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Personal finance: What's the best policy when it comes to buying reputable travel insurance?: It's vital to get cover you can rely on, but there's a growing number of unknown names to pick from. Harriet Meyer guides you through the maze

June 8, 2014

Harriet Meyer



You've booked the holiday, updated your summer wardrobe and checked the neighbours will water the plants. But have you bought travel insurance? If you are one of the millions turning to price-comparison sites to search for a policy the choice can seem baffling.

Cash logged into Moneysupermarket.com to search for a Europe-only annual policy to cover two adults and two children under 16. It offered 94 policies from just pounds 22.80. The same search on Gocompare.com returned 95, from pounds 24.64. The startlingly low prices are thanks to intense competition among an expanding list of providers.

However, table-topping names were mostly unrecognisable. We scrolled past a dozen or so before coming across a well-known brand. So how do you know you are buying from a reputable company?

Large insurers tend to trade under a range of different names, and an unknown brand could actually be backed by a company you have heard of. For example, Travelinsurance.co.uk is a trading name of InsureandGo, which is part of massive Spanish insurer Mapfre. You can check the "about us" section of a provider's website to see who they are. "Picking one that is part of a big insurer should give you peace of mind," says Malcolm Tarling of the Association of British Insurers.

There is a handful of standalone players, including Explorer Travel Insurance, Traveltime, Starttravel.co.uk, Planet Earth and goPanda. "In this case check who underwrites the policy - this is the company paying in the event of a claim," says Tarling.

If you are buying through a comparison site, the brands are authorised and regulated by the Financial Conduct Authority and you are covered by the Financial Services Compensation Scheme (FSCS).

In the unfortunate event you pick a small brand and it goes bust, the scheme will step in. "We may first try to transfer the policy to another insurer," says a spokesman. "If there is a claim already in process, we may be able to offer compensation, but this would be on a case-by-case basis."

Whether a provider pays out is what consumers really want to know. The Financial Ombudsman Service received, on average, 43 complaints a week in the year to April 2014, ruling in favour of the consumer in more than half the cases.

One of the most common reasons for a claim being rejected is when an insurer relies on a particularly restrictive or onerous term in the contract.

A spokesman for the ombudsman says: "Should the worst happen, keep a note of any correspondence. Keep electronic copies of your policy saved to your email account so the documents can be accessed wherever you are in the world. Taking pictures of an incident is another great way to record what's happened."

Complaint disputes make it important to consider how companies deal with customers. Look for 24-hour helplines, and check online forums to see if there are any comments about a brand.

Gocompare.com offers star ratings beside policies from independent financial researcher Defaqto. Some of the cheapest are only awarded one star out of a possible five. Consumer ratings are also a useful way of understanding which companies look after their customers. Of 20 travel insurers listed by consumer group Which? it only recommends Saga and Marks & Spencer Bank based on customer feedback.

Fairer Finance, a service set up to help consumers choose the best financial products, ranks insurers based on what customers think of the brand, how good they are at handling complaints, and how transparent they are. The best score highly across all of these areas.

Among travel insurers LV=, First Direct, Tesco, Amex, M&S and Saga are gold-rated, while Aviva, HSBC, Staysure and the AA are silver-rated.

"It's worth going to a comparison site first to see what the cheapest available policies are - but if you don't see any of these brands it could be worth going to them directly," says James Daley, founder of Fairer Finance.

Before any search make a list of what cover you need in a policy, says Tarling. If you are unsure if the policy will pay out for your needs, you could also call a broker. A list of these is available at biba.org.uk. They can advise you of the right policy for your requirements.

Graeme Trudgill, executive director of the British Insurance Brokers' Association, says: "Numerous brands listed on comparison sites are actually brokers. You could give them a call to check the policy definitely covers your needs - they will have different types and strip down the cover to get a competitive quote."

Here are some relatively unknown insurers that may crop up

Staysure

This is a specialist insurance broker for the over-50s known for being prepared to cover holidaymakers with cancer or other serious pre-existing medical conditions. Staysure has above average happiness and trust scores from customers on Fairer Finance - in spite of having the longest policy document of all travel insurers (at almost 38,000 words)

BigBlue Cover

Listed by Which? as offering attractive rates with a good level of cover for singles, family and couples. It is part of the larger Rock Insurance Group.

TopDog Insurance

Surprisingly, it isn't a pet insurer. Cover is underwritten by Mapfre, which has a below average record on complaints handling, says Fairer Finance. In the last six months of 2013, the Financial Ombudsman received 310 complaints about Mapfre compared to 115 for Saga. Its policy documents are among the longest - at a little over 25,000 words.

Explorer Travel Insurance

It specialises in insurance cover for over 65s. It is listed by Which? as providing among the best value European single trip policies for those over 80 with a good level of cover.

CHECK LIST

Many providers will remove or reduce some elements of cover or inflate excesses to bring the price down and appear at the top of the table.

As a guide, Which? recommends travel policies should cover medical expenses of at least pounds 2m (Europe) or pounds 5m (worldwide); at least pounds 3,000 for cancellation; and at least pounds 1,500 for baggage and belongings cover. It offers useful tables on its website showing the cheapest providers with a decent level of cover for families, singles, couples, older travellers and those with pre-existing conditions. Also, watch out for the detail:

¦ Missed departure This is often featured on a policy's summary document - but it does not necessarily cover both outbound and inbound journeys.

¦ Excess The excess is the amount you have to pay towards the cost of your claim. So if you claim for pounds 250 and your excess is pounds 50, the insurer will pay out pounds 200. However, watch out for an excess per person which can soon make a policy worthless in the event of a small claim.

¦ Baggage cover On some cheaper policies baggage cover has fallen from pounds 1,500 to pounds 750 or less.

¦ Valuables More of us are taking our laptops or iPads away - check the limit for individual items, as this can be as low as pounds 50, and does your home insurance cover this anyway?

¦ Medical exclusions Policies typically won't cover pre-existing conditions. However, this is not limited to medical conditions that have already been diagnosed. It may also apply to symptoms for which the customer has seen a doctor before buying the insurance, but where the cause of the problem has not yet been diagnosed.

¦ Stepchildren Stepfamlies should check the detail of their policy. According to research by Gocompare.com, of 472 policies only 297 covered stepchildren as standard.

¦ Booze There is a disparity between different insurers' attitudes. Some refuse to cover any claims arising directly or indirectly from excessive alcohol intake.

Captions:

Some basic homework before you leave home can ensure peace of mind when you get to the beach. Alamy


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Source: Observer (UK)


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