Travel Insurance Policies Leave Thousands of Delayed Travellers Out in the Cold

Strategic Insights -

Thousands of travellers affected by the recent UK airport security clampdown may not receive compensation due to exclusions in their travel insurance policies. The vast majority of insurers do not have adequate reinsurance to cover terrorism attacks, forcing many to rely on policies with limited or no terrorism cover. Travel policies with terrorism cover are available, but often come at no additional cost, and are essential given the ongoing severe terror alert status in the UK.

Key Takeaways:

  • According to Graeme Trudgill, technical services manager at the British Insurers' Brokers association (BIBA), most insurers do not have adequate reinsurance to cover terrorism attacks, leaving many travellers without compensation.
  • Some insurers, including Direct Line and Norwich Union, will pay out if passengers were left waiting at the airport for more than 12 hours, while others, including Axa and More Than, exclude terrorism cover and will not offer any payments.
  • Travel policies with terrorism cover tend to cost the same as those that exclude it, making it essential to purchase a policy with terrorism cover, particularly in the current severe terror alert status.
  • Many insurance policies require travellers to keep valuable items, such as electronics and jewellery, with them at all times, making luggage cover essential when forced to check in hand luggage.
  • Insurers are considering how to respond to the possibility of restricted hand luggage, which may impact insurance coverage.
  • If a traveller chooses not to take an alternative flight when their original flight is cancelled, they may have insufficient grounds to make a cancellation claim.
  • Insurance claims for travel cancellations can only be made in extreme circumstances, such as if a traveller or a relative falls ill or dies, or if the traveller is made redundant or called for jury duty.
  • When making a claim, proof of the event is necessary, and haggling may be involved, with travellers needing to justify the loss.
  • Beyond terrorism, travel insurance policies cover a wide range of mishaps, including mugging, lost or stolen passports, and medical emergencies, with Norwich Union paying up to £1,000 for mugging and £350 for replacing a lost passport.

Statistics:

  • The majority of insurers exclude terrorism cover, leaving many travellers without compensation.
  • Some insurers, including Direct Line and Norwich Union, will pay out up to £1,000 if a traveller is mugged.
  • Norwich Union pays up to £350 if a traveller must replace a lost or stolen passport.
  • Many insurance policies require travellers to keep valuable items, such as electronics and jewellery, with them at all times.
  • Travel policies sold online or through agents as part of packaged holiday trips often have price and exclusion issues, leading to increased complaints.

Sources:

  • Graeme Trudgill, technical services manager at the British Insurers' Brokers association (BIBA)
  • David Ross, spokesman for Norwich Union
  • The Financial Ombudsman service