Trapped in T5 - a travel insurance nightmare?

Just as the angst, political chicanery, duplicity and divisiveness of the abolition of the 10p tax band has been distilled into the phrase"the 10p", so the abject frustration of modern day air travel has been reduced to a similar piece of linguistic shorthand: "T5".

Before March 2008, if you said "T5", many might think it something created by director James Cameron and played by the "Governator", Arnold Schwarzenegger. But now, just mention T5 and it conjures up notions of delays, cancelled flights, mandatory passenger fingerprinting, lost baggage and ageing "supermodels" throwing hissy fits and spitting at policemen.

In short, T5 has become an eponym for travel chaos. But that's OK: youve got travel insurance and you can claim all this disruption back. If your flight is delayed, your luggage lost forever, or you have to spend several nights in an expensive airport hotel, then this is all covered on your travel insurance policy, right? Err, not quite.

Travel insurance and a Terminal condition

In mid-April 2008, a month after T5 opened and the TV camera crews recorded the chaos for the bulletins that seemed to be screened hourly and the newspapers slashed the pandemonium across their front pages, a group of insurers - chiefly the RBS brands Direct Line and Churchill - quietly withdrew cover (even on policies issued months earlier) for risks such as lost baggage, delayed flights and temporary hotel accommodation for travellers being processed through Heathrow's Terminal 5.

The reason given by the insurers was that, because the problems with lost baggage and delayed flights at T5 were so well known it was considered a "pre-existing condition" and so didn't qualify for cover under these insurers' travel policies. RBS expected the rest of the insurance industry to follow suit and fall into line behind them; instead, their competitors lined up to condemn their actions (and earn a bit of positive PR at the expense of their rival). A few days later - and anxious to avoid any further criticism - the RBS insurance brands were forced to eat humble pie and start honouring claims on T5 delays and losses.

The anguish suffered by T5 travellers is by no means unique - nearly 200,000 UK passengers have their luggage lost or misplaced at airports every month, according to research by Insure&Go. So, with summer upon us, if your summer holiday involves jetting off to sunny climes (whether via Terminal 5 or not), travel insurance is something you simply must have - no excuses.

Going abroad this year? Try our Travel Insurance comparison service.

Don't gamble with your health on holiday

According to financial services industry number crunchers Defaqto, one in seven Brits go on holiday without travel insurance. While some holidaymakers may shrug resignedly at lost luggage, unbuilt hotels and delayed flights and see these as an inconvenient risk of foreign travel, these are the least of your worries should you be involved in an accident requiring medical treatment. Many feel that simply getting a European Health Insurance Card (EHIC - the old E111 as was) which entitles you to free or discounted healthcare in European countries is enough: it's not.

Yes, you're entitled to free healthcare in the European country where you require it, but you're only entitled to the basic bog-standard care that country's citizens get. Fine if you come a cropper in France or Scandinavia, which have impressive heavily state-funded healthcare schemes. Not so good in counties such as Spain or Italy where the quality of medical treatment varies widely depending on which bit of the country you're in. Also, some European countries offer their citizens incredibly basic free healthcare to which anything over and above basic care is paid for through top-up fees.

Travelling abroad on holiday or business? Check out our tourist rate guide to see how much your pound will get you.

Medical expenses escalate if there's a need for repatriation. In Europe's most popular summer destinations such as Greece and Spain, repatriation costs are £11,500 and £8,000 respectively, while the cost of an Air Ambulance from the US West Coast to the UK is approximately £38,000. In respect to the amount of grief and hideous expense an accident abroad can cost you, travel insurance is laughably cheap.

Where and when to buy

But the first rule of buying travel insurance is where you buy it and you should never buy it from the travel agent through which you've booked the holiday. Rather like mineral water in a restaurant, travel agents add a large mark-up on the premiums that offsets the tempting deal they've offered you on the holiday itself. Also the cover offered can be shoddy. A survey by the Consumers' Association (publisher of Which? magazine) found extensive evidence of mis-selling of insurance by travel agents. Researchers called on travel agents to buy insurance, and found that only one out of 28 travel agents checked customers for pre-existing medical conditions, as well as explaining what the policy did - and did not - cover.

08 July 2008 © Moneyextra.com

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