Why Cheap Insurance Can Cost You

By July 1, 2019 No Comments

Most sensible people take out travel insurance before going on holiday. Travel insurance covers all sorts of things, from shoddy service to last-minute flight cancellations. The problem, however, is that in a bid to get prices down as low as possible, many travel insurance companies engage in small print chicanery, offering customers what seem like incredible deals which, are in fact, not. 

Take the case of Rachel Taylor. Rachel had booked for her and her mother to stay in a holiday cottage in the Lake District. Nothing unusual there. She’d also taken out insurance because she knew that her mother wasn’t well and that she might have to cancel. As it turned out, her mother did fall ill and was unable to go away. Rachel, therefore, claimed for the week-long cost of the cottage rental: £646 from her travel insurance company. To her horror, the insurance company only paid out half that amount, claiming that the insurance was only paid out on a per person basis. If she wanted the full cover, her mother would have had to take out insurance too. 

Rachel’s example is what happens when people look only at the price without reading the fine print. Because the cottage was rented in Rachel’s name, the travel insurance company saw it as a shared holiday even though she paid for it in full, and claimed that the accommodation was fit for two people, not just one. Rachel lost out. 

There are numerous other examples of people getting screwed by cheap holiday insurance.


Onerous Per Person Excesses

Travel insurance seems cheap when you take it out. A family of four might pay something like £20 each to cover a week-long trip to Europe. Not bad, right? While it might seem like a good deal on the surface, problems could arise if and when things go wrong. 

The main issue is onerous per person excesses. A per person excess is where each member of the family (including your two-year-old son) has to pay a substantial contribution to the costs of the claim, perhaps £300. If you want to claim the whole family, you could be on the hook for a total payment of more than £1,200, which seems ludicrous when you consider the full price of the trip. 

Always check the small print. 


Low Payouts

You might see what looks like cheap travel insurance for just £8.99 per person. Looks great. But check to make sure that the cover will reimburse the costs of your holiday. Many of these policies pay out as little as £750 to cover your expenses. 


No Baggage Cover

Some policies try to get costs down by failing to include baggage cover on the plan. 


No Cover For Common Holiday Losses

Cheap policies may not cover you if an airline goes out of business, there’s a terrorist act which ground planes or you need dental treatment while abroad. Some policies don’t even cover passport replacement. Find a checklist of things that a policy should cover and then cross-check this with the plan you’re thinking about taking out. 

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