When does annual travel insurance make sense?

·7-min read
 (Unsplash)
(Unsplash)

Travel insurance and coronavirus

When buying travel insurance, check whether the policy provides cancellation cover that includes coronavirus risks, including if you fall ill or need to isolate before you travel. You should also have cover in case you fall ill (including with Covid) while you are away. Read the policy documents and check levels of cover with the insurer if you are not sure what protection is provided.

Travel insurance is an essential for any holiday as it offers financial protection should things go wrong. But should you buy a policy that covers just one trip, or one that lasts the whole year and covers multiple trips? Do your research before you decide.

What is an annual travel insurance policy?

As the name suggests, an annual travel insurance policy will provide cover for any holiday you take over a 12-month period. That’s why annual policies are sometimes called multi-trip travel insurance.

If you are a regular traveller, these policies can work out cheaper, not to mention more convenient, than taking out several single-trip policies.

A comprehensive annual travel insurance policy should cover you for the following:

  • Medical expenses

  • Medical repatriation

  • Cancellation and curtailment

  • Missed departures

  • Delays

  • Lost baggage and personal possessions

  • Personal liability

You can buy annual travel insurance policies to cover individuals, a couple or a family.

When is it worth buying an annual travel insurance policy?

If you know that you will be going away two or more times in a year, it’s worth comparing the price of an annual policy with single-trip insurance as it may work out to be the cheaper option.

After that, the more you travel every year, the better value an annual policy will be.

As well as saving you money, annual policies save the hassle of going online to book insurance every time you travel – great if you like to book spontaneous breaks or take several trips over the kids’ school holidays.

What should I look for in my annual travel policy?

If you decide to take out annual travel insurance, think realistically about all of the trips you are likely to take in a year to ensure you’re adequately covered.

If you know you’ll stay within Europe, a European policy will fit the bill.

If you go for worldwide cover, you may be offered two types of policy options – those that cover travel to the United States, Canada and the Caribbean and those that don’t.

Those without cover for the USA, Canada and the Caribbean are likely to be cheaper because of the high cost of medical treatment in these destinations.

With both European and worldwide insurance, check your insurer’s own list of countries it covers. Turkey, for example, will be covered on some European policies but not others.

If you take lots of mini breaks in the UK throughout a year, consider policies that include UK cover too. They can provide financial protection for everything from cancelled trips in the UK to personal liability.

If you go away often and for extended periods, pay attention to the number of days of travel you’ll be covered for on annual policies.

There will be limits on both the number of days per individual trip and the overall number of days in a year.

If a winter sports break or activity holiday is on your radar, check what’s covered and what’s excluded under the standard policy. Contact your insurer about any extra cover you may need.

When is annual travel insurance not the best option?

If you’re only planning one trip over the course of a year, single-trip insurance will be the best option for you.

But, there are also other less obvious instances where annual travel insurance might not be your best choice. These include:

  • If you’re an older traveller. If you are over the age of (typically) 75, you may not be able to take out annual policies with certain insurers or they can be very expensive, making single-trip policies a more cost-effective option

  • If you have a pre-existing medical condition. Again, the cost of a multi-trip policy can work out a lot more expensive making single-trip policies your best bet

  • If you take long trips. Many annual policies come with limits on the number of days you can travel for, so a single-trip policy may be a better option.

What is the best way to decide on the right policy for me?

If you’re not sure whether an annual or a single-trip travel insurance policy is the best option, compare a number of policies side-by-side. Look at the level of cover each provides for the cost.

The excess level you choose – how much you’ll pay yourself in the event of a claim – can also affect the price of a policy. Generally, the higher the excess, the lower the price. But think realistically about how much you can afford to pay or it could prove a false economy.

And, remember that the cheapest policy is not necessarily the right one. You may regret skimping on cover should you need to make a claim.

Annual travel insurance and coronavirus

The coronavirus pandemic has had a huge impact on travel in 2020 and 2021, with millions of holidays being cancelled as a result. And, travel insurance policies have adapted by adding coronavirus-related exclusions.

Always check the level of cover on the policies you are considering so you have peace of mind.

The pandemic has also caused a number of travel companies to struggle. If you don’t tend to book ATOL-protected package holidays, you still may want to look for policies with ‘end supplier failure’ or ‘scheduled airline failure’ included. This can protect you should one of the companies you book with go into administration. You may be able to add this cover on too.

What happens if my annual travel insurance runs out while I’m away?

If your policy comes to the end of its term and is not renewed, the cover will cease and you’ll no longer have insurance.

Most annual policies are set up to renew automatically, with the premium being paid by direct debit - this is something you agree to when you sign the paperwork. It can be a useful way to ensure you have continuous protection, although you may wish to check what other policies are available and, if you find a better deal, let your original policy lapse and take out a new one.

Your insurer should get in touch several weeks in advance of renewal, giving you a further opportunity to make sure a policy will be in place all the time you are away. You must tell them if anything relating to the policy has changed otherwise you may invalidate your cover.

How many trips can I take with an annual policy?

There is no limit to the number of trips you can make.

How long can any one trip be with an annual travel insurance policy?

Each insurance company has its own rules, but the typical limit with be around 30 days, with some policies extending this to 60 days. Your age may be relevant here, with older travellers - those over 65 - being restricted to, say, 21 days.

Can I use annual travel insurance to go back-packing?

Annual travel insurance is not designed for back-packers because of the limits on the duration of each trip - unless, of course, you’re only back-packing for a month. If you’re planning a longer adventure, then a specialist back-packer plan would be more appropriate.

Can I add optional extras to my annual travel insurance policy?

Travel insurers usually offer a range of policies - perhaps Bronze, Silver and Gold - with the range of cover provided increasing with each step (along with the premium). This means you can broaden the scope of your policy and increase the amount you could claim. You can specify exactly what cover you are looking for during the quotation process.

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