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Travel and holiday insurance for travel in the UK and for international travel; what travel insurance and holiday insurance you may need. How annual travel insurance works and why you may need to take out separate ski insurance.

Why do I need travel insurance?

Every year UK residents make around 59 million overseas journeys. (Source: Department of Health website) We buy travel insurance for the same reason we purchase any insurance policy: to cover us when things go wrong. You may not be very impressed by the National Health Service but, remember, not every country has a free health service and you could find yourself facing a hefty bill if you fall ill abroad.

Then there are the problems which are not life-threatening but still stressful - lost luggage, cancelled flights and so on. The bottom line is it makes sense to take out an insurance policy unless you're prepared to find yourself out-of-pocket as a result of any holiday mishaps. However, if you're only going to be travelling within the UK you are unlikely to need holiday insurance, with the exception possibly of cancellation cover in case you need to cancel a pre-booked holiday.

Going abroad? Check out our travel insurance service .

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What health cover is already available?

The level of emergency medical cover available to UK residents around the world falls into three broad categories: the European Economic Area; Reciprocal Agreement Countries; and countries with no health care agreements with the UK.

The European Economic Area (EEA) consists of the European Union together with Iceland, Norway and Liechtenstein. The European Community reciprocal health care arrangements apply in these countries and also Switzerland. You are entitled to free or reduced-cost emergency medical treatment in the other 27 EEA countries (and Switzerland) provided you have with you a European Health Insurance Card.

The UK also has reciprocal health care agreements with more than 40 countries around the world, including Australia, New Zealand, certain Caribbean Islands, and most republics of the former Soviet Union, including Russia itself. These agreements entitle you to emergency treatment in those countries.

In the rest of the world, which means more than 100 other countries, including some of the most popular tourist destinations from the UK, such as Canada, the USA, India, the Far East, the whole of Africa and Latin America, no such reciprocal agreement exists. If you are travelling to any country outside the EEA or with which the UK has no reciprocal agreement, you would be wise to take out full medical insurance to cover the cost of treatment.

Full details of the emergency cover available under the various agreements is contained in the Department of Health booklet Health Advice for Travellers, which is available from your local post office, via telephone on the Health Literature Line (0800 555 777) or online at www.dh.gov.uk/travellers . It is worth remembering that even in countries with which the UK has health care agreements you will need a certain amount of insurance.

What travel insurance do you need?

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What cover can I expect from a travel insurance policy?

Your travel insurance policy should cover: medical expenses, personal liability, cancellation and curtailment, loss of baggage and theft.

The two most important parts of the cover are the medical expenses to cover the cost of any emergency medical treatment you may require, over and above the basic cover offered by governmental arrangements and your European Health Insurance Card, and personal liability - this covers you in the event that you're faced with a bill for any damage or injury you cause to anyone else or their property while abroad.

You should also have cover to pay out a lump sum if you're injured or if you die while abroad. The amount of insurance for each of these categories obviously differs from policy to policy, generally the cheaper the policy, the lower the cover.

In addition to basic disaster scenario insurance, your policy should include cover for those awkward moments when you discover that you have arrived in one continent while your baggage has been despatched to another. Cover against theft of valuables such as clothing, jewellery, cameras, foreign currency and credit cards is no more than common sense!

Some policies offer a range of value-added services, such as replacement vehicles, house-watching and so on. It may also be worthwhile choosing a policy which offers an international helpline, especially if you are going to a country where English is not readily spoken.

Get the right travel insurance !

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Is it really worth shopping around for travel insurance?

Travel insurance, like other general insurance policies, is regulated by the Financial Services Authority, except when the travel insurance is sold in connection with travel arrangements (e.g. a holiday or a flight). In other words, the FSA does not regulate travel insurance when it is sold by travel agents, which seems strange when it is estimated that up to one-third of all travel insurance policies are sold by travel agents. (Source: Churchill website 29/12/2004)

Travel agents want you to buy the travel insurance they offer because they can earn substantial commission by getting you to sign up for cover when you pay for your holiday. It used to be a nifty marketing ploy for travel firms to offer discounts on the package if you took out their insurance policy. This so-called "conditional" selling is now illegal but the convenience of taking the cover offered by your travel agent remains persuasive as, indeed, do the salesmen.

Some operators may refuse to book a holiday without insurance policy details. However, you can get round this problem - there is nothing to stop you signing a form stating that you are making your own insurance arrangements.

There is nothing intrinsically wrong with policies offered by travel agents but, frankly, the cover on offer from a high street travel agent is highly unlikely to be the best deal you can get. Agents may charge between two and three times as much as other insurers for cover that is often not as comprehensive.

Compare travel insurance costs now.

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Do I need extra insurance cover if I am taking my car abroad?

If you plan on driving abroad, whether your own vehicle or a hired vehicle, you should check with your car insurer about just how much protection your existing policy provides. All UK policies provide the minimum cover required by law in other European Union (EU) countries or the minimum cover required by UK law if that is greater. However, this cover does not automatically include theft or damage to your car.

Most people will want the same protection they enjoy in the UK when travelling abroad, for example Comprehensive or Third Party, Fire and Theft. This could, in addition to the legal minimum of third party liability cover, include accidental damage to, or theft of or from, your own vehicle, depending on the policy cover. A number of insurers automatically provide this extended cover for a specified period and often do so without additional charge. It is important, however, that you check with your insurer or insurance adviser to ensure that you have the cover you need before you go abroad.

Outside of the European Union, a green card provides proof that your domestic motor insurance policy covers the minimum legal requirements in the country being visited. Further details on the Green Card Scheme can be found on the Motor Insurers' Bureau website . You should also consider an international roadside assistance policy. Standard travel insurance policies will not cover you when driving abroad.

Looking for a better motor insurance policy?

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Is it worth buying an annual travel insurance policy?

There is a very simple rule of thumb: if you travel abroad more than twice a year, you are likely to be better off purchasing an annual policy rather than separate policies for each journey. Annual travel insurance policies generally allow an unlimited number of trips as long as no one trip exceeds 90 days in duration. If you are travelling for a longer period, say taking a gap year abroad, you need to take out special long stay travel insurance. If you are planning a long trip off the beaten tourist path, you will almost certainly require specialist help.

Annual policies are offered by a number of insurers. However, you should check the cover, some annual contracts may not insure you for winter sports, for example, so if one of your trips is to the ski slopes, you may still be better served by arranging dedicated policies.

Compare annual and single trip travel insurance .

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Why do I need special insurance for a skiing holiday?

Let's face it. British skiers have something of a reputation on the slopes! It seems we have a tendency to ski just a little too fast for our own good. Statistically, you are far more likely to have an accident skiing, or indulging in some other hazardous sport, than you are sitting on a beach reading a book. This is why most basic travel insurance policies exclude hazardous pursuits.

You should make sure you are covered, for example, for mountain rescue costs (if you need to be brought off the mountain); the cost of prepaid expenses such as ski pass and skis; and expenses incurred as a result of delays caused by avalanches in addition to the standard travel cover.

You need to know what your ski travel insurance does and does not cover. As a minimum, you should expect cover for equipment hire, piste closure, inability to ski because of an accident, sickness or loss of ski pass, avalanche and repatriation.

Be aware that you should also have at least £2 million of public liability cover in case you injure someone else, or someone else's property. This is particularly important if you are travelling to the USA or Canada, where liability litigation sometimes appears to be a popular sport itself!

Going skiing? Check our travel insurance service now!

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Can I get free travel insurance cover from my credit card issuer?

Many credit cardholders paying for holidays or air tickets with their plastic used to be eligible for some kind of free travel insurance. However, as an unexpected by-blow of the Financial Services Authority taking responsibility for the regulation of travel insurance in January 2005, a number of card issuers withdrew this perk from their cards. You should check with your card issuer to establish what their policy is.

Cover offered by standard credit cards may be limited but gold and platinum cards may still provide comprehensive travel insurance. You should also check your household insurance policy to see what cover it offers you. For example, if your household insurance policy is arranged on an "all-risks" basis, it means your possessions are also insured outside the home although you should check whether this applies if they are taken abroad.

Can you get a better credit card deal ?

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What kind of cover should I be buying?

Are you travelling on your own or with your family or as part of a group? If you are buying insurance for more than one person, a joint policy is likely to work out cheaper than separate policies for each individual.

The kind of cover you will be looking for will also depend on how much cover you already have. Your possessions may already be covered through an all risks clause on your home insurance policy and your actual travelling costs may be covered by insurance through your credit card (assuming you used it to purchase the holiday tickets).

When you buy travel insurance you may not be asked to fill out a detailed application form. Be aware that this does not mean that there are no policy exclusions and it certainly does not mean that you should keep quiet about anything likely to affect your holiday, such as pre-existing medical conditions or your plans to indulge in dangerous sports, such as trying skydiving for the first time!

Find the right travel insurance for you.

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What potential problems are not covered by travel insurance?

There are some dangers you might face while on holiday which will not be covered by any travel insurance policy: these include detention or confiscation of belongings by Customs or any other government officials; the risk of radioactive contamination; and being arrested for spying. You may feel that these possibilities are remote enough not to worry about. However, that is probably what the plane spotters found guilty of espionage after being arrested at an air show at Kalamata air base, southern Greece, in November 2001 thought as well!

There are also more prosaic dangers that may prove to be expensive and life threatening in that order: no travel insurance policy will cover you against losses as a result of exchange rate movements or against HIV infection or AIDS. You should also check whether your travel insurance policy covers the holiday booking itself. If your tour operator, travel agent or airline goes out of business you may lose your money or be stranded abroad.

Package holidays involving a flight are required to be covered by the Air Travel Organisers' Licensing (ATOL) scheme, which makes sure customers get refunds in the event of insolvency and also runs a consumer helpline.

Some protection for other holidays may be offered by tour operators which are members of one of a number of associations, including: the Association of British Travel Agents and Tour Operators (ABTA) ; the Association of Independent Tour Operators (AITO) ; the Federation of Tour Operators (FTO) ; the Passenger Shipping Association (PSA) ; and the Travel Trust Association .

However, accommodation-only agents may not offer cover, so you should consider paying with your credit card because of the purchase protection offered by the Consumer Credit Act on purchases of more than £100. Similar advice applies to buying tickets on scheduled airlines, either direct or through a travel agent.

How much money will you need? See our tourist rates .

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What things do I need to take with me when I go abroad?

To state the obvious, you should remember to take your passport and tickets, together with any visas or entry permits and, where necessary, vaccination certificates. You should also have a copy of your travel insurance policy with you. Avoid writing your home telephone number on luggage labels. You could unwittingly provide a criminal with information to the effect that your home is unattended. Use business details where possible.

Among basic travel security tips to bear in mind: keep your baggage and ticket stubs. If your luggage gets lost, you'll need them in order to confirm you checked the luggage in. If you do run into problems with lost luggage, report it as soon as possible before continuing your journey to your final destination.

If you carry a credit card or travellers cheques, be sure to check you're still in possession of them every day or so. In the case of travellers' cheques, thieves are known to rip out the bills from the last cheque so that you don't discover your loss immediately. Keep any unused cheques under lock and key.

If you're taking your own car abroad or are likely to be hiring a vehicle you should also have your driver's licence, motor insurance, green card and, if you are taking your own car, a copy of your car registration document. Finally, don't forget your travellers' cheques, foreign currency, credit cards and, for the last stage of the return trip, some sterling.

For those travelling to more exotic locations, it may be worth checking with the Foreign Office to determine up-to-date conditions in your destination and also for any advice on specific precautions that you should be taking.

The right travel insurance will stop a disaster from being a nightmare.

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13 September 2007 © Moneyextra.com

 

Our senior editor Robin Amlôt recommends you should consider taking independent financial advice before acting on any article. Please contact us for help with your individual circumstances if any assistance is required.