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8.2.4 Travel insurance

Insurance for travel has changed radically since the 2000s, partly due to an increase in foreign travel but also because of changes in the insurance market itself.

Travel insurance covers:

  • the risk of disruption to your holiday
  • theft of your belongings
  • the risk that you might cause injury, damage or loss to others
  • the risk of medical problems while abroad.

If you have a medical emergency while travelling abroad you could end up with significant health-care bills, or large costs if you have to be repatriated to your home country. A European Health Insurance Card (EHIC) is available through UK post offices. It allows you access to emergency medical services throughout the European Economic Area (EEA) and Switzerland on the same basis as local nationals. You may have to pay towards the cost of those services in some countries, so an EHIC is not a substitute for full medical insurance.

Traditionally, travel policies were often offered for a single trip as part of the purchase of a foreign holiday, or you could make your own insurance arrangements for each trip you took. However, the market changed and increasingly people began to make insurance arrangements for their travel generally (rather than for a single trip) by buying insurance for a fixed time period.

This trend was enhanced by changes to the law in the UK that prevented holiday firms from forcing customers to pay over the odds for compulsory single-trip insurance. Since then, the market has expanded with the entry of new insurers and brokers, and new products have become available.

As with all other types of insurance, shopping around for the precise cover you require may reduce your costs. Different policies can cover different parts of the world. They may or may not include winter sports (an activity with a rather high probability of accidents). They vary as to how long any individual trip may be within a given time period.

One recent trend has been for travel insurance to be included with a particular credit card or bank account – but check carefully whether such ‘bundled’ policies meet your requirements.

Figure 7