Where travel insurance fails us

Travel policies do not offer cover for everything that can go wrong. We show you what travel claims result in the insurer saying 'No' to paying out.

The travel insurance industry doesn't do much to change the general misconception that it will cover almost any financial loss that occurs on holiday. The reality is that most travel insurance policies contain strict limitations on the losses covered and the amounts they will pay. Here are some of the areas that cause the most complaints:

Cancellation

Cancellation due to your injury, illness or death, or that of a closely connected person, are included, but there are many exclusions.

The main complaints arising from this section of the policy are pre-existing conditions and medical conditions about which the policyholder has consulted a doctor. Travellers usually believe that it is just diagnosed conditions that are excluded, but normally the condition will be excluded whether or not the doctor has identified the problem. The only exception is if it was diagnosed incorrectly.

It's even more complicated when it's not you, the policyholder, but someone travelling with you. If it is thought that the policyholder should reasonably have known about a pre-existing condition then it won't be covered.

Here's a cheering case study. One man bought a policy ten days before he was due to travel. He later cancelled the trip on his doctor's advice as he developed a severe chest infection. The insurer refused to payout, saying he must have known earlier. The policyholder said that, at the time, he just had a cough. The Financial Ombudsman Service investigated and then ordered the insurer to pay the claim.

If the policy covers cancellation due to a missed departure the cover is usually very limited, so don't expect a great deal back. The end of a romance is not a good enough reason for claiming, but the death of your travel partner is.

If you take out an annual-trip policy and fall ill before it starts you probably won't be able to claim for cancellation. This means that you might want the policy to start some time before you're due to go on your first holiday; perhaps you may even want it to start right away.

Curtailment

If you need to cut short your holiday you may find resistance from the insurer to paying out. There are two common reasons for this. The first is pre-existing medical conditions - but I've covered this already above.

The second is whether it is medically necessary to cut short your holiday. Normally you should call the insurer's emergency helpline when you are ill to get guidance. Sometimes people travel home early because they're ill but say they didn't call the helpline because the illness wasn't an emergency. Typically insurers won't pay out as they don't believe there was a need to terminate the holiday. The Financial Ombudsman Service tends to agree with them.

On the other hand, the Financial Ombudsman Service often upholds complaints and forces the insurer to pay out if the policyholder was so ill he/she had to be confined to a hotel room - even if he/she was not hospitalised or repatriated (brought back home). However, partners' claims are only upheld if there was a medical need for them to stay with the patient.

Medical expenses and personal accident

Again, it's pre-existing illnesses that are a problem. Many insurers suggest you call for advice if you've recently seen your doctor, if you're taking medication, or if you're awaiting tests or results. Your insurer can then decide whether there's no issue, or it can exclude the condition or charge you extra.

Sometimes there is no special limit to what the insurer will pay for repatriation. Instead, the limit is included in the medical expenses limit, which is typically £1 million to £10 million. (Read Don't get ripped off by your travel insurer to find out more.) However, repatriation sometimes has its own separate limit, which may be too low. Repatriation can cost £50,000 or more so you should ensure you have adequate cover.

If your insurer has not properly defined what it considers to be a hazardous activity, the Financial Ombudsman will normally rule in your favour. However, you shouldn't take chances. If you're going on an adventure holiday, riding a motorcycle or doing anything that may be considered higher risk to you and those around you than taking the taxi to a museum, you should read the small print and contact the insurer to ensure it's covered.

If the standard or availability of local medical care is insufficient it is rarely your insurer's problem, so complaints about that aren't normally upheld.

Baggage

Most travel insurance complaints arise from baggage claims.

Most policies won't allow you to claim for unattended baggage or baggage left in vehicles (although the precise terms vary widely between insurers). Insurers will normally reject claims where you can't provide receipts and a written police report. The need to provide receipts is often too onerous for many travellers.

When it comes to the crunch, insurers often try to define 'unattended' too loosely, even calling baggage right next to you 'unattended' if you're not looking directly at it.

It may be that your policy says you're covered for £1,500 of baggage, but many travellers don't realise that there are specific limits for various items, too. A typical example might be:

The same goes for money and documents cover, if this is included:

Insurers normally pay out just the current value of the items, not the replacement-as-new value, which comes as a shock to many. The fact that the insurer will deduct an excess (or more than one) from any settlement is also a cause of resentment.

Insurance as an add-on benefit

When you have a travel policy as an additional benefit, for example with a current account or credit card, the terms are often much more restricted. To take an example, if your spouse or partner is covered it may only be when he/she is travelling with you. The Financial Ombudsman Service will typically reject complaints about this.

Hey, it's the FOS!

Nevertheless, the Financial Ombudsman Service considers each case on the basis of fairness and has a good system in place for doing so. I've read many of its rulings and the reasons for them over the years and I find them to have a great deal of common sense. If it finds in your favour, it will order the insurer to pay your claim.

In the first instance, you should read your policy thoroughly and call the insurer when you're unsure about anything. In the second instance, if you feel you've been treated unfairly, a complaint to the Financial Ombudsman Service is free and worthwhile.

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