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Do I Need Travel Insurance? 3 Key Questions

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If you're like most people in the UK, you'll travel abroad on a holiday this year. As part of your planning, a crucial consideration is the purchase of travel insurance. You can buy travel cover independent of your other bookings or when you book your flights, accommodation, car hire, etc. you may be asked if you want to buy travel insurance.

photo of economy class seats on an airplane

It's important to have enough insurance cover, without paying for duplicate coverage. Carefully consider what you need before making a purchase.

You May Already Have Travel Insurance, and Not Know It

Before you sign up to a new travel insurance policy, be sure you don't already have coverage through your bank or credit card. For instance, HSBC Premier account holders are covered through Premier Worldwide Travel Insurance. Barclays, Nationwide and Halifax also offer the option of various forms of travel insurance to account holders. Tesco Bank Premium credit cardholders get annual worldwide family travel insurance (aged under 70).

In most cases, however, travel insurance through your bank or credit card comes at a cost—in the form of an additional monthly account fee, an annual fee or minimum deposit requirements.

If you do have cover through a bank or credit card, be sure to read the details of the policy so you know what is and isn't covered. Cover may be more basic or not include "extras" like baggage, airline insolvency, cruise cover, etc. For example, travel insurance provided through most American Express cards only covers accidents for loss of life, limb, sight, speech or hearing (including hijacking situations)—on public vehicles.

When You Really Need Travel Insurance

While travel insurance can provide a financial safety net to just about every traveller, there are some circumstances in which travel insurance may be even more valuable.

1) You're worried about overseas medical expenses

Medical expenses in many parts of the world, particularly North America, are prohibitively expensive. If you don't have private medical insurance that covers worldwide travel (most of us don't, in the UK), then you should definitely consider travel insurance to cover any unexpected medical expenses.

Those with a European Health Insurance Card (EHIC) have the right to state-provided healthcare during a short-term stay in another EEA country or Switzerland. However, even those travelling to Europe only should consider buying additional travel insurance. An EHIC does not cover any private medical costs (e.g., mountain rescue or being flown back to the UK) nor does it cover cruises.

2) You have pre-paid, non-refundable travel expenses

If you're staying with family or friends when you travel, and aren't pre-booking many other expenses like activities or tickets, then you may have less need for travel cover. That said, you may still want financial protection for lost baggage, travel disruption (which may cover airline insolvency) or trip cancellation (e.g., due to illness).

If you have pre-booked any non-refundable accommodation or taking a cruise, you'll have extra need for trip insurance. Cruises in particular are vulnerable—if you arrive a day late due to a missed flight, for instance, you may be left at port. Travel insurance can compensate you for a missed departure, for instance, so you can try to catch up at the next port.

3) You're travelling with expensive possessions

While most of us travel with hundreds of pounds worth of clothing and other belongings in our luggage, those travelling for their wedding or perhaps with expensive sporting or other equipment have the potential to be out thousands of pounds if their luggage is lost or damaged. Any one travelling with a wedding dress, golf clubs, gadgets like a laptop, etc., may have extra need for travel insurance. Coverage for these valuable items often costs extra as an insurance add on.

What is Travel Insurance Worth?

The value to you of any insurance product is a function of the policy cost vs. any potential expenses you might incur if things go wrong. When considering the relative cost and level of coverage for travel insurance, keep in mind which countries you'll visit, the cost of pre-booked expenses (e.g., flights, accommodation, activity bookings, etc.), potential medical expenses, the value of your belongings, etc. How much of a hardship would it be for you if your holiday didn't go as planned, and you were out of pocket for any of these costs?

Buying Travel Insurance

Like any financial decision, understanding the terms of a travel insurance policy is crucial before you sign on the dotted line. If you do decide to buy travel insurance, be sure to read the fine print to understand what is and isn't included in the policy. Some key features to look out for may include:

  • What happens if the airline or accommodation provider becomes insolvent?
  • What happens if my flight is cancelled or delayed?
  • If I have an accident, what medical expenses are covered?
  • How long do I have to make a claim, and what proof do I need to provide?

By asking these types of questions, you'll make a more informed decision about your travel insurance purchase. To get an idea of expected costs, please read our article on the average cost of travel insurance in the UK.

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The guidance on this site is based on our own analysis and is meant to help you identify options and narrow down your choices. We do not advise or tell you which product to buy; undertake your own due diligence before entering into any agreement. Read our full disclosure here.