Travel Insurance Terms Explained

Sometimes it seems as though those folks that work in insurance speak another language. Contrary to popular belief, curtailment doesn’t actually have anything to do with curtains and has lot to do with cutting your trip short unexpectedly. Who knew?

It’s important that you know what these terms mean before you book a policy – that way you can work out the bits you need and the bits you dont… which will save you cash in the long run!

So what do the terms mean?

Medical expenses

In most countries outside the UK you will have to pay for ALL medical treatment, from in-grown toenail removal (less than £100) to emergency life-saving surgery (probably over £50,000)… and your hospital stay (sometimes over £1,000 per week to be in the bed). With the right cover your insurance company will pick up the bills. If you are travelling to the US, the costs will be higher, so bear this in mind.

The largest ever medical bill was around £900,000, however, you would be hard pushed to go over £500,000. We therefore recommends a minimum of £1 million cover. The Government says a minimum of £5 million. ‘Unlimited’ medical cover is just a marketing gimmick – unless you’re to be flown to the moon for treatment?

Emergency repatriation will usually be included in your medical expenses (check!) This is all about getting you home. If your leg is in plaster a nurse may accompany you on a scheduled flight (lucky you!) If you are confined to a wheelchair or a bed/trolley, your insurance company will pay for an air ambulance with a medical team. Obviously this is more expensive. The good news is that this also covers the cost of flying you home in a box if you look left instead of right when crossing the road and fail to see that bus.

Reminder, largest ever claim for medical was £900,000, so don’t go overboard on this.

Personal Accident

Unfortuantely this is the nasty side of insurance as it refers to ‘personal accident to you’. Being totally honest, this is just a token compensation amount. So if you lose an eye, arm, leg etc. then you could receive up to the amount quoted. Some choose to opt out of this, others go for the full monty of £30,000+. What you choose is up to you. Remember, the medical bills to sort out this stuff are covered in ‘Medical Expenses’, so this is purely a token payout to compensate you for your loss. £15,000 seems to be about the average if you choose to take it.

Cancellation and curtailment

These both cover you if you have to cancel or cut short (curtail) your trip. Cancellation is usually before you have left e.g. trip booked, two days to go, you break your leg ‘doing an Elvis’ on the dance floor at your leaving party. Curtailment is usually having to cut your trip short e.g. you start a ski instructors course and slip on the dance floor whilst showing the Canadians how to ‘do an Elvis’.

Damn that Elvis!

The money quoted is what you will receive to pay back what you have spent on the trip i.e. if your round the world ticket cost you £900 and you cancel the trip before you go, then you will receive £900 back. If you cut your trip short e.g. six months into your 12 month round the world trip, then you will receive £450 back, half of the £900 ticket i.e. it is in proportion.

So how much you need to be covered for purely depends on the price of your ticket and any other expenses you have to pay out. £1,000 is generally plenty. If your ticket and your outlay is more expensive, then go up accordingly.

Travel delay

This pays you back for tea, coffee, sarnies etc. that you pay for if your flight is delayed. Many think that they are onto a winner here i.e. stock up if the flight is delayed. The bad news is the compensation figure is usually around £20 for every 12 hours delayed to a maximum of just over £100 i.e. you would need to delayed for about five days. Overnight accommodation is not covered by this and generally if there are any serious issues the airlines will look after you and pick up the cost of hotel bills etc.

Most backpackers don’t worry about this one. If you’re delayed take a good book, some comfy clothes and stock up on drinks and snacks before you get to the airport (usually cheaper). If you want it, you would find yourself hard pushed to go over £100.

Baggage & personal belongings

This covers your backpack and the stuff inside. You need to ask yourself a few questions:

1. What have you got in that backpack that is of any value or that you can’t replace cheaply overseas? If nothing, then you may decide not to take the baggage cover
2. What are you likely to be buying overseas that will cost you over say £100 e.g. iPod in Singapore, digital camera in Hong Kong etc. Lose them and you’ll lose the money you paid.
3. If you only have one item of value e.g. £150 digital camera, you may like to forget the baggage option and get it insured independently i.e. to include the baggage option may add another £20 on to the policy, however, it may be cheaper just to insure your £150 digital camera for under £15. You’ll need to call the insurance company to get a quote for this

So, add up the value for your kit and decide if you want to be compensated if they all go missing. Then choose a cover that is enough, but not over the top (they will ask for receipts, so you won’t be able to blag an extra £200 for some Gucci sunnies that don’t exist!)

Travel documents

This is compensation for non-refundable items such as your inter-rail ticket, pre-paid travel tickets, pre-paid passes to tourist attractions etc. You lose your inter-rail pass in Munich, you’ll have to fork out another £200 before you can go anywhere. If you’re covered, the insurance company will pay. This does also include documents like passports, driving licenses etc. Generally the money covered is the stuff you would have to pay to make the phone calls, courier the passport to where you are etc. The limit for a lost passport will be set (read the small print), probably around £100 – £200.

So, how much do you need? If you don’t have any pre-paid tickets, are a really careful person or are staying in one place for most of your trip, then you may choose not to bother getting cover. If you have pre-paid tickets etc. add up the value and then work out how much you need to be covered for.

After some basic cover? £50 – £150 is usually sufficient to pay for a few phone calls, a courier etc. If you’re going somewhere remote then maybe stack this up a bit more.

Cash limit

This is cover for physical cash that you have in your pocket that you may lose, have stolen etc. The amount you get covered for should equate to what you carry around. If you’re not going to carry around over £100 cash (which is sometimes the limit for cash payout), then you may not want this. You will need to prove what you had in your pocket, so remember to keep all receipts when you take cash out of machines etc. – your only proof. Without you may get nothing. Most backpackers choose not to take this as it isn’t worth the hassle claiming for £30-£40 going missing.

Personal Liability

So you’re hot, excited and a bit drunk. Or you’re generally just messing around. You jump into the pool and land on top of some random bloke. Unfortunately he is carted off to hospital to have your footprint removed from his back. He then can’t work for 10 years, which is a mare as he has to support a wife and three kids. So, he sues you for compensation. He wins.

Let’s say he was earning £40,000 per year and his medical treatment came to £50,000. 10 years x £40,000 is a minimum of £400,000. Add the £50,000, to make £450,000. As long as your personal liability is more than that, you are fine. If you have cover for £200,000, you will have to find the other £250,000.
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Stuff that backpackers tend to do include riding into people on mopeds, surfing over people, landing on people when jumping into water, etc. Sod’s law also states that you will damage someone who earns a lot in a country where medical treatment costs a lot of money. So, how much do you need here?

Well, £1 million is your absolute basic. The case above of the bloke with kids is quite extreme, so in most cases going over £1 million would be quite difficult. You would probably read about the payout in the papers if it happened – that kinda thing. If you’re going to America, where everyone sues everyone, and you are going to be doing stuff that puts others at risk, then consider £2 million.

Legal expenses

This is generally to do with you having to take someone to court, the cover pays for the legal fees. You probably haven’t ever done this, so probably have no idea how it works right? Ok…

You’re walking across the street checking out the house where Madonna once lived and some guy jumps the light in his car and runs you over. You are injured, taken to hospital and have to undergo treatment that costs you money. You also could do with a bit of compensation for the fact that you are now having to go through life six inches shorter and with only one arm. Bummer. The you find out that he’s not insured. You will then need to take him to court. Lawyers cost anything from £10 an hour in some developing nations to over £1,000 an hour if you have a top QC in the UK or the US. So how much cover do you need?

£5,000 will go a long way in Poland, but will be chewed very quickly in the US. £10-15,000 will get you further in the UK and the US, so certainly go higher if you are going to the US for more than a few days. You can elect not to be covered for it, but it is one of those things that is very useful if something does go wrong.

Adventure/Adventurous activities

This covers you for accidents that happen when you are doing ‘adventurous activities’ e.g. bungy jumping, crocodile wrestling and calling your mum’s cooking ‘bad’. If you go rafting, have an accident and haven’t told your insurance company that you were going rafting, you may not be covered. Therefore, if you are intending to do ANYTHING on your trip that might be seen as adventurous e.g. rafting, tandem skydiving or bungy jumping, make sure you’re covered as most budget policies won’t cover you for any of these activities so you’ll need to add them in.

Can I decide when I get out there?

Yes you can, although we wouldn’t advise it. You can elect not to take adventure cover and then call up when you’re out there, contemplating a bungy jump the following day. The only thing is that (a) it may be more expensive (b) if you choose local cover you may not be aware of the full terms and conditions that apply to those not local to the country (c) with cover for some activities in this bracket you will get a better deal before you head off i.e. free extra days skiing, extra sports included etc.

Beware: there are various definitions of ‘adventurous’. What some insurers class as ‘adventurous’, others class as ‘hazardous’. However, it’s unlikely that ‘adventurous’, ‘hazardous’ or even ‘down right dangerous’ activities are going to be the sole purpose of your trip. If you are only going to do these activities for a couple of days at best you can often get insurance for these activities by the day for an extra couple of pounds.

As it is such an important issue we would suggest you read into what each policy covers specifically or call up and ask before you buy. If you think you may end up doing something, get covered – as it is one of those things that you may suddenly do ‘on a whim’ and so put your finances at risk (adventure sport accidents are generally costly!).

Other terms not mentioned above…

Excess

This is the amount you might have to pay if you make a claim e.g. if the policy has £75 excess on medical expenses, this means that you have to pay the first £75 of your medical bills, before the insurer pays the rest. Read the small print guys as some insurers can be a bit sneaky here. Many aspects of your policy will include an excess, so find out (a) if there is one and (b) how much it is.

Territorial limits

The cost of the insurance policy varies depending on where you intend to travel mainly because the cost of medical care is more expensive in some countries, particularly the US. However, most policies enable you to travel outside the policy area for up to 25% of the trip without paying more e.g. if you intend to spend nine months backpacking in Australia and South East Asia you can spend up to three months in the USA without paying the additional premium.

Winter sports

Winter sports cover usually costs more because

(a) You’re probably cool and have lots of expensive clothes and equipment – the latest board, latest bindings and the Oakley goggles
(b) You probably pull the sickest moves and so are more likely to wind up in hospital
(c) Sometimes, following (b), you are taken to hospital with the ‘slow family of four’ you were trying to avoid but accidentally mowed into the slope and off the cliff

It also usually covers things such as piste closure and avalanches (if you survive).

Jargon buster

Click here >> to see our comprehensive list of all other terms.

FINALLY – a few important things to consider

1. Flying your parents out.

Recently a friend of ours, Matthew Miller, fell ill whilst backpacking in Australia. What seemed like a simple fever nearly turned into something disastrous as they found a lesion in his brain and an inflammation in his spine. His parents were desperate to be with him and his insurance policy with No Worries Insurance immediately authorised his parents to fly out there – they would pick up the bill. NB a lot of this is done on a case by case basis, which is why it is vital that you get a quality policy with a reputable company who would be willing to put their reputation on the line to do the right thing. We are pleased to say that Matthew, although a little shaken up, has recovered. His parents did not need to fly out in the end, but at least the option was there.

2. Mopeds.

You will probably only get cover for Mopeds up to 50CC. Have an accident on one over this and you’ll find you’re not covered. This is a common backpacker accident, so take note. If you want cover for bigger bikes then you have to ask

3. Scuba diving.

You will probably only be covered to dive to 30m. Go deeper and you’re not covered. If you want insurance to go deper, you need to ask. NB: most problems happen at depth, so please don’t take the chance. Insure for deeper if you know it’s likely to happen.

4. Mechanical stuff.

ALWAYS, ALWAYS, ALWAYS check to se if you are covered for any mechanical object you may be going on or using e.g. diggers, quad bikes, chain saws, light sabers etc. Chances are you won’t be covered and generally accidents on/with these things are messy and expensive. Think before you buy.

5. Alcohol.

You may not be covered if you have an accident when you are drunk. Bear this in mind. Drink driving is a stupid thing to do anyway. Do it in the US and knock someone over and say goodbye to all your family’s possessions. A nice short-cut to bankruptcy for all that one… and probably prison.

6. Locked rooms.

Believe it or not, insurers may not pay out if you leave your brand new iPod on your bed in a hostel dorm where the door is unlocked. Think about this.

Found this guide & insurance section useful? Great! Let us know as we’d love to know that we’re getting it right.