Four ways travel insurance can save you money if something happens while travelling

Travel insurance is one of those things you should get, but hope you never need. Unlike car insurance it’s not always a legal necessity, but it can save you a lot of money in the long run.

We never want to think about things going wrong, but the sad reality is it happens. It might not be as drastic as a life-changing accident, but losing your luggage or missing a flight are real realities. Recent research from GoCompare revealed one in four British holidaymakers go on holiday without any travel insurance, which is pretty risky.

I’ve been lucky enough to not need travel insurance myself, but I know plenty of people who have needed it when abroad.

If you become ill while you’re away

Depending on where you go in the world, medical treatment might not be free. America is a prime example of this.

If something happens and you need medical treatment, travel insurance can prevent you from being out of pocket. Sometimes the cost will be covered by an emergency payment. Other times, you'll need to foot the bill and claim back the costs incurred. Every policy is different in what it covers/excesses’ etc but you could end up saving thousands of pounds if something happens while you are away.

When you do get your cover, make sure you declare any pre-existing health conditions. It may make your initial payment more expensive, but not declaring it could invalidate your policy if you need it.

If you need to cancel

Again every policy is different in what you’re covered for, but you can get policies that would cover you if you need to cancel your trip beforehand.

You might need to cancel if you become ill or break a bone. Or it might be due to the health of a family member. Whatever the reason being covered can save you a lot of money.

With most travel companies if you cancel you’ll lose your deposit, and depending on how far out your trip is you may still need to pay for the whole trip.

My mum broke her leg a few weeks before going away one year so wasn’t able to fly. Thankfully, my parents had travel insurance and the policy refunded the money they’d paid for the trip they couldn’t take.

The important takeaway here is that you need travel insurance in place before you might need to cancel. Take out a policy as soon as you've booked the trip!

If you miss your flight or it’s cancelled

You hear stories all the time of people’s flights home being cancelled and they’re forced to fend for themselves or shell out loads of money to get home.

If you buy a flight in isolation (outside of a package) then the airline should offer a replacement flight but this might be days away. If you're travelling within the EU, they are legally obligated to get you on another flight - even another airline - but if all other flights are fully booked you could be waiting a long time.

Travel insurance can help with these costs and prevent you from being out of pocket. Maybe you need a hotel for an extra night if your new flight isn’t until the next day. Or you need transport to an alternative airport.

If you lose your bag or passport

Things can happen while you’re away, and these things can end up being very expensive. If the airport loses your bag they may offer you a small sum of money, but chances are this won’t cover all of the things inside that you may need. Or you could lose your bag yourself and need to replace items.

Travel insurance can help cover these costs so you’re not out of pocket. Or if you lose your passport you may be able claim back fees for embassy visits, or appointments to get an emergency replacement.

Don’t always go for the cheapest option

I know it's boring, but try to look into what is and isn’t covered when choosing a policy. I always used to go for the cheapest option available, but if something had happened, chances are it wouldn’t be fully covered and I’d have to pay some money myself.

You can add on extras such as specific cover for golf, winter sports, wedding cover or for cruises. We’ve been on a few golf trips before and always added extra cover for Luke’s clubs.

Plus, if you’re going away a few times within a year, it almost always works out cheaper and easier to get annual cover as opposed to individual trip insurance. Take a look at our post giving you five things to consider when choosing your policy.

Check you're not already covered

Lastly, you might already be covered by a policy you're not aware of. Firstly, make sure you didn't take out an annual policy at some point over the last 12 months. Secondly, some banks bundle annual travel insurance with their accounts. Even if you don't have one of these accounts, your partner might, which means you could be covered by a family plan.

The following UK current accounts include travel insurance:

• Virgin Money Club M (Worldwide)
• NationwidevFlexPlus (Worldwide)
• Co-op BankvEveryday Extra (Worldwide)
• Halifax Ultimate Reward (Worldwide)
• Club Lloyds Silver (UK and Europe only)

The following premium accounts include travel insurance:

• HSBC Premier current account (Worldwide)
• Citigold current account (Worldwide)
• American Express Platinum credit card (Worldwide)