How To Avoid Holiday Insurance Loopholes
It's difficult to make sure you'll be properly covered when purchasing holiday insurance
. So how do you protect yourself any hidden loopholes?
The first, and most important thing to note is that you need to read the small print.
A study from financial research company Defaqto highlighted the importance of scrutinising any small print before purchasing an insurance package.
Travel insurance is available from most banks as well as packaged with some use abroad credit cards.
The new Defaqto study revealed that from 423 of the available annual travel insurance policies, 28 per cent did not cover children that lived in a different home to the parent they were travelling with.
Brian Brown, author of the Defaqto report and Head of Research at the company warns separated parents to check details of insurance documents as some insurers do not view the child as family if they live at a different address.
The study also found that 77 per cent of insurance companies refuse to refund for grounded flights, with independent travellers found to be most at risk.
Brown points out that although many insurers will cover for 1,500 or more for airline failure, this may not be enough to cover all pre-booked items such as hotel accommodation and pre-paid trips.
The second point is that you might do well by using a credit card.
You should also consider using a credit card over a debit card to book plane tickets. This is because Section 75 of the Consumer Credit Act (1974) offers protection to the purchaser when they make a credit card transaction. Therefore, if an airline goes bust, a person should be able to claim for their flight under Section 75.
A credit card is safer to use because a 'pre-existing arrangement' exists between the supplier and credit provider and is open to all, so you don't need to bear it in mind when you compare credit cards.
Problems can occur if the card is accepted by a different company to the one that supplied the tickets, for example, buying a ticket from a travel agent could be risky as they only contracted to supply the ticket and not the flight. However, if the flight was part of the travel agent's own 'package deal' you should be able to make a claim as this situation classes the agent as the supplier.
Be aware of other situations when the credit card company can refuse a refund. For example, only items bought on a credit card between 100 and 30, 000 will be covered. Again this all comes down to reading the small print thoroughly before you buy an insurance policy and when purchasing other potentially high pressure financial products such as instant decision credit cards.
by: Helen Glaberson
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