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Is travel insurance a waste of money or the best €100 you’ll ever spend?

Things can go wrong on holiday, or ahead of it, for all sorts of unexpected reasons

People pay thousands of euro for their summer holidays and yet are reluctant to protect that investment with an insurance policy costs around €100. Photograph: iStock

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Conor Pope
Fri Jan 26 2024 - 11:04

We are in the middle of the peak holiday booking season with thousands of people planning and paying for their summer holidays. But while many will be happy – or at least willing – to spend thousands of euro on trips overseas, large numbers of them will baulk at the notion of paying not much more than €100 to give themselves the peace of mind of travel insurance.

Travel heartache makes up a significant percentage of the queries and complaints sent to the Pricewatch page of this paper and far too often we hear stories of woe that could have been avoided had people taken out one fairly good value financial product in a timely fashion.

Late last year, two stories were carried on that page which illustrates why travel insurance is good value for money.

One reader bought flights for family members to Portugal but they were unable to travel as, weeks before the trip, one of the party fell and broke their hip. The reader was absolutely furious that the airline wouldn’t countenance a refund despite being provided with a doctor’s letter proving that the cancellation was for entirely legitimate reasons.

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Then there was the person whose ferry crossing from mainland Europe was cancelled because of bad weather. He was left with a substantial bill for making alternative arrangements to get home and thought it only fair that the company pick up at least some of the tab.

In both cases, the readers thought they had a case and in both cases they were wrong.

Airlines can look sympathetically on people who have to cancel in the event of sudden bereavement or very serious illness but they are not obliged to and will generally not even consider refunds if someone is unable to travel after a fall.

And a ferry company is at the mercy of the weather – just as we all are – and is not obliged to cover the costs of alternative arrangements if they can’t get a person home as planned.

In both these instances, travel insurance would have helped greatly and it might have helped many more people last weekend when Storm Isha blew in and wrecked the travel plans of thousands of people coming to and from Ireland.

An annual policy, which costs not much more than €100 for a family, can save you tens of thousands of euro and endless heartache if things go wrong.

If you have the misfortune to have a heart attack in the US and are in hospital for just a week, you could easily find yourself with a bill of close to quarter of a million euro – sizeable enough to bring on another heart attack – while getting a new hip privately in the UK after a bad fall might set you back at least €30,000.

Even minor surgery done privately in many EU countries is €20,000 while the cost of an air ambulance home can also be pretty eye watering.

Despite its evident value, as many as half of all Irish people who travel overseas don’t bother with travel insurance. The percentage of people who chose to go without cover climbs when it comes to short trips and European breaks.

Many people think that because they have health insurance at home, they don’t need travel insurance while they are away.

There will also be those who chose not to take out travel insurance when 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.

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 (EHIC).

While such thoughts are understandable, they are mistaken. Private health insurance and an EHIC card might cover the cost of medical care overseas, but will do nothing for you if you have to cancel or curtail your trip, have your bags stolen or find yourself stuck for three days overseas because a storm has disrupted your plans for the home journey.

As we said at the outset, many people are booking holidays now and, even among those who will take out travel insurance, far too many will hold off on paying for the policy on the basis that they can always take it out closer to the travel date when they might be just a little bit more flush.

There is little or no advantage to waiting and delaying the purchase of travel insurance might well ending up costing people dear. As many as 40 per cent of claims are made before travel, with illness and death the most likely reasons for cancelled holidays.

And at risk of stating the obvious and bringing you down – and who needs that at the end of the gloomiest month of the year – bad things can happen at any time.

It is also worth bearing in mind that, with travel insurance, you do get what you pay for. If you buy the cheapest cover, you will give yourself some protection but the small print might exclude cover for travel rearrangement expenses, accommodation and cancellations relating to “natural disasters” outside of weather disruption. There might only be €30 or €40 between the cost of two policies but they could be worlds apart when it comes to the cover they offer.

If you want travel disruption cover, you will have to pay more for it, although such an add-on might only cost €15.

Don’t allow yourself be bedazzled by the top line prices or the promise of €10 million worth of medical cover. Pay attention to the small print: you might be surprised at how many things are not covered.

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.

While we say pay attention to the terms and conditions, that does not mean you are expected to read them word by word. Such documents can frequently run to 30,000 words or more – and they are not the most interesting or well strung together words, generally speaking.

But there will be get-out clauses for companies that you should look out for. One top tip is to do a word search for things like “excluded”, “not covered” and other variations. It gives you a sense of the cover you don’t have that you think you do.

When making a claim, you will need to follow the rules set out in the policy; any deviation from them could lead to your claim being rejected. It is key that you inform the insurer as soon as you realise you can’t go on the trip or need to cut it short. And always tell the police and get a report if you are the victim of a crime overseas. If you don’t you will not be entertained by an insurer.

Make any official complaint quickly. If you leave a police report for longer than 24 hours, insurance companies might use the delay as a reason to avoid paying out.

Because while travel insurance is enormously valuable to you, the big insurance companies did not get rich by giving money away. They all put obstacles in the way of making claims so it is key to dot all the is and cross all the ts to make sure that you get what you are due when you are due it.

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.