The impending rise in Insurance Premium Tax (IPT) on travel insurance from 17.5% to 20% could lead people to cut corners and opt for the ‘free’ insurance offered by their credit or debit card company warns P J Hayman (the company behind 24/7 travel insurance). The specialist travel insurance and schemes provider believes that this could leave travellers without the necessary levels of cover and prove to be costly in the long term.
According to research by P J Hayman, 5%* of people use the travel insurance that they receive as part of a package from these types of financial service providers rather than taking out more comprehensive cover. This means that as many as 2.9 million trips** are made each year without adequate cover. Peter Hayman (Director at P J Hayman) expects these numbers to rise as more and more people opt to economise and use ‘free’ cover as the cost of IPT increases.
However, while this cover is often billed as ‘free’ or part of a ‘premier account package’, it can which usually only protects an individual while they are travelling; so any unexpected circumstances such as cancellation, flight delays or luggage damage may not be covered. Indeed, certain activities such as winter or adventure sports and some countries such as the USA are excluded from this cover.
In certain cases, some policies are also only valid if the holiday – or part thereof – is paid for on the card associated with the insurance. With 62%* of people neglecting to read the small print of their travel insurance policies closely, these exclusions are often not spotted until the policy holder comes to claim.
Peter Hayman, Director of P J Hayman says:
“Although the low-cost approach can seem to be the easiest option, it is important that people look into the level of cover offered and think twice about whether or not it will provide them with adequate cover. Indeed, we believe that those who are most likely to look to economise in this way are those who are most vulnerable – adventurous young travellers, large families with several children or older travellers.
“These groups can ill-afford to pay thousands of pounds when they find out that their ‘free’ travel insurance policy does not offer them the protection they expected. Therefore, we suggest that before people ‘cut-back’ and rely on ‘free’ travel insurance that they receive as part of a package from a credit or debit card provider, they read the terms and conditions of the policy to ensure that they are covered.”
* P J Hayman surveyed 1,330 people in Q3 2009 via web based research tool.
** 58,433,000 (UK residents visits abroad – 2009 – Office of National Statistics).