Travel Insurance Article Discussion

AlwaysHere

ericthelobster wrote: »

Regarding Martin's exhortation to "Always buy travel insurance early" in today's MSE email...

I don't think this is necessarily the no-brainer that MSE would have us believe actually. Personally, I've just booked a short holiday abroad next spring, for which I will definitely be wanting medical insurance. I deliberately haven't bought it yet though, and won't be doing so until the week I travel.

Reason being that by far the most likely reason for my trip to be cancelled is that my mum is in her mid-eighties and although she is presently well, realistically she could get ill and/or die at any time, meaning that I'd not travel. And equally realistically, you can be sure that under those circumstances any insurancer would scream "Bzzt... pre-existing condition!" (it will inevitably be one of the several typical 'elderly person' conditions that she currently has that would bring about her illness or death).

All that would happen if I buy insurance now, is that I'd lose the cost of the premium in addition to any unrecoverable holiday costs. So I'm not going to...

This is nonsense. Pre-existing conditions apply to you, not your family members unless they are covered by your insurance.

ericthelobster

AlwaysHere wrote: »

This is nonsense. Pre-existing conditions apply to you, not your family members unless they are covered by your insurance.

If you're claiming for cancellation on the basis of a close family member being ill or dying, then you'd better believe that the pre-existing conditions rule will applies to that family member, just as if they were named on the policy. Why wouldn't it, if you think about it?

As it happens I've been burned by this myself several years ago; I was on holiday in the USA having booked and insured it many months previously. My Dad was 100% fine at that time, but while we were away my Dad was hospitalised for a heart valve op, became extremely ill with pneumonia and I had to return home urgently. I later put in an insurance claim for the missed days of holiday and the extra transatlantic flight, but the claim was denied on the basis of my Dad having been diagnosed with atrial fibrillation 30 years previously - that is an electrical condition in the heart which had been completely controlled, and medically completely unrelated to the heart valve problem. However, the insurers saw the word 'heart' and denied the claim. I've uploaded their reply here if you're interested.

I ended up going to the Ombudsman over it - not even because of the pre-existing conditions issue, but because of the incorrect medical interpretation of it - and the end was offered an ex gratia payment of 50% of the claim, which I grudgingly accepted

So no thank you, I'll not be buying my travel insurance any time soon.

koru

AlwaysHere wrote: »

This is nonsense. Pre-existing conditions apply to you, not your family members unless they are covered by your insurance.

Cancellation cover often does not cover cancellation due to death or sickness of family members who are not insured under the policy. Where this is covered, however, there is usually some sort of exclusion for cancellation, when the death or sickness is related to something that existed when the policy was bought.
eg, LV's policy says

If a relative, colleague, travelling companion or someone you’re going to stay with, who is not insured on this policy:
− has a medical condition that is unstable, or
− has a medical condition that is likely to deteriorate, or
− is having any investigations or tests
when you take out or renew your policy or before you book a trip; you won’t be covered for any claims that are related to that person’s health.

Perhaps there are some policies that do not exclude this, however.

koru

ericthelobster wrote: »

Regarding Martin's exhortation to "Always buy travel insurance early" in today's MSE email...

I don't think this is necessarily the no-brainer that MSE would have us believe actually. Personally, I've just booked a short holiday abroad next spring, for which I will definitely be wanting medical insurance. I deliberately haven't bought it yet though, and won't be doing so until the week I travel.

Reason being that by far the most likely reason for my trip to be cancelled is that my mum is in her mid-eighties and although she is presently well, realistically she could get ill and/or die at any time, meaning that I'd not travel. And equally realistically, you can be sure that under those circumstances any insurancer would scream "Bzzt... pre-existing condition!" (it will inevitably be one of the several typical 'elderly person' conditions that she currently has that would bring about her illness or death).

All that would happen if I buy insurance now, is that I'd lose the cost of the premium in addition to any unrecoverable holiday costs. So I'm not going to...

I agree, on the whole. Martin's statement is far too sweeping. It depends on how much you would lose if you cancel. Martin's example was someone who claimed £1800 for cancellation of three pre-booked holidays, but some of us don't have three holidays per year.

For someone whose accommodation and flights are refundable or who only paid, say, £80 for some cheap RyanAir tickets, then any cancellation claim would be small (or zero) and perhaps below their excess. I reckon that many people will have little or nothing to gain from buying insurance early. It might be better in such cases to delay buying insurance until just before departure, in case you do have to cancel for whatever reason, then at least you haven't wasted money on an insurance policy you won't use.

Perhaps what Martin should have said is that one should always buy insurance early IF one has paid a lot in advance and it is not refundable. I think this would be true, even for someone with an elderly parent like you.

You are concerned that if your mum falls ill, then you would cancel the holiday to stay and be with her and as this would probably not be covered under travel insurance, you would have wasted the premium. A typical premium is what, £50? So, you are saying it is better not to buy the policy in advance and only spend the £50 close to departure if your mum is still OK. If your mum does indeed fall ill, at least you haven't wasted an extra £50.

However, by doing this you are losing the ability to claim for cancellation due to any other reason that is covered by the policy. Even if you judge this to be less likely than your mum falling ill, I think you need to balance this against the potential amount of the cancellation claim. I have no clue, but if, for instance, you have spent £1000 on flights or accommodation that is not refundable then that's a potential loss that is 20 times bigger than the £50 premium (ignoring excesses).

In that case, it would only make sense to delay buying the insurance if you judge that you having to cancel for a reason that is not covered by your policy (such as your healthy (but elderly) mum suddenly falling ill from a pre-existing condition) is 20 times more likely to happen than you having to cancel for any of the reasons that would be covered under the policy. I'd be surprised if this was true, though it is hard to judge.

I'm not saying you have made the wrong decision. Perhaps your ratio of possible losses is much lower than 20:1. Perhaps it is much more likely that you will have to cancel because your mum falls ill than for a reason that would allow a claim under the policy. I'm just saying that it depends.

koru

koru wrote: »

In that case, it would only make sense to delay buying the insurance if you judge that you having to cancel for a reason that is not covered by your policy (such as your healthy (but elderly) mum suddenly falling ill from a pre-existing condition) is 20 times more likely to happen than you having to cancel for any of the reasons that would be covered under the policy. I'd be surprised if this was true, though it is hard to judge.

The more I think about this, the more intrigued I get. I'm now wondering if insurers include cancellation cover in policies as a sly way of making extra profit, by exploiting our ignorance of the relative likelihood of various causes of cancellation.

If you think it through properly, cancellation cover is really an optional extra. If you don't want it, just buy the policy the day before you start your trip. There isn't usually an explicit extra premium for cancellation cover, but it does have a cost. That's because if you want to have the cancellation cover, you do need to buy the policy early. And that means you are running the risk that you cancel your trip for reasons that are not covered by the policy, in which case you forfeit the premium even though you never use the policy. (Or even if you can claim, the payout, net of excess, is less than the premium.)

So, I'm wondering if insurers include cancellation cover in order to tempt us into buying insurance when we book our travel or accommodation, knowing that this means they get more premiums than if we all waited until the departure date? That is, they know some people will inevitably cancel their trip for reasons that cannot be claimed for under the policy, and that if those people had not already bought cover for their trip then, having cancelled their trip, they wouldn't ever buy a policy.

Perhaps the extra 'windfall' premiums on policies for cancelled trips exceed the cancellation claims paid out? I doubt it, to be honest, but only an actuary would know for sure.

Many policies only cover cancellations for a narrow range of causes, such as jury duty, redundancy, major damage to your home, and one of your travel party falling ill from a non-pre existing condition. I wonder how common this is, compared with other causes of cancellation, such as pre-existing conditions, illness or death of people not travelling with you, divorce, airlines cancelling flights (eg, RyanAir)?

(I'm largely talking about single trip policies. With annual policies, you probably renew once a year so the concept of buying cover early does not apply.)

adindas

I have an insurance which will end in February 2018 and will RENEW" the insurance policy before the current policy is expire.

If I buy the holiday package in December 2017 and might renew the policy before February 2018.

Will I be covered by the insurance if for instance there is a cancellation beyond my control, the travel agent went bust, etc. in July 2018 (say) ?

IS section 75 still needed in case a comprehensive travel coverage is already in place ??

Thanks

ericthelobster

koru wrote: »

I'm not saying you have made the wrong decision. Perhaps your ratio of possible losses is much lower than 20:1. Perhaps it is much more likely that you will have to cancel because your mum falls ill than for a reason that would allow a claim under the policy. I'm just saying that it depends.

Oh yes totally, I get that. For example, my current outlay on the trip is about £100 deposit, with no more to pay until a few weeks before departure (at which point I'll review the situation obviously).

It's very hard to estimate that 'ratio' though isn't it? All I can say is that having been lucky enough to have taken an awful lot of holidays over my lifetime (and I'm late 50s now), I can only ever recall having to cancel two - one being the instance with my dad's illness I mentioned upthread, and the other being a few years back when the UK pulled the plug on flights to Sharm El Sheikh in Egypt, due to the terrorism risk. On that occasion we'd booked our accommodation direct with a hotel out there, and needless to say, when we were forced into cancelling it, our travel insurers didn't want want to know!

Hence my healthy scepticism of travel insurance :cool:

koru

adindas wrote: »

Will I be covered by the insurance if for instance there is a cancellation beyond my control, the travel agent went bust, etc. in July 2018 (say) ?

Are you asking whether cancellation cover under an annual policy applies to a holiday that was booked before the current policy was bought? Unless the policy has some weird wording, it almost certainly does.

As for whether it covers a specific cause of cancellation, read the policy.

adindas wrote: »

IS section 75 still needed in case a comprehensive travel coverage is already in place ??

If the travel coverage is so comprehensive that it covers any cause of loss, then no. But I doubt there's a travel policy that is sufficiently comprehensive.

adindas

koru wrote: »

Are you asking whether cancellation cover under an annual policy applies to a holiday that was booked before the current policy was bought? Unless the policy has some weird wording, it almost certainly does.
.

Sorry I have not been clear in this case.

I currently have one year insurance which cover until end of February 2018 (renewable)

I want to buy a holiday package / Flight this month December 2017

I will renew this insurance (the same insurance) on February 2018.

If the company where I bought my holiday package/insurance in December 2017 is going bust in the July for instance (e.g after the expire date of the old insurance but the renewal has started) do I have a claim for loss with the insurance company ??

koru wrote: »

If the travel coverage is so comprehensive that it covers any cause of loss, then no. But I doubt there's a travel policy that is sufficiently comprehensive.

Is there any common case / example where a claim is not covered by Travel insurance but covered by section 75 ?

koru

adindas wrote: »

Sorry I have not been clear in this case.

I currently have one year insurance which cover until end of February 2018 (renewable)

I want to buy a holiday package / Flight this month December 2017

I will renew this insurance (the same insurance) on February 2018.

If the company where I bought my holiday package/insurance in December 2017 is going bust in the July for instance (e.g after the expire date of the old insurance but the renewal has started) do I have a claim for loss with the insurance company ??

What matters is whether you have cover when the loss happens.

adindas wrote: »

Is there any common case / example where a claim is not covered by Travel insurance but covered by section 75 ?

Failure of companies providing transport or accommodation isn't covered by many policies.