Cheap Travel Insurance Investigated

Consumers gravitate to buying cheap travel insurance to make their holiday spending money go even further, but is it best value to choose on price alone?

More expensive policies available sometimes have tangible financial benefits in return for paying the higher price, such as medical cover for 5 or 10 million, as opposed to 2 million.

To evaluate whether that extra theoretical cover converts in to value for money, first we would need to find a policy holder who required a 3 million spend on medical costs in one short holiday incident. Such a person would be very rare indeed! We take from this point that the theoretical benefit is hardly ever used in practise.

Hidden aspects to a highly priced policy often include the advertising costs of making the insurer's product well known to customers. The benefits here are intangible and perhaps not benefits in any direct sense at all. Things like commercial heritage, peer familiarity, popularity in the marketplace, and which figures are used to endorse the service add nothing when it comes to cashing the pay-out cheque.

Those in the camp for cheap travel insurance, assert that a policy of reduced advertising filters down to business costs which can be passed along to the customer as financial savings on price. There is also an argument that expensive marketing campaigns reduce the ability to deliver back-office services to process insurance claims. Resulting in well known brands theoretically stretched by the enhanced workload, whilst lesser known travel insurance companies provide improved claims processing service, based on more resources allocated to that department and fewer claims in total, stemming from a smaller customer base.

Insurers employing a physical shop-front to help sell their insurance products, such as banks and travel agents are at a further economic disadvantage when contrasted with exclusive internet-only competitors. Where does the cheaper price occur? A good example is the difference between filling in the initial application. Expensive policies available might well engage the talents of an assistant or phone operator to complete personal details needed for an accurate quote. Online, the customer does this independently, equating an instant cost saving.

Further Information

1. Cheap Travel Insurance Advice - Debates the issue of finding savings in the present economic landscape.

Technorati tags; cheap travel insurance, making a claim.

Where Does Lost Luggage Go?

Lost luggage is a risk we all take when travelling by air. But how is it possible that so many suitcases become mishandled when simultaneously passengers manage to board the right flights?

Certainly having cheap travel insurance in place when this eventuality occurs provides significant reassurance and easing on personal finances. Having to personally replace the entire content of a large wardrobe neatly stored inside a suitcase is both a galling and completely preventable action.

According to the 2009 SITA Baggage Report 1,800,000 bags are lost, never to be recovered in the period of one year. This incredible figure only serves to make travellers more anxious about the reliability of the security checking and baggage handling system, once passengers have submitted the bulk of their belongings in to the hands of the airport process.

One answer to the question “where does lost luggage go?” presents itself as the Unclaimed Baggage Center in Scottsboro Alabama, USA. A horrendously garish exponent of schadenfreude at work; the business profits from the innocent misfortune of frustrated travellers parted from their personal belongings.

By analysing the percentage allocations of all lost luggage, some of which is found and returned, we can determine more of the factors involved in mishandled baggage.

• 49% - Flight connections.
• 21% - Loading errors.
• 16% - Tagging or security issues.
• 8% - Mishandling upon airport arrival.
• 6% - National or airline restrictions imposed.

Ultimately, these reasons should still keep the baggage within the confines of the airport, and in theory it should only be a matter of time before the luggage is returned to the owner. That is only possible if the passenger has taken the basic step of writing their contact information inside the case.

Which leaves a handful of alternative explanations as to where lost luggage really goes. Theft is a serious concern, especially given the extraordinary security checks supposedly demanded of staff working air-side.

However, it could also be that the luggage in question makes it through highlighted risks of loading, flight connections, security investigations, and it arrives on the baggage carousel with bar code tag intact, only to be stolen by an unscrupulous criminal sharing the same flight.

While travel insurance can help recover the costs involved, it can't reunite travellers with cherished and irreplaceable personal artefacts. The simple act of writing down the flight information, date of travel, and contact information inside a suitcase can decrease the risk of lost luggage should the barcode tag become detached.


Technorati tags; delayed baggage, lost luggage, travel insurance.

Travel Insurance Jargon - Mini Dictionary

Helping consumers understand some of the jargon used in travel insurance policies assists in gaining the most benefit from interactions with insurance providers. Below are some definitions explained.

1. Child / Adult: Definition
   In many insurance contracts the line drawn between the legal definition of an adult occurs at and above age 19. Don't tell the kids that though... Watch out for a reduction (e.g. 50% in pay-out values for children) which is a cheeky clause by insurers who assume children's prices for items needing replacement are somehow cheaper. Perhaps clothes and shoes, but certainly not PSP's and cash!
   
    
2. Hospital Sundries
   A sum which covers the costs of being a patient in a hospital, per 24 hours. This is typically a significant sum like one thousand or so, but will likely have a daily limit much lower than that, so the entire allowance cannot all be claimed in one day and requires prolonged durations in hospital to attain the upper limits of an allowable claim for these sundry expenses.
   
    
3. Curtailment
   This is when for some reason the full duration of the trip is cut short and those insured have to return home early. This could be due to illness or injury, or even severe weather like hurricanes or floods.
   
    
4. Repatriation
   After suffering an unfortunate incident such as illness or injury and having to be transported back to the country of residence.
   
    
5. Home Country
   The location where the insured reside and will be the destination for any repatriation. This is key for determining which laws will apply to the insurance contract.
   
    
6. Territorial Limits
   These define geographically the extent of where an insured traveller is and is not covered during their travels of the world. These typically match up with pre-drawn international boundaries, and may also include other markers such as maritime borders.
   
    
7. Claims Handler
   This is a named person or company featured in the policy contract. Their role is to discuss liability, identify negligence, and adjust the value of loss they deem to be correct.
   
    
8. Personal Liability
   This refers to liability for accidentally injuring a third party, and can also include incidence of accidental damage to somebody else's property. The third party can recover these costs and even sue for damages. Personal liability cover of travel insurance is a hugely valuable benefit if called upon.

Technorati tags; making a claim, pay outs, travel insurance policy.

Scheduled Airline Failure - A Consumer Success Story

Since Travel Insurance Insider penned the excellent article investigating the next airline to go bust insurers have now woken up to customers' demands.

This time last year, very few insurance companies incorporated a scheduled airline failure clause in to their policies. This was largely a legacy from a time when tour operators ruled the travel market and airlines going bust were both unthinkable and seemingly only a concern for industry bodies such as:

• United States Tour Operators Association (USTOA)
  
  
• European Tour Operators Association (ETOA)
  
  
• Association of British Travel Agents (ABTA)

However, since the advent of low cost carriers and the accessibility of flight only purchases the role of tour operators has dwindled to the extent that even back in 2006 only 55% of all airline tickets were purchased through travel agents. (Source: PhoCusWright’s Travel
Agency Distribution Landscape 2006 - 2009).

Driven by the economising focus of airlines such as Easyjet and Ryanair, consumers revelled at the idea of circumventing travel agents' 12% profit margin and happily endorsed the process of disintermediation.

The idea of consumer ground-swells predicting the next airline to go bust is a recent phenomenon, but thankfully most insurers now offer scheduled airline failure cover. Typically this is sold as standard, and less often as an additional charge.

Turn the clock back a year and we viewed a different set of circumstances: Scheduled airline failure was omitted from many policies, considered a high liability should an airline go bust, generating a large influx of claims in a concentrated period.

It was only when airlines began folding and customers engaged the acid test of their travel insurance policies, that the lack of cover in this area was found to be unnacceptable and thanks to subsequent industry guidelines, scheduled airline failure is now available to the majority of policy holders.


Technorati tags; scheduled airline failure, next airline to go bust.