Travel insurance - is free always a good thing?

by Chris Rowlands
The majority of us have a credit card for one reason or another, whether it be for business purposes or purely for a little indulgence once in a while.

What you may or may not know is that many companies now offer "free" travel insurance to their cardholders. Almost 3 quarters of the credit card companies now offer this and many banks are now following suit with their current accounts packages.

The problem is - you may not be receiving the same level of cover you'd expect from a stand alone travel insurance policy. The financial ombudsman service is said to have noted a rise in complaints related to free insurance policies.

The cover can suffer from one of a few problems, firstly; lack of cover level in important areas such as medical/injury. Secondly; lack of range - you will usually find you don't receive the same all round comprehensive level of cover you'd receive from a stand alone policy. And last but not least - the duration of cover may only be based on a single trip policy outline and therefore not give continued cover should you need it.

Insurance experts are said to have reported that Medical cover is lacking on the majority of these policies and anything under £5 million is inadequate. Of course there are certain credit card companies who offer a high enough level of cover, however - weeding these out from the myriad of credit cards available today can be difficult.

There have been a few cases in which the free insurance policy has refused to pay out. This can be due to the credit card company not being informed of minor medical problems which occurred long before traveling commenced. In a recent case reported to the financial ombudsman the ruling was made in favor of the insured as it was deemed unreasonable for the client to report every minor health problem to the provider of the free insure throughout the year.

In the case of a standalone single trip policy there is usually no need to mention minor illnesses from which you have recovered at the time of applying for cover. This should therefore be the same across the board including free insurance policies.

As a good rule of thumb you should seek a minimum cover level of £1 million when traveling in Europe and at least £2 million when traveling in non EU member countries such as the USA. Anything below £1 million should be considered too little and this is where many free insurance policies fail the end user.

In certain countries - such as America, medical treatment is extremely expensive and without a high level of cover you could find yourself out of pocket by thousands of pounds.

Many of us spend much time planning our holidays but little thought is put into taking out a holiday insurance policy. It is vital for peace of mind and to offer protection for yourself and your family - you should carefully consider taking out a policy if you do not already.

The insurance ombudsman also reported that travel insurance complaints overall were dropping but the free insurance related complaints continue to rise.

Remember - of you do rely on a free insurance policy; read through the terms and conditions carefully to identify any areas where you may be lacking vital cover. Carefully consider the pros and con's of a stand alone policy compared to a free policy, you will usually find you are better off with the former.

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