Has Covid hiked travel insurance costs? How you can stay protected

Shante Abdo

Table of Contents Why are prices rising?Will your insurance cover Covid-related claims? What you need from your travel insurance  Thousands of holidaymakers could see their travel insurance premiums rise by 20 to 30 per cent, thanks to Covid, new research has revealed.  Some could even see a hike of 38 per […]

Thousands of holidaymakers could see their travel insurance premiums rise by 20 to 30 per cent, thanks to Covid, new research has revealed. 

Some could even see a hike of 38 per cent, according to research from Go Compare.

Meanwhile, a basic multi trip insurance policy around Europe jumping from £17.38 in July 2019 to £22.71 in July this year, according to separate data from Compare the Market.

It also found insurance for a one week trip to Europe has increased from £8.44 two years ago to £10.53 this summer.

Travel insurance might go up for some holidaymakers, thanks to Covid, experts have revealed

Whilst the jump may not seem a lot, prices have increased across the board as travel insurance has become more essential than ever since the pandemic.

Holidaymakers are encouraged to take out a decent policy that will cover them for every eventuality with the hike in price potentially due to increased demand as more people start to travel abroad. 

There was a 31 per cent uplift in visitors comparing the cost of travel insurance last week versus the week before, according to MoneySuperMarket.

The comparison site also stated that 87 per cent of the enquiries were for August departures and the other 13 per cent for September onwards.  

To find out whether prices are actually increasing, This is Money contacted a number of industry experts who advised what cover is available and how customers can protect themselves when abroad.

Why are prices rising?

Many insurers did not wish comment on whether premiums have increased, as it was commercially sensitive information, but said they were able to cover for a range of coronavirus related claims.

A Go Compare spokespersons said: ‘We have seen a 38 per cent increase when comparing travel insurance premiums in July 2021 against July 2020.

This increase can be attributed to a number of factors – including Covid-19 – but we are also seeing other factors having an impact on premiums. In particular, we have seen a big increase in the number of people who buy their policy in the week that they are travelling, compared with month or a year in advance of their departure.

‘This is largely due to Covid related disruption/restrictions forcing customers to book last minute getaways. We are also seeing more people buy five-star policies so both of these changes will have an impact on premiums, as well as Covid.

Buying travel insurance as soon as you book your holiday gives a degree of cancellation cover (up to specific a value, and it’s important to check any cover limits and exclusions in the policy wording) so customers can claim for the cost of the holiday if they cannot travel for specific reasons covered under the policy.

Kevin McMullan, Director of travel insurance at Saga, said: ‘Covid-19 is understandably front of mind for people going on holiday at the moment. The majority of holiday providers are flexible on Covid cancellations and rollovers, should you need to postpone your trip.

‘Saga Travel Insurance customers are covered as standard for medical treatment abroad and repatriation, but your policy may differ, so check the wording and if you are not sure then ask your provider.

‘You should also remember that coronavirus is just one of many health issues that could potentially affect you or your loved ones before you travel or while away. It’s equally important to make sure you have the cover you need for all eventualities alongside your protection linked to Covid-19. 

‘Avoid going for the cheapest policy or just focussing on the Covid clauses to ensure the cover you take out is right for you and as valuable as possible.’

An AXA UK spokesperson said: ‘AXA provides cover for many situations relating to Covid-19, including when customers have to cancel their trip due to a positive Covid-19 test and if they get ill with Covid-19 while abroad, as long as they have travelled according to FCDO advice.

‘We advise that customers check FCDO advice as this may restrict cover to specific countries, and we suggest they carefully read their policy and visit our website or get in touch if they have any questions.’

Whilst research from Compare the Market shows travel premiums are increasing, some industry experts believe the cost of travel insurance is in line with the cover it provides customers. 

HOW MUCH TRAVEL INSURANCE HAS INCREASED IN TWO YEARS
Product Trip Jul-19 Jul-21
Single Trip Travel Insurance 1 week Europe £8.44 £10.53
2 nights Europe £1.77 £1.81
1 week UK £2.79 £5.53
2 nights UK £1.26 £1.75
Multi Trip Travel Insurance Europe £17.38 £22.71
Worldwide £21.89 £27.49
Worldwide Travel Insurance 1 week £8.75 £12.07
2 nights £3.03 £2.85
Source: Compare the Market     

Malcolm Tarling, spokesperson for the Association of British Insurers, said: ‘Travel insurance remains competitively priced, and is primarily designed to cover what can be jaw droppingly expensive medical bills if you need emergency overseas medical treatment, including for Covid-19.

‘Travel insurance does not cover costs involved in complying with entry requirements set by overseas authorities or return requirements set by the UK, and will have some Covid exclusions relating to cancellation cover, so check your policy.

‘Having travel insurance remains vital when travelling abroad, and when shopping around for cover make sure you buy the policy that best suits your needs, not automatically opting for the cheapest.’ 

Will your insurance cover Covid-related claims? 

One of the main concerns for those heading abroad in the near future is whether they will be covered for any coronavirus related claims.  

But travel insurance is designed and priced primarily to cover costs of any emergency medical treatment, including that Covid-related, needed while overseas, which can range from tens to hundreds of thousands of pounds, Defaqto said. 

Providing customers are not travelling against any Government advice, then their travel policy will operate in the normal way, in accordance with the terms and conditions.

However, holidaymakers are encouraged to check their policies carefully before they buy as they some will likely have Covid exclusions. 

Fortunately, 97 per cent of policies cover the costs of medical treatment if you catch Covid while on holiday whilst 90 per cent also cover you if you cancel a holiday because you have tested positive for Covid before you travel, according to data from Defaqto.

Meanwhile, 58 per cent will also cover cancellation if you are told by the NHS Test & Trace team to isolate because of being in close contact with an infected person, but without having caught the disease yourself. 

Brian Brown, Consumer Finance Expert at Defaqto said: ‘One of the big costs at present is the cost of testing. Just five per cent will cover the cost of any tests taken as part of your holiday, if those tests prove positive.

‘If you booked your travel through an ABTA travel agent, or an ATOL flight operator, and the government changes its advice and tells people not to travel, these organisations should either arrange alternative holidays or give you a refund or get you home.

‘Failing this, customers are likely to have to rely on their credit card provider to get them a refund. Insurers will not currently cover cancellation caused by the FCDO changing its travel advice.

‘We would advise all travellers buying travel policies at the minute, or who have already bought, to check their policy to make sure they will be covered if they catch Covid, or if the country they intend travelling to is moved to a different risk category.’

Holidaymakers are advised to check their travel insurance policy carefully before purchasing

Holidaymakers are advised to check their travel insurance policy carefully before purchasing

What you need from your travel insurance 

Defaqto said there are three main areas which travel insurance is designed to cover, each of which make up about a third each of travel claims. 

Customers are encouraged to check their policy adequately covers them for each of the below:   

1. Pre-travel: There are things which might happen which cause you to cancel your holiday, including you or an immediate relative getting ill which prevents you from travelling. Other issues include failure of your scheduled airline, or the hotel/resort you’re travelling to going bust.

2. Medical issues while abroad: One of the biggest problems for travellers is becoming ill while overseas, because few countries in the world have free medical care like the NHS.

Travel insurance is designed to cover the costs of emergency medical treatment abroad and usually the costs of getting you back to the UK.

In the EU if you have an EHIC (European Health Insurance Certificate) card or its replacement the GHIC (Global Health Insurance Card) you are entitled to the same standards of health care as a local resident would receive.

This though might not mean that you receive totally free cover, and it won’t cover the costs of returning you and your party to the UK.

If you are ill while abroad you are also likely to miss some or all of your holiday, and travel insurance will usually pay towards the cost of this ‘lost’ holiday. This is known as ‘curtailment’ cover.

3. Baggage & Personal Belongings: Lots of customers rely on their travel insurance to pay for the costs of replacing any lost, stolen or damaged belongings, money and travel documents when they travel.

Travel policies often cover baggage for these issues, but might also pay some compensation if your baggage is delayed. This is especially important in the case of things such as skiing holidays, when your skis are lost in transit for a few days.

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