial recompense if your trip is cancelled or curtailed due to circumstances beyond your control
• Medical emergency and/or repatriation expenses if you are ill or injured
• Loss or damage to your personal possessions
• Loss or theft of money
• Expenses incurred due to a delayed departure
• Expenses incurred replacing a lost passport
• Legal expenses and personal liability cover in the case of an accident where you cause injury or damage to a third party or their property
• Compensation if you suffer permanent disability or death whilst on holiday.

Often these areas of cover are subject to specified limits and excesses, so you will need to read your policy document carefully to check how much you are covered for and what, if any excess you would need to pay in the event of a claim.

Travel insurance policies may be purchased for individual trips or as an annual policy for all trips taken in the year of insurance.

You can buy travel insurance from many different sources including insurance brokers, travel agents, tour operators, banks, building societies, the post office, retailers, credit card providers or direct from insurers.

Suppliers offer a variety of methods of purchasing such as over the counter, by telephone, post and over the internet.

Important exclusions

• Claims arising from ongoing medical conditions that you suffer from before you take out the insurance;
• Claims arising from your participation in hazardous activities or some adventure activities such as horse riding, skiing, scuba diving or cycle touring (listed activities vary).

If you have any pre-existing medical conditions or are planning to participate in any potentially hazardous activities and you want these to be covered, you must tell the insurer before you travel to confirm whether they will cover you for claims arising from these causes. If in doubt ask your insurer.

What other things should I ask or think about when buying travel insurance?

Shop around – There is a huge range of products available so it pays to let us shop around for the best cover and value for money to suit your needs.

What are you planning to do? – With the rise in popularity of adventure travel it is increasingly important to ensure you will be covered for any activities you may participate in during your holiday.

Where are you planning to go - Sometimes it may not be considered safe to travel to certain destinations. If you are unsure, check the Know Before You Go section of the Foreign and Commonwealth Office website for advice about your destination.

If you will be travelling to remote areas of less developed countries where medical treatment may not be readily available, does your insurance cover repatriation costs if you are seriously injured or taken ill?

What cover do you already have? – Some Household Contents insurance policies may provide cover for personal possessions temporarily taken abroad.  If you already have sufficient cover for taking personal possessions abroad as part of your contents insurance, you may be able to drop this type of cover from your travel insurance package.

Some credit card providers may offer some elements of travel insurance as part of their product, but cover may be limited.  You might therefore have to buy some additional cover to provide the equivalent protection as stand-alone travel insurance.

Regulation
    
Please Note:  Regulation of general insurance by the Financial Services Authority (FSA) replaced the General Insurance Business Code of Practice and its related documents from 14 January 2005.

Association of British Insurers΄ General Business Code of Practice

Introduction

The ABI Code has always been applied on a flexible and practical basis, wherever possible.

In the case of mass-marketed insurances, for example, travel, these are often sold as an adjunct to another product like a holiday. More often than not, those selling these insurances at point of sale do not have insurance experience. Also, by their nature, mass-marketed products achieve economies of scale so that the consumer benefits from highly competitive pricing.

For these reasons, it is recognised that special provisions should apply.

ABI guidelines

The ABI Code Manual describes the general framework in which insurances should be sold to comply with the Code. The guidance recognises the position described above by including a specific section on mass-marketed insurances which distinguishes them from mainstream insurances like motor and household particularly when they are sold in the traditional way.

Travel insurance

Travel insurance is, however, sold in a number of ways - over the counter, by postal/telephone bookings or as a separate annual policy.
To assist insurers, travel agents and operators to fully comply with the Code, the following specific guidance should be taken into account:-

Counter Sales

The client should be given, at least, a summary of the cover at the time the insurance is taken out, with full details being sent to the client afterwards.
The insurer will be responsible for ensuring, in liaison with the travel agent/operator, that the insurance documentation, including the summary (or certificate) and full policy if separate, include full details of cover and highlight in bold or as a separate section for example, particularly important exclusions and restrictions. The minimum details to be included in the summary/certificate/policy are set down in the ABI Code Manual as follows:-

• Travel Benefits (eg holiday cancellation, medical expenses, the loss of or damage to baggage)
• Principal Exclusions
• Complaints Procedure

As far as the full details of the cover are concerned, these should be contained in either a Policy Document or Certificate of Insurance and, in addition to the items outlined above, should also include details on the following aspects:-

• Interpretation / Definition of Terms and Condition
• All Exclusions
• Payment of Benefits
• Claims
• Cancellation / Termination
• General (eg Variation of Cover etc)

It is also recognised that when people are considering/booking holidays, insurance is rarely a priority and is usually seen as an unwelcome, albeit necessary, additional expense. To focus the attention of the client on what their insurance policy covers and does not cover and the need to make further enquiries in certain cases, it is suggested that a laminated card be passed to them at point of sale. This will supplement the Summary/Certificate/Policy details available at the point of sale and should assist in ensuring that the important details of the cover and restrictions/exclusions are understood by the client.

It should also assist in avoiding complaints where, after the event, a customer claims that they were not “made aware” of the limitations of cover. A model format for the laminated card follows (Appendix) and can be adapted in liaison between the insurer, travel agent/operator to suit individual circumstances.

The option is also available to pass a paper copy to the customer to take away and read at their leisure and/or to retain a signed copy to demonstrate that the customer has been shown the information.

Where individual underwriting becomes necessary, for example, where “material facts” have been declared at point of sale, then the insurer still has the ability to accept at normal terms, special terms or, indeed, to decline the risk provided the decision is conveyed to the customer before the travel commences. It must be stressed that underwriting cannot be undertaken at the claims stage.

Postal Bookings

The same general approach is appropriate for postal bookings save that, normally, the documentation sent to the client should include relevant information. For example, where proposal forms are utilised, these should carry all the important details of cover/restrictions/exclusions and, if not included at this stage, full policy details should be provided prior to travel commencing.

Telephone Sales

As part of the continuing development of Code guidance, ABI is considering specific guidance for telesales. In general, it is considered that telesales should not cause any problems in terms of meeting obligations under the Code.

In some respects, compliance may be more easily demonstrated as it will be necessary to take the caller through a series of questions controlled by the insurer. However, ABI will be seeking to achieve some consistency in this area within the guidance so that clients will become aware of what to expect when buying insurance by telephone. The position may also be affected by the EU Directive on Distance Selling and this is being considered.

Annual Policies

These are not, normally, sold as an adjunct to another product and so do not meet the mass-marketed insurances criteria. In the circumstances, they will be subject to the same requirements as motor or household type policies. For clarification purposes, these latter type policies do not, necessarily, have to be described orally. More importantly, “the proposer should have a reasonable understanding of what he is buying, whether this is explained orally or whether he is given a summary and his attention drawn to the main points”.

Much depends on the distribution channel and whether a generic policy is being sold by, for example, a high street intermediary or a specially designed product, for example, by a building society or bank on a direct mail basis or as part of mortgage documentation.