tifgroup’s consumer campaign to help customers understand travel insurance, Travel Insurance Explained, was invited to contribute to BBC Radio 4’s Money Box programme on Saturday 23rd Sept., which asked the question “What you can expect your travel insurance to cover you for in light of the recent flight cancelations by Ryan Air?”
This was a great opportunity for us to be able to get our message to a wider audience.
The recent Ryan Air fiasco with headlines such as “RYANAIR holidaymakers hit by mass flight cancellations are facing fresh misery as travel insurance firms refuse to cover their costs”, really turned the focus on what can you expect your travel insurance to cover you for, and it was unfair to suggest, once again, that travel insurers were the bad guys here. The reality is that travel insurance policies are designed to put the consumer in the same position after the claim as they were before it – in this case, Ryanair had broken its contract with its customers, and they refunded the cost of the flights, so in this regard, the customer was no worse off financially.
Travel insurance policies are also contracts, and they lay out the terms and conditions of when they will, and won’t pay a claim. Generally, policies do not provide cover if the airline, tour operator, hotel or any other element of the holiday cancel your booking – they have a duty to refund you accordingly, and in some cases, provide additional compensation.
Where the problems arise for the customer is when they have booked various elements independently, and find that because one part of the holiday has been cancelled they now cannot use the other parts of the holiday and therefore they have to cancel and pay whatever charges apply. This is known as ‘consequential loss’ in technical speak, and not covered under standard travel insurance policies.
So, this brings us to the next question, why isn’t it covered? and the simple answer is – price.
Too often we see customers who buy their travel insurance policy purely on cost. Encouraged by ‘consumer champions’ and price comparison sites to ‘save money’ and ‘buy the cheapest’ they pick one of the cheaper standard policies so they can tick the box and say they have travel insurance. Like any product, the cheaper the price the more limitations there are likely to be on what that policy will, and will not cover. You would not pay the price of Ford Fiesta and expect the luxury and performance of a BMW.
The problems start when something happens and they then look to the policy to solve the problem. From research Travel Insurance Explained has commissioned, we know that over 45% of people either never check the terms and conditions on their travel insurance policy when they buy a policy, and only do so when they need to make a claim, and it is at this point that their expectations are not met, and they are disappointed, and blame the travel insurer.
Part of our campaign is to change the way that people but insurance. We want them to think about the cover they would expect from a travel insurance policy and then look for a policy matches that criteria, once you have done that then you can think about the price.
So going back to the Ryanair situation, if you want to be covered for money you have paid out and can’t get back from anywhere else you should look for a policy which will cover you for cancellation for ‘any cause beyond your reasonable control’.
These policies may be a couple of pounds more expensive than the standard policies, but that would be a couple of pounds well spent should you need to make a claim.