Why travel insurance is a must have

With times hard, many people are cutting back on travel insurance. But when even minor problems abroad could mean bills running into thousands of pounds, insurance is one thing you shouldn't skimp on. Ruth Jackson examines the ins and outs of travel insurance, and how to make sure you have the right cover for you.

As the recession takes its toll, it appears that almost a quarter of us are prepared to skimp on travel insurance, according to a survey by insurer LV=.

But if those people realised how much it could end up costing them, I'm sure they'd change their minds. A burst appendix is painful enough without having to worry about the £7,500 cost of having an appendectomy in Europe - or worse still, a £25,000 bill if your appendix gives you trouble while holidaying in America.

And a recent article in the Daily Mail points out that, should you also need help getting back to the UK following an accident, you could be looking at bills of around £25,000 for even relatively minor problems.

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For example, once you take into account that something as straightforward as a broken leg could mean you need a first-class seat on a flight just so you have sufficient leg-room, it starts to become clear how quickly the costs of an accident abroad can mount up. Add in the pay and expenses if you require a qualified medical practitioner to escort you, and "you begin to appreciate that £25,000 is quite conservative even for a straightforward case," says Chris Blackman from medical travel insurer AllClear.

What about my EHIC card?

British citizens are entitled to a European Health Insurance Card (EHIC). This allows you to claim free or cut-price medical treatment in EU countries and Iceland, Liechtenstein and Norway. But this isn't an alternative to travel insurance.

An EHIC entitles you to the same level of state medical treatment that locals would get. But this could be significantly less than you would get on the NHS some European countries don't even have a state healthcare system. And it doesn't help you with the cost of repatriation (getting back to the UK).

You certainly shouldn't travel within Europe without an EHIC apply for an EHIC card here - especially as youmust have the card to receive the benefits. But get travel insurance as well.

What cover do you need?

Before you start shopping around for travel insurance, think about what kind of policy you need. If you are likely to take more than two trips a year than the chances are an annual multi-trip policy will be more cost effective than buying insurance for each trip. Typically a multi-trip policy will cover you for an unlimited number of trips per year, as long as no single trip is for more than 31 days.

The next thing to consider is what you need your insurance to cover. It is vital that it provides you with sufficient medical cover. Make sure you check the small print of a policy before you buy it, as some of the cheaper ones may not provide enough cover. The minimum medical cover recommended for Europe is £1m, rising to £2m if you are holidaying in America where hospital costs are higher, says The Guardian. Also make sure that your insurer provides 24-hour assistance you don't want to be laid up with a suspected broken leg listening to an answer phone telling you to call back during office hours.

It's also worth getting cancellation cover, so that if you have to cut your holiday short or cancel before you even set off, you can recoup your costs. But always read the small print to check what your policy will cover.

Personal liability should be included in your policy too. This means that, should you damage anything or anyone while you are abroad, you are covered if they sue you. It's recommended you get a policy with at least £1m personal liability cover.

What aboutbaggage cover?

For an extra fee most insurance policies will give you a level of baggage cover which you can claim if your luggage or belongings are lost or stolen while you are abroad. But before you sign up for this, check your home contents insurance. It may be that the valuable bits you want to insure are already covered when they are out of your home.

Once you've worked out what cover you want, head to Moneysupermarket.com or Confused.com and find the best value cover for you. And once you've bought it, read the small print. It may be time consuming, but should the worst happen it pays to know what you are covered for.

Finally, do remember to pack a copy of your insurance documents and keep the emergency number handy. There's no point in buying insurance only to find you have no idea how to claim when you need to.

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Ruth Jackson-Kirby

Ruth Jackson-Kirby is a freelance personal finance journalist with 17 years’ experience, writing about everything from savings and credit cards to pensions, property and pet insurance. 

Ruth started her career at MoneyWeek after graduating with an MA from the University of St Andrews, and she continues to contribute regular articles to our personal finance section. After leaving MoneyWeek she went on to become deputy editor of Moneywise before becoming a freelance journalist.

Ruth writes regularly for national publications including The Sunday Times, The Times, The Mail on Sunday and Good Housekeeping among many other titles both online and offline.