What is travel insurance and how does it work?

A travel insurance policy protects you from losing money because of unexpected events that might happen:

  • before you travel abroad
  • while you are travelling abroad.

These are the main areas covered by a travel insurance policy:

  • Emergency medical expenses – this includes any emergency treatment while you are abroad. It includes ambulances and getting you back home safely.
  • Cancellation – if you have to cancel your trip or end it early, for example, if you or a family member are ill.
  • Personal liability – if you injure someone or damage their property by accident.
  • Baggage – this pays out if your belongings are lost or stolen.

You do not have to take out travel insurance. But if you go abroad without it, you could end up paying very large amounts of money. This could be if you need emergency medical treatment, or if you injure someone else by accident.

Travel insurance might be offered as a benefit with your bank account, credit card or home insurance. Check with your bank or your home insurer.

Types of travel insurance

The main types of travel insurance include the following.

Single trip

Single trip insurance covers you for one trip abroad. You will need to take out a new policy each time you travel.

Annual policies

Annual (or multi-trip) insurance covers you for more than one trip in the same year. This may be more difficult to get with a health condition. It is also generally more expensive, particularly for worldwide cover. If you are planning more than two trips in the same year, you could think about getting annual insurance. But check first if it is cheaper to get single trip insurance for each trip.

Winter sports and activities

If you are planning on doing winter sports such as skiing on your holiday, getting travel insurance may be more difficult. Travel insurance providers will generally ask whether you have any activities planned. Because winter sports are considered high-risk activities, they may increase the premium or the excess.

Standard travel insurance policies often do not cover winter sports. Instead, you often need to include winter sports cover. If you get injured on a skiing holiday, medical bills can be very expensive. This means getting the right cover is very important.

You might also need extra cover if you plan to do other activities or sports that carry a high risk. These include scuba diving, mountain biking or bungee jumping.

It is important to check the details of any policy and make sure it specifically covers any activities you are planning. Some policies contain exclusions which mean you would not be covered in certain situations. For example, this might include skiing off-piste without a guide or cycling without a helmet.

You can ask the provider if it is possible to extend a policy so that it covers any extra activities you are doing. If this is not possible, you could look for suitable specialist policies. These are sometimes advertised as activity travel insurance, adventure travel insurance or sports travel insurance.

Remember to check that baggage insurance would cover any sports or activity equipment you take with you. You can also protect your belongings under your home insurance policy.

Cruise holidays

It is important to know that some travel insurance policies will not cover cruise holidays. Some insurers will charge you more for this type of trip. If you have annual travel insurance and are going on a cruise holiday, check that your policy will cover you before you travel.

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