Is Cheap Travel Insurance Good Travel Insurance?

Whether you are looking to buy single trip travel insurance or annual holiday insurance you will not want to pay more than you have too. There is however a huge difference between cheap and good value and knowing how to tell them apart could be the difference between disaster and relief.

Before looking at how to spot the difference, lets firstly look at the basic principle of travel insurance from an insurers perspective. A travel insurer sells different types of policies including:

Single trip travel insurance
Annual holiday insurance (also known as Annual multi-trip travel insurance)
Longstay travel insurance (also known as Backpacker and Gap year travel insurance)
Cruise travel insurance
Corporate travel insurance

They sell these policies through a range of distributions including:

Online travel insurance
Brokers
Travel agents
Tour operators
Affinity partners

Ultimately an insurance company aims to collect enough combined premiums from people buying their travel insurance to pay out the combined claims against the policy. Premiums that they have left over are the funds the insurance company has to pay the expenses of running the business and then to make a profit.

Cheap travel insurance
So with this in mind, if insurance companies sell policies too cheaply they will have more claims to pay than premium collected and will not make any profit. Therefore, it might be safe to argue that cheap policies must have more terms and conditions attaching and more importantly more exclusions to help from paying so many claims. It also makes sense that cheaper policies will have less cover with lower limits. Other ways exist of selling cheap travel insurance which include:

Annual holiday insurance
oLower maximum trip durations
oMaximum amounts of cover per year, not per trip
oIndependent travel cover just for the first named insured

Single trip and annual holiday insurance
oFewer sections of cover
oLower levels of cover
oHigher excess'

Good value travel insurance
So rather than cheap, what you should really be looking for is good value travel insurance. Clearly the term good value has a personal definition, but in respect of travel insurance things to look for include;

Ensuring that the policy has the following cover as a minimum:
Emergency medical expenses cover to 2,000,000
Cancellation cover to the value of the trip, unless it is a last minute booking.
Cutting short your trip cover to the value of the trip
Personal liability cover to a minimum of 1,000,000
Legal expenses cover to a minimum of 10,000

Other sections and cover which is highly sought after:
Departure delay cover to a minimum of 150
Missed departure to a minimum of 500
Trip abandonment to a minimum of 800
Personal belongings single article limit to a minimum of 100
Personal money to a minimum of 200
Hospital benefit to a minimum of 20 per day
Personal accident to a minimum of 5,000

As well as looking at the sections and limits, take the time to have a look at the sections within the policy wording. Most should set them out with what is covered and what is not covered. You will be surprised at how easy it is to understand.

Other things to keep in mind include; The higher the excess, the cheaper the policy, The lower the cover limits, the cheaper the policy, the cheaper the policy, the more restrictions there are likely to be and lastly a reminder generally you should expect to get what you pay for but there are some insurance companies that the sell good value insurance products and do not skimp on the cover. In the main, online travel insurance will be the cheapest travel insurance policies as there will be less people involved and so less people needing to make money from the sale of the policy.