The Secrets of Cheap Travel Insurance: Ditch Baggage Cover and Don’t Pay for Unlimited Medical Expenses

Holidaymakers can save hundreds of euros by eliminating unnecessary extras from their travel insurance.

But if you go too far, you risk a bill that is many times higher if it turns out that you are underinsured.

How do you achieve the ideal balance? Money Mail investigates.

How much do prices vary?

Many “gold standard” policies can cost more than double the basic coverage from the same company.

Insurance company InsureandGo, which we chose as an example because their budget cover is fairly comprehensive, charges £25.12 for insurance for a two-week trip to Spain at the end of August.

The top package costs an extra £40, at £65.25. And that’s excluding optional extras for gadgets and dangerous activities.

Such price differences are common among insurance companies, says Rory Boland, editor of Which? Travel magazine. ‘You don’t have to buy the most expensive cover,’ he adds. ‘It’s about working out what you need.’

InsureandGo was asked for comment.

1. £5 million in medical cover will probably be enough

Probably the most important aspect of travel insurance is medical coverage, along with repatriation, which can be sky-high, especially when traveling in the US.

This is an area where holidaymakers probably won’t want to skimp. But you probably won’t get anywhere near the £20 million that some policies offer.

According to the Association of British Insurers, the average claim for emergency medical care in 2022 was £1,750. Even if the worst were to happen, it is rare for claims to exceed £1 million.

However, according to the British Insurance Brokers’ Association, the largest recent claim was over this amount.

And consumer body Which? advises you to opt for £5 million in medical cover – which many basic policies include. It’s highly unlikely you’ll need more than this.

2. Cover the full cost of your holiday

Please ensure that the full cost of your trip is covered by your insurance should you need to cancel.

Policies do not usually offer unlimited cover. For example, InsureandGo’s budget policy only covers up to £1,000 for cancellations due to events outside your control.

The Gold policy covers £7,500 in cancellation fees and the Black policy covers up to £10,000.

For a top holiday or luxury cruise, you may need more cover. Alice Lawson, associate director of insurance for Holiday Extras, says the company has paid out £15,000 to a customer for a cancelled cruise.

3. You may not need baggage coverage

As long as you’re not travelling with a suitcase full of designer brands or expensive items, £1,000 is probably enough, especially as insurance often covers the cost of wear and tear.

Larger items such as jewellery, phones and computers may already be covered by home contents insurance. Check what your policy covers to avoid paying twice.

For that reason, True Traveller has not included baggage insurance in its standard policies. ‘A lot of people are already insured through their home contents insurance,’ explains director Tim Riley.

InsureandGo charges £40.05 if you take out additional gadget insurance in our Spain example, compared to £25.12 for a basic policy.

4. Package holidays offer extra protection

If you have purchased a package holiday (two or more items booked and paid for at the same time with a tour operator, such as a travel agent), you are already covered by the package travel rules.

It is the responsibility of your tour operator to get you to your destination.

They will also normally rebook your holiday or refund your money if you decide to cancel your travel plans after a delay of 24 hours. In that case, travel cancellation insurance is not necessary.

“If you book a package holiday, you need less of your travel insurance,” says Mr Boland, adding that cover in case the tour operator goes bust is also unnecessary.

Even if you don’t book a package holiday, but you pay with your credit card and your travel provider goes bust, you are covered under Section 75 of the Consumer Credit Act for items worth over £100.

5. Don’t skimp on your personal liability insurance

You may be wondering whether you really need insurance if you injure someone or damage their property while on vacation.

But in some cases it can be invaluable. Both Which? and consumer specialist Money Saving Expert recommend travellers have £1 million of cover, although in certain circumstances in America you may want to consider increasing that.

“The biggest one is a skiing accident. If you’re going skiing in North America, you definitely want £2 million covered,” says Mr Riley.

6. Check if you are covered by your bank

Check if you already have travel insurance through your bank account, but pay attention to the small print.

Some insurance policies only provide cover within Europe and may not cover you if you undertake certain activities such as diving, horse riding or zip lining.

7. Dangerous sports may be included

Travel insurance policies often offer optional add-ons for dangerous activities such as horse riding or skiing, but check first to see if your activity is already covered before paying extra.

Essential insurances

1. Always buy before you fly

Take out insurance on the day you book your trip. Comparison website Go.Compare reported that 23 percent of people take it out on the same day they travel – which could mean cancellation insurance is invalid – while another 23 percent take it out just a week before departure.

2. Don’t forget your EHIC/GHIC in Europe

Although essential, your EHIC (European Health Insurance Card) or the newer GHIC (Global Health Insurance Card) are not a substitute for your travel insurance. They only entitle you to treatment at the same price as residents of the country you are visiting.

Despite its name, the GHIC is not valid outside Europe.

3. Report any existing medical conditions

Failure to disclose any medical conditions you may have when purchasing your insurance may result in your coverage lapsing.

There are specialist companies that deal with people with serious medical conditions, such as All Clear.

• Travelling without insurance? Email moneymail@dailymail.co.uk