Travel insurance specialists are issuing urgent warnings to British holidaymakers about significant changes to policy terms that could leave travellers facing unexpected financial burdens this summer season. With many consumers relying on comparison websites to select the most affordable coverage, experts caution that the fine print in annual policies is evolving in ways that could substantially increase out-of-pocket expenses when making claims.
The Growing Shift in Excess Charging Structures
Financial product rating agency Defaqto has identified a concerning trend among annual travel insurance policies, where the method of applying excess charges is undergoing fundamental changes. Traditionally, many policies applied a single excess to the overall claim amount, but an increasing number of insurers are now implementing per-person charging structures that can dramatically increase the financial impact on policyholders.
Understanding the Per-Person Excess Impact
Under these new charging models, if you purchase a policy with a £250 excess and need to make a claim as a couple, the first £500 of your claim would not be covered by the insurance provider. For families of four travelling together, this exclusion amount escalates to a substantial £1,000 before any insurance coverage begins to apply. This represents a significant departure from previous industry norms and could catch many holidaymakers unprepared when facing emergencies abroad.
The Multiple Excess Trap
Compounding this issue, some policies now incorporate a "per person, per section" rule that can result in travellers paying multiple excesses for what they might consider a single incident. For instance, if two travellers experience both lost luggage and stolen cash during their holiday, they could face four separate excess charges totalling £200 on a policy with a £50 excess. This layered approach to excess application can transform what appears to be comprehensive coverage into a financial minefield for unsuspecting consumers.
The Zero Excess Alternative
Simultaneously, the market is witnessing a rise in policies offering zero excess options. While these policies typically come with higher initial premiums, they provide the assurance that approved claims will be covered in full without any deductible payments from the policyholder. This alternative approach offers greater financial predictability for travellers who prefer certainty over potential savings on upfront costs.
Balancing Cost Against Coverage
Higher excess policies continue to attract budget-conscious holidaymakers with their lower initial premiums, but Defaqto emphasises the importance of considering the potential financial impact when claims become necessary. The apparent savings on policy purchase could be quickly eroded by substantial excess payments when travellers need to access their insurance coverage during holidays.
Specialist Coverage Considerations
Beyond excess structures, insurance experts recommend that British travellers carefully assess whether their chosen policies provide adequate coverage for specific holiday activities. Those planning adventurous pursuits like risky sports, skiing holidays, or cruise vacations should verify that their insurance includes appropriate protection for these activities. Many standard policies contain exclusions or limitations for such specialised travel experiences.
Checking Existing Coverage
Defaqto also advises consumers to investigate whether they already possess annual travel insurance through existing financial products. Many banks and credit card providers offer complimentary travel insurance as a benefit with premium accounts, potentially eliminating the need for additional policy purchases. Verifying this coverage before buying new insurance could prevent unnecessary duplication of expenses.
As the summer travel season approaches, insurance professionals stress the importance of thoroughly reviewing policy documents rather than simply selecting the cheapest option. Understanding excess structures, coverage limitations, and existing insurance benefits could save British holidaymakers hundreds of pounds and prevent unpleasant financial surprises during what should be relaxing getaways.
