The Holes in Your Policy – The Curse of the Comparison Sites

Nowadays, the trend of consulting a comparison site before purchasing a travel policy is having a seriously unhealthy effect on the market. When they began, the comparison sites just searched on price, but now most will show the price plus ‘key features’, which normally mean the amount of medical cover, cancellation cover, baggage cover and maybe a couple of other items. The consumer is bound to look for the company offering the highest medical sum for the lowest price – and if the amount shown for baggage is £100 higher than the next best that will probably swing the deal.Of course, this means many insurers deliberately tailor their policies so that they look good on the comparison sites. Unfortunately, travel policies cannot be reduced to just a handful of ‘key features’, because they vary in exactly what is included and the definitions used. All travel policies contain holes in cover that you may not be aware of until, or unless, you have to make a claim. The comparison sites merely tempt insurers to produce policies that look good but may have more holes.When you buy a travel policy, what you are really interested in is the medical cover. We all understand the risk of serious illness abroad and do not want to be bankrupted or stranded without proper care. While the amount of medical cover varies, normally from £2 million to £10 million, the sums are nearly always adequate; though, naturally, you should look to the higher limits if you are going to the US.Some policies will reduce a deductible or give some extra, if you have a valid EHIC card when travelling within EU and use public facilities. A few, very cheap, policies state that they will only cover private hospitals within the EU when they have given specific agreement and that you must insist on being taken to a public hospital. While it is normal for all policies to state that cover is only given once the emergency helpline has given agreement, a few companies have particularly strongly worded versions of this clause, which does make it appear as if they are looking for some sort of get-out. It is actually in everyone’s interest that the helpline staff become involved as soon as possible since they can ensure that proper treatment is given. However, all the companies have to accept that if you are in the back of an ambulance after a serious accident you and your companion might have other things to think about. Most companies use a phrase like ‘as soon as practical’ and I think that any company that tried to deny a claim would have to have very serious grounds for them to succeed.

The real concern – and the big possible hole in some policies – is not what happens when you are in hospital but what happens when you get out.If you break a leg and a couple of ribs, your stay in hospital will be quite brief and the medical costs fairly low. However, you might be declared unfit to travel for two weeks. That means you have two weeks’ food and accommodation to pay for plus a new air ticket.Most policies will cover these costs and include them in the total allowed for medical expenses. A fairly normal policy may state that the insurer will pay for accommodation in a hotel of the same class as originally booked for you and a companion and will pay the extra cost of an Economy ticket to return home (or whichever is the cheapest ticket available at the time). Basically, this is unlimited cover. Two weeks in the Caribbean and Business Class flights home for you and a companion (because they were the only seats available at short notice) would blow a hole in most people’s budgets.You can probably see that these amounts can be quite expensive for insurers, so it is very tempting for them to cut back as much as possible. I checked a cheap policy that has the same overall medical limit as many others but states they will only pay up to £1000 in total for a flight home and ‘basic’ hotel accommodation. Such a policy appears to be good value because it pretends to offer the same cover as other policies but it does not and could leave you very seriously out of pocket.I suggest you look carefully at the appropriate wording on your policy. In the event of accident or illness, this could become important. Virtually every policy will pay medical bills without a hitch – but some, seemingly identical policies, could leave you with costs of thousands of pounds.There is another serious issue that is starting to spread amongst insurers and does not seem limited to the budget companies.We are all aware of the need to declare any medical problem when a policy is purchased. Many people do not realise that this requirement extends to ‘annual multi-trip’ policies as well. The phrase ‘annual policy’ is misleading because each trip is in fact a new policy and the company will assume you are confirming the status quo on your medical history before you book a new trip. If you develop an illness during the course of an annual policy and fail to inform the insurer, they can invalidate the policy. You should be aware that some insurers will pose particularly tough extra charges or conditions on people who call them during a policy to advise them of a change in health. A few insurers like to think they have you in a corner and can charge accordingly. If you feel this is the case, it would be wise to check other companies because you could cancel the original policy.This is not the biggest problem. Unfortunately, some insurers are now inserting, and using, a clause in policies that puts the onus on a client to inform the company of a change in health even after booking. There have been instances of a client booking a cruise, paying for a single-trip policy and then developing cancer and, though their doctor gives them the all-clear to travel, the insurer withdraws cover and merely offers to pay the cancellation costs of the cruise. We have seen a spate of instances of insurers trying to withdraw cover when claims looked possible (swine flu, baggage at Terminal 5 and threatened strikes). This attempt is slightly more honest because at least there is a clause in the policy that theoretically allows it. However, even the normally conservative Financial Ombudsman Service has expressed concern about the insertion of this clause, which they say puts too heavy a responsibility on travellers and, in theory, allows insurers to cancel a policy or invalidate a claim on a whim. If you get a minor pain in your stomach a few days before you go on holiday, should you call your travel insurer and, if you do not, what happens if you then go on to need emergency surgery on your appendix?It is interesting that the Association of British Insurers, which acted to stem the nonsense being spouted by a few insurers about swine flu, is also expressing concern about the use of such clauses. Quite simply, these clauses go against the whole principle of insurance. When you buy a policy, the insurer is able to calculate the risk of, for example, a 53-year-old man falling ill while on holiday and charge an appropriate premium. Taking the premium and then denying cover if a claim begins to look likely is cheating – akin to a bookmaker suddenly refunding bets on Chelsea after they have scored the first goal in a game. The Association of British Insurers needs to worry because if this trend continues what will happen next – motor insurers suddenly saying they won’t cover any accidents for a couple of days because snow is expected or building insurers excluding flood damage when a storm is due?

Defaqto calls itself “Britain’s leading independent financial research centre” and uses a star rating to rank various financial products. Companies are inclined to use good star ratings as proof of the quality of their policies. Do not be taken in by these ratings. They are based on a similar list of ‘key features’ that are shown on comparison sites. They do not use insurers’ actual wordings as a guide and so miss the serious negative points in many policies.My advice is simple:o Always read your policy in full.o Do not rely on ‘key fact’ summaries of the coverage.o Ensure that there is full coverage for additional accommodation and travel expenses after a hospital stay. This can prove to be the most expensive part of a medical claim.o Watch out for any dangerous catch-all medical clauses that make you report an illness even after booking – better to buy another policy if you can find one with more liberal wording.Incidentally, you might have seen the adverts for Hiscox Home Insurance. This is a top-class insurer that offers a much broader home policy than its rivals do. It claims that a large percentage of the claims it pays would not be paid by other companies. Of course, it charges more, but at least you know you are getting the most comprehensive cover. Hiscox does not offer travel cover and, unfortunately, I am not aware of any company that offers a similarly comprehensive package for travel. Most of the more expensive policies we see are more expensive simply because they have higher limits and gimmicky add-ons, not because they have a more comprehensive approach to claims settling.

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