Travel Insurance may save you hundreds or thousands of pounds on unexpected expenses in case a holiday goes wrong, perhaps in the form of a medical emergency or trip cancellation. But it's wrong to assume that an insurer will pay out for any mishap that occurs on a trip. An insurance claim will be paid only if it's explicitly spelled out in the policy terms and conditions. This is why the cheapest insurance isn't always the best—you often get just what you paid for.
Here is a list of some situations that might make a claim ineligible under your policy terms. Each policy is different, so be sure to understand the terms and conditions of your own policy, both before and after you buy.
1. Pre-existing conditions
In most cases, if you fall ill from a pre-existing condition while travelling, your travel insurance will NOT cover your treatment—unless you have formally told the insurer about the condition and the insurer has agreed to cover the condition. In the case of pre-existing conditions, an additional premium may apply to your policy.
2. High-risk activities
A travel insurance policy typically spells out a list of sports that are included in cover, and another list of sports which either are not covered at all or fall under limited coverage. You should assume any sport not specifically listed is NOT covered, unless authorized by your insurance provider in writing.
Typically, high-risk activities are not covered under a general policy, but you may be able to buy specialist cover—for instance, skiing, competitive sports (e.g., sailing, horse riding, cycling, etc.), shooting, etc. For all activities, be sure to check the fine print, as there may be specific requirements surrounding particular activities, such as wearing a helmet, wearing eye protection or supervised by a qualified person. Fail to meet these requirements and any claim may be invalid.
3. Claims without proof
When claiming for lost or stolen valuables, for instance, you may need to provide proof of ownership. This proof can be in the form of an original receipt, insurance valuation prior to the loss, credit card statement or a photo of you with/wearing the item. Evidence of replacement value is generally not sufficient, as items are not settled on a "new for old" basis. Without proof, you may be limited to a significantly smaller coverage amount.
4. Insolvency of airline
If you've booked flights and accommodation separately, you may NOT be covered if one of them goes bust even if you have travel insurance. Many travel insurance policies do not include cover for an airline or accommodation provider becoming insolvent. If you want this protection, look out for End Supplier Failure and Scheduled Airline Failure Insurance (SAFI).
On the other hand, a package holiday, where flights and accommodation are included in one price, should be covered by ATOL insurance, which will kick in if a provider becomes insolvent.
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5. Acts of God, terrorism, strikes, war, etc.
Generally speaking, claims won't be covered if they stem from acts of terrorism, war, strikes or "acts of God" like volcanic ash, earthquake or tsunami.
6. Claiming for accommodation of a higher standard than original booking
Under travel disruption insurance, you may be covered for the cost of alternative travel and/or accommodation. However, just because your policy covers for disruption (perhaps due to adverse weather conditions, mechanical breakdown, strike—every policy is different) doesn't mean that you can upgrade to more luxurious accommodation or flights. If you try that, your claim probably won't be paid (at least in full).
Anytime you claim on travel disruption insurance and you need to rebook accommodation and/or flights, be sure to keep to the same standard as your original bookings.
7. Alcohol and drugs
Most travel insurance policies won't cover for claims that arise from your being under the influence of alcohol and/or drugs.
8. Mobile Phone
Mobiles phones may be covered under your travel insurance plan, in the Valuables or Gadget section of cover. But many plans do NOT include cover for your phone or other gadgets. Sometimes, you can buy it as an optional add on.
Read the Policy Wording Carefully
Before you buy a travel insurance policy, it is very important to read through the fine print (that is, the policy wording). By doing so, you're more likely to enter into a contract that provides the coverage you find important; plus you'll be better prepared on how to proceed if a claim becomes necessary.