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Do I need travel insurance for my holidays or is it a waste of money?

On The Money: Travel cover for going abroad might not cost much but it could save a whole lot of heartache

Travel insurance: Many will not bother with it if they are travelling in Europe because they assume they will be okay. Photograph: iStock

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Conor Pope
Fri Jun 23 2023 - 11:26

The short answer to the question, if travel insurance is waste of money, is a big no. In fact, travel insurance is almost certainly one of the best value financial products on the market and while it is to be hoped that you will never have to use it, you might find having a policy will save you a huge amount of heartache in some of the worst case scenarios.

The summer holiday season is well and truly upon us and while many people will be giddily packing suitcases and pricing sun-creams in European tourist hot spots in the days ahead a significant percentage of Irish people - as much to 40 per cent in fact - will forget to pack what is, arguably, the most important thing of all - travel insurance.

Many will not bother with it if they are travelling in Europe because they assume they will be okay on the basis that they will be treated in public hospitals in France, Spain, Italy or wherever at no cost.

And that is true up to a point.

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What does my European Health Insurance Card cover?

If you fall ill while in the EU you will be treated in that country’s health system just like you would be if you were a citizen of that country - although to be sure of that you will need a European Health Insurance Card.

However, in the absence of travel insurance people will have absolutely no protection if they have to cancel a trip before they leave home or curtail a trip while they are away because of an illness to themselves or a loved one.

We frequently hear from people who have suffered some misfortune and are upset with airlines or tour operators because they have been refused refunds or at the very least the opportunity to reschedule trips.

While the upset on the part of those who contact us is entirely understandable, so too is the position adopted by the companies.

If a trip has to be cancelled because one of the travelling party breaks a limb or needs to have a minor surgery, a travel operator will almost certainly refuse to entertain any request for a refund or rebooking.

They will point out that that is exactly what travel insurance is for and they can’t be expected to pick up the tab for every illness and misfortune that befalls their customers.

It is also worth pointing out that in our experience if trips have to be cancelled for much more serious reasons - such as bereavements or very grave illnesses, travel companies tend to be more sympathetic.

Then there is the fact that having access to the public health system in the EU will make little difference to a person who is the victim of a crime and it will most likely not get them home to Ireland in an air ambulance.

What will it cost if I get sick on holidays?

In any discussion about the worth or otherwise of travel insurance, it is worth nothing how much treatments cost overseas.

It is a big world and the answer to that question depends on where in that world a person is and what they are being treated for.

An urgent hip replacement in a private hospital in the UK will cost around €30,000 while emergency brain surgery in New Zealand will cost at least twice that while if a person has a massive heart attack in the US they can expect to face a bill of at €200,000.

In short, travel insurance can make life a whole lot easier for less than €100 a year for a multi-trip policy covering a family of five.

And bear in mind that the cheapest travel insurance policy on the market is often not the best value one. The price difference with more expensive policies can be - relatively speaking - very small but the level of cover they offer can be substantial.

And it is important to stress the need to pay at least some attention to the fine print. It can run to some policies of more than 20,000 words which is too much for anyone to digest but it people need to at the very least look at the size of the excesses and the exclusions.

What does travel insurance cover?

For instance, phones are not covered in many cases, while other valuables can lose their cover if they are not in the presence of the insured at all times.

And, if a person has not been storing a passport in a hotel safe when it is stolen, they can almost certainly forget about making a claim for its theft from the room.

Rather than reading the policy document in full, download a PDF version or copy the text into Microsoft Word and search for “not covered”, “excluded” and “exclusions”. At least that will give you a sense of what not covered by your policy.

It is also key - this summer more than any other to make sure policies cover travel disruption.

Many cheaper policies do not cover travel rearrangement expenses, accommodation and cancellations relating to “natural disasters” outside of weather disruption or industrial action and if that travel disruption cover, can cost more although not a whole lot - and such an add-on might only cost €15.

If someone does have to make a claim, they will need to inform the insurer immediately as soon as they realise they can’t go on the trip or need to cut it short.

And anyone who is the victim of a crime overseas will have to contact the police in the first instance. Without an official police report, a claim will not be entertained by an insurer.

And that official complaint will have to be made quickly. If a police report is delayed by more than 24 hours, an insurance company might view a claim with scepticism.

Oh, and one final point. If a person is already away and does not have travel insurance it is not too late to take a policy out although it is worth bearing in mind that policies taken out while overseas don’t tend to kick in for between 24 and 72 hours after being bought in order to stop people taking out policies after being the victim of a crime or falling ill.

You can contact us at OnTheMoney@irishtimes.com with personal finance questions you would like to see us address. If you missed last week’s newsletter, you can read it here.