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Pandemic travel insurance: Read small print carefully

There is a lack of clarity from travel insurers over how much protection their policies offer for Covid-related disruption, new research has revealed.

This could lead to consumers losing money, and with less protection than needed, as international travel reopens, according to data from Which?.

It found that many travel insurance customers are being left with a false impression about the level of protection they would benefit from if the pandemic was to hit their holiday plans.

Much of this is down to poor communication by some insurance providers and the use of often confusing, blanket terms such as ‘Covid Cover’ or ‘Enhanced Covid Cover’ on their websites.

A lack of clarity from travel insurers could mean holidaymakers could lose out on money

Which? surveyed over 2,800 travel insurance customers between February and March 2021. 

It found that 29 per cent of travellers had committed to bookings or arrangements for international trips this year with 12 per cent saying that while they’d not booked or arranged travel, they did have specific plans.

Half of the respondents believed they would be covered should the government’s travel advice change after a trip was booked and 47 per cent thought their policy would cover them in the event that local or national lockdowns prevented them from travelling.

Another 46 per cent believed their policy would cover them if their airline or holiday company postponed their travel but wouldn’t offer a cash refund.

However, analysis of 73 travel insurance providers between October and November 2020 found cover for those three such eventualities – particularly for when government travel advice changes – was very rare, with large discrepancies between what policies included.

Since March 2020, most insurers have considered the pandemic a ‘known event’, and excluded FCDO cancellation cover from new policies and for newly booked trips.

However, Which?’s survey found that customers with policies bought after March 2020 were more likely to believe that they were covered for this type of disruption than ones that had bought policies before then.

For instance, 65 per cent of respondents that bought travel insurance less than six months prior to participating in the survey believed they would be covered if FCDO travel advice changed and advised against travel after they had booked their trip, whereas 48 per cent of respondents that bought policies over a year ago did.

While some insurers give upfront information about how they protect against Covid-related disruption on their webpages and in their FAQs, some providers only state key benefits that their ‘Enhanced Covid Cover’ provides, and are less clear about what is excluded.

Other providers describe their policies as covering a ‘range’ of Covid-related scenarios, and direct prospective customers to the FAQs for further detail.

Length of time with current insurer Less than six months Between six months and one year NET: More than one year All customers
1. Cover for costs if – after booking my trip – the Foreign, Commonwealth and Development Office (FCDO) advises against travel to my destination 65% 56% 48% 50%
2. Cover in the event that a local or national lockdown prevents me from travelling 60% 55% 45% 47%
3. Cover in the event I can’t travel because I have to self-isolate at home because of NHS Test and Trace 58% 48% 33% 37%
4. Cover in the event I can’t go on my trip because I’m diagnosed/test positive with COVID-19 66% 51% 41% 44%
5.Medical cover if I catch COVID-19 overseas 63% 58% 47% 50%
6. Cover if my airline or holiday company postpones my travel but will only offer a rebooking or credit and not a cash refund. 57% 53% 43% 46%
Source: Which?         

Which? is now urging the Department for Transport to ensure travel insurance providers are clear about Covid-cover terminology.

It believes providers should present what is included and excluded in their Covid policies clearly on their websites and not bury exclusions in their FAQs. 

It is also urging the DfT to work closely with the Treasury and sector regulators including the FCA, Civil Aviation Authority and Competition and Markets Authority, as well as with industry, to ensure all travellers adequately understand their travel insurance cover. 

Jenny Ross, Which? Money Editor, said: ‘The ongoing threat of Covid-related disruption means that getting the right travel insurance for your holiday is more important than ever.

‘Without closer scrutiny from government and regulators of how clearly insurers present their policies, there is a very real chance that many travellers will be left out of pocket yet again this summer.’

Which? added the Financial Conduct Authority (FCA) should be monitoring terminology used by travel insurers in their Covid-19 policies and marketing material to ensure they provide sufficient clarity. 

In turn, this would help consumers make a more informed choice when booking a trip abroad and could save them money. 

Holidaymakers are warned that having travel insurance is more important than ever before

Holidaymakers are warned that having travel insurance is more important than ever before

What to know before you travel  

The travel environment has changed, but the core purpose of travel insurance – to cover the high costs of needing emergency overseas medical treatment abroad – has not, the Association of British Insurers (ABI) has warned. 

It has provided holidaymakers with six tips they should follow before travelling overseas.

1) Make sure it is safe to travel: Always check current FCDO advice, especially as travelling against FCDO advice is likely to invalidate your travel insurance. Be aware of any quarantine requirements on your return to the UK – travel insurance will not cover costs associated with quarantining in Government provided accommodation. 

2) Buy travel insurance and make sure that it best meets your needs: The main reason for travel insurance is to cover the costs of emergency overseas medical treatment which, together with any repatriation required back to the UK, can easily run into tens or even hundreds of thousands of pounds. 

3) Be aware of any Covid exclusions in your insurance: All ABI travel insurers will continue to provide cover for emergency medical treatment needed overseas, including emergency medical treatment related to Covid-19. However, policies are unlikely to cover cancellation due to Covid-19 as it was a known risk when the policy was taken out 

4) Be aware of, and comply with, travel requirements for entering overseas countries: It is your responsibility to comply with any border restrictions in place at your destination country. If you do not comply with these requirements, then you will need to return home at your own cost. 

5) Have your EHIC, or get a GHIC, if travelling to Europe: If you hold a current European Health Insurance Card this remains valid until its expiry date. After then, or if you do not have an EHIC, you will need to apply in the same way for a Global Health Insurance Card. 

Neither the EHIC or the GHIC is a replacement for travel insurance as it will not cover you for all medical costs, or the cost of emergency repatriation back to the UK.

6) Know your rights: Get as much information as you can, so that, in the event of any travel problems, you know what you are entitled to. For example, check the refund policy of any accommodation provider, what you are entitled to if booking a package holiday, and what the legal obligations of the airline are if your flight is disrupted or cancelled. 

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