Why is travel insurance so important?

The Foreign & Commonwealth Office estimates that British citizens will take over 65 million trips abroad in 2007, and this number is increasing dramatically every year. With more people travelling abroad every year it becomes increasingly important to be aware of the kind of hidden costs that can be incurred while travelling, exactly the kind of costs that can be avoided by having a comprehensive travel insurance policy.

What's Covered?

Before looking for a travel insurance policy it is important to understand not only the types of coverage that should come as standard but also the limitations of travel insurance policies. Not every policy will cover for every eventuality so it is vital that you choose a policy tailored to your needs both to avoid paying too much and to ensure that you are covered for all eventualities.

Even so, there are a few eventualities that are covered by most travel insurance providers. Below is a list of the coverage that should be offered as standard:

Each element of this coverage is likely to differ slightly between providers, and between individual policies that providers offer so be sure to check the fine print.

What is never covered by travel insurance?

Unfortunately some events are never covered by travel insurance policies, under any circumstances. It is important to be aware of this before travelling. These events are:

The category of war covers both declared and undeclared war. It is vital that you check the current advice given by the Foreign and Commonwealth Office for the country you are travelling to so as to ensure your personal safety throughout the trip. It is also important to note that some insurance companies will not cover you if you choose to travel to an area that is deemed "unsafe" for travel. The cost of your policy is affected by the area you choose to travel to.

Buying a Policy

There are many things to think about when you finally decide which policy is best for you, one major decision may be whether to buy your policy now or closer to your departure date. There are advantages and disadvantages to both:

Buying now

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You can cover pre-existing conditions
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You can cover financial default (in case your agency declares bankruptcy)
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You will have full coverage of all the listed reasons
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You have to pay for the insurance in full
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You only have a limited number of days to cancel your policy

Buying later

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You still have coverage for the listed reasons
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You can cancel your trip without any penalties
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You can change your itinerary or trip cost at any time
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You do not have coverage for pre-existing conditions which arise between now and the time you buy
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You do not have coverage for financial default

If you do not need coverage for any pre-existing conditions, then buying travel insurance later may work out to be cheaper for you. However, if your trip has to be cut short because of financial default you won't be covered. Be sure to think carefully before deciding when to buy.

Online vs Instore

Almost all travel insurance providers now offer instant quotes online, with many being cheaper than those offered on the high street - even by the same provider! However, there are drawbacks to buying online too:

Buying in store

If you don't understand any terms of your policy you can get clarification there and then
You can speak to your provider directly and ensure that you have the right level of cover
It is time consuming, you get one quote only per store or agency meaning it takes a lot of time and effort to compare prices
As you are interacting with a salesperson you run the risk of being sold something you don't need or being pressured into buying there and then

Buying online

Comparison engines allow you to compare hundreds of policies at once and to get as many free quotes as you need
May have special deals and discounts for online policies only
Some companies who sell direct to the customer online can offer cheaper policies due to lack of overheads and middle-men
You may have difficulty understanding some of the finer points of the policy
You may not be aware of some extra cover you require and then not end up with a comprehensive policy

To overcome these points it may be a good idea to get a free quote from the high street and then shop around for a cheaper deal online. Whatever you decide to do be sure to check several providers first and make sure you find the cheapest deal while still being fully covered.