Outdated travel insurance can’t cover modern life

TRAVEL insurance policies have failed to move with the times, providing inadequate cover for lost or stolen valuables abroad and potentially leaving holidaymakers hundreds of pounds out of pocket, a report has found.

Consumer group Which? conducted an investigation into 20 of the largest travel insurers, including Tesco Aviva and Natwest, and found that many travel insurers have not updated their policies for years.

Consumers’ expensive everyday gadgets and valuables, such as smartphones, tablet computers, watches and cameras, may not be fully covered by the flawed policies. Which? compared the limits insurers set to cover the cost of replacing one item (single item limit), as well as the overall valuables limit that travellers can take abroad.

It found that nearly all had set unrealistically low limits on what could be claimed back in the event of loss or theft of a valuable item, especially once the excess had been deducted.

All 20 companies investigated had a single item limit for valuables on their standard policies of only £300 or less, four of which – Axa, Columbus Direct, Insure & Go and Virgin Money – had a limit of a mere £200.

Three quarters of the companies set the overall valuables limit at only £400 or less, with two companies – Insure & Go and Virgin Money – with overall limits of just £200.

More than half – 52 per cent – of 1,300 people polled by Which? said they take their smartphone, with an average value of £372, on holiday.

However, they may find themselves up to £375 out of pocket if their iPhone5 is stolen abroad, and with a bill of £1,160 to replace an iPhone, iPad and watch stolen from a hotel room.

Travel insurers told Which? that consumers could find greater cover for their valuables when travelling abroad via their home insurance instead.

Richard Lloyd, executive director of Which? said that policies should be changed in order to reflect the higher value of such items, and that companies should not expect home insurance to cover higher losses.

He said: “Travel insurance has not kept pace with the changing times. Insurers should raise outdated limits for everyday items like smartphones and laptops or, at the very least, always clearly offer the option of cover at a higher premium. It’s not good enough to expect people to use their home insurance policy to pick up the tab. To avoid a nasty surprise, travellers should shop around and read the small print or they could find themselves seriously out of pocket.”

The findings come as the Financial Conduct Authority announced a review of the travel insurance market earlier this week.

The regulator is investigating the travel and household insurance claims market as part of a wider “thematic” review of the insurance industry, according to chief executive Martin Wheatley.

Wheatley said it is important for the insurance industry as well as consumers to determine whether there is a “case to answer”. He said: “It would be very difficult, if not impossible, to defend any company if it was found to be aggravating these experiences by dragging its heels – or trying to wriggle out of its responsibility to pay legitimate claims.

“We buy insurance for peace of mind. Not for a painful scrimmage with insurers.”

The review has been ordered following a rise in customer complaints about insurance products.

Which? recommended LV, Saga, Age UK and First Direct as the best travel insurance providers on the market.