Thursday, December 27, 2007

Cheap travel insurance: is it enough?

You’ve bought those last few holiday essentials, made your final bookings and are ready to pack your bags… but do you have your travel insurance in place? Often overlooked till the last minute, travel insurance is an essential holiday inclusion, especially if you are going overseas. And if your destination is the United States it should be the first thing you buy! But how much do you really have to pay to get what you need? Will cheap travel insurance do the trick or will it leave you vulnerable if you have to claim? Here we outline the things you will probably miss out on with a cheap travel insurance policy so you can decide for yourself if the risk is worth it.
Why is it cheaper? Have they missed stuff out?

The old adage you get what you pay for holds true for travel insurance. Buying cheap travel insurance means either you are covered for the same things but at a lower value, your excesses are higher or you will miss out on the nice-to-haves such as cover for your luggage and legal expenses in the event of a personal liability claim. It may also mean you are not covered for pre-existing medical conditions, such as asthma, or sporting or extreme activities that aren’t specified. Pregnant women should be very careful when taking out a travel insurance policy so they are aware of any restrictions and are certain they are covered to travel – both at the beginning of the trip and the return journey.

One of the potentially pricier consequences of buying cheaper travel insurance can be receiving only limited medical cover. Having a cap on this type of cover means there could be expensive, leftover costs in such circumstances as the need for a medical evacuation (this can go way past the $100,000 mark in Australia) and hospital costs (in destinations, such as the US, this can be about USD$10,000 a day).

Other shortfalls can include only being provided a couple of hundred dollars for travel inconvenience, such as flight delay, missed connections and delayed or lost luggage. If, for example, a flight delay runs into days, your out-of-pocket expenses could add up to be considerably more.

Many travel insurance policies also end as soon as you hit home soil, so if you leave early due to, say, a relative being sick or a death in the family, and your policy does not cover you for special circumstances, you cannot get a refund for the portion of the holiday you missed out on.
Comprehensive travel cover versus cheap travel insurance

Good travel insurance may provide unlimited cover for medical emergencies and evacuation, as well as address cancellation costs, loss of baggage, personal liability (and associated legal costs), damage to rental cars and flight delays. A cheaper policy may only provide a restricted amount of cover, such as medical cover, personal liability, missed departure and connection, personal baggage and your cash.

It may seem like a big chuck of cash to fork out upfront but not taking out an appropriate level of travel insurance could bankrupt you. Once you leave home turf and step out into the big wide world stuff happens. Most people have a story to tell about lost baggage, cancelled flights, missed connections or stolen belongings. A few also have stories to share about broken limbs, evacuations (especially from countries not medically equipped to deal with more serious medical emergencies) and family circumstances that compelled an early return. To be sure your holiday is as restful as possible be sure you take out enough cover to give you peace of mind.

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