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Watch out for the travel insurance small print |
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HOLIDAYMAKERS have been warned to check the small print of their travel insurance closely following a huge increase in the number of disputes over claims for ruined trips.
Many of the cases involved insurance companies refusing to pay thousands of pounds for medical treatment and lost holidays after travellers were taken ill - often on the grounds that they did not declare a pre- existing medical condition.
Consumer groups last night accused the industry of hiding crucial exclusion clauses amid pages of legalese, and warned that insurers were increasingly likely to exploit loopholes and ambiguity in the small print.
New figures from the Financial Ombudsman Service (FOS) reveal that the number of travel insurance complaints rose from 1,088 in 2002/03 to 1,453 in 2003/04, an increase of 34%.
The FOS has the power to make judgments in cases and force companies to pay up. About half of all cases are resolved by mediation. Of the rest, the FOS typically finds in favour of the consumer in just over half of cases.
The FOS called the rise in disputes "significant" and said: "Much of our caseload focused on how insurers apply exclusion clauses relating to ‘pre- existing conditions’."
Disputes over pre-existing conditions normally involve the insurer claiming that the traveller failed to make it clear that he had an illness which might lead to a complication while abroad.
Holiday medical costs can be enormous. According to research by a finance magazine, anyone hospitalised in Greece faces a bill of £11,500 simply to be transferred back to the UK. Treatment for a heart attack in Spain would typically cost £35,000 and a hip fracture in the US costs around £22,500 to treat.
Britons spend an estimated £600m each year on travel insurance, with a typical premium for a two-week trip for a family or four costing around £60.
One policy seen by Scotland on Sunday ran to 13 pages of small print containing 15,000 words. The details on pre- existing medical conditions made up three short paragraphs on the fourth page.
Conditions consumers must mention include ongoing or recent treatment for heart problems, cancers, high blood pressure, lung illnesses, diabetes, epilepsy, and asthma.
In the case of diabetes, epilepsy and asthma, insurers will normally add an extra cost to the premium but still offer insurance. But in the case of heart, lung and circulation problems and cancers, most firms will refuse cover and refer the consumer to a specialist insurer.
Travellers usually do not have to declare minor illnesses such as colds, or diseases - however serious - if they have not received treatment for a year, or in some cases, two.
The FOS said: "Sadly, in too many of the cases we see, firms have fallen well short of best practice. Some continue to hide the ‘pre-existing condition’ exclusion in long-winded and complex policies offering little or no advice about how it might impact on a traveller’s holiday plans."
In one example cited by the FOS, a traveller demanded the costs of his holiday from his insurer after he had become too ill from stress to travel. But the company rejected the demand because it argued the consumer had previously been diagnosed for stress within the previous year but had not disclosed this. The traveller lost the entire costs of his holiday.
But even in cases where travellers believe they have followed both the letter and the spirit of the rules, they can still encounter problems.
Emma Davis, a sales executive from Edinburgh, took the step of telling her holiday insurers Boots that she had asthma before she headed to the Netherlands for a fortnight’s holiday last year.
She said: "I told them when I got the cover that I had asthma, and it meant that I paid more. I thought that since I was paying more I would be covered."
But when Davis’s inhalers were stolen along with her baggage, she found to her horror that the company had decided it would not cover her.
She said: "I went to the hospital and they checked my insurance documents and then made some checks and came back and told me that I was not covered.
It was staggering. My doctor was on the phone to the hospital and told them which kind of inhaler I needed.
"I said I would buy one, because they cost just £27. The problem with the insurance meant I couldn’t even buy one because of the rules over there. I had to cut short my holiday and fly home and get an inhaler."
She lost £250 in travel costs.
A Boots spokesman said it was reviewing the case.
An insurance industry insider said: "If you are suffering from a complex condition, it is entirely legitimate that it should be taken into account in their premiums.
"People can't just expect us to pick up the bill for all manner of operations when they haven't told us about their illnesses."
But consumers’ groups last night challenged insurance companies to make the caveats in their policies clear.
A spokesman for the Consumers’ Association said: "We don’t believe that giving a person a policy several pages long and leaving it to them to read it counts as making the policy clear to them."
WHAT TO LOOK FOR
WHEN you are travelling you should have at least £1m medical cover in Europe - £2m in the USA and the rest of the world - and at least £1,500 baggage and belongings cover. Make sure you also have enough cover for expensive items such as camcorders.
Other policies should include:
• Cover for cancellation or curtailment of your trip, including prepaid excursions and the costs of getting you home (for example, if a close relative falls ill).
• Personal liability cover of at least £1m to cover any costs which are incurred as a result of you injuring someone, or damaging their property.
• A 24-hour English-speaking emergency line and cover for legal expenses.
• Membership of the Financial Ombudsman Service. If you are unhappy with the outcome of a claim and can’t settle your dispute with the insurer, you can complain to the ombudsman for free. The ombudsman can force the insurer to settle claims and pay compensation.
• Cover for any sports. Travellers looking for winter holiday insurance should be wary of policies which do not offer off-piste cover. Being even a millimetre off the piste, for example at the end of a fall, could disqualify a claim. |
