How to choose the right level of travel cover

Travel insurance ensures you’re covered if something unexpected (and often expensive) happens, such as an injury or lost luggage.
But just how much cover is the right amount of cover?
These are the minimum levels of cover we recommend and a short explanation why:
Medical expenses: £2m
If you are taken ill or have an injury while you are abroad, the medical costs you face are likely to be expensive.
Experts recommend choosing a policy that has £2m worth of medical cover as this will include repatriation costs and other costly medical assistance, which can spiral into thousands of pounds.
Some policies will offer more than £2m, but bear in mind this added level of cover could result in you paying over the odds for what you need.
Personal liability: £1m
Personal liability covers you for a whole host of claims such as injuring someone while skiing or damaging a property while you are away.
Protection of £1m should ensure you’re covered for most scenarios. 
Cancellation: £3,000
We recommend a cancellation cover limit of £3,000 (for two people) or the total cost of your holiday.
However, it’s worth checking exactly what your insurer will pay out for if you did have to cancel your holiday.
For example, take a look at your insurer’s bereavement clause should you be unable to go on your trip due to a death of a family member.
Baggage and belongings: £1,500
If your luggage is lost, stolen or damaged, insurers often have a cap on how much they will pay out. This is usually between £1,500 and £2,000, although some insurers will pay up to £2,500.
There is also usually a limit on how much your insurer will pay out for individual items, such as cameras and laptops. Limits can vary according to policy specifics, but are generally in the region of £250 - £500.
If you have a gadget or expensive item that costs more than this, you’ll have to call your insurer to get it added on or get it insured separately. 
Cash: £250
As a minimum, we recommend you have cover of £250 in case your cash is lost or stolen.
You should however adjust this limit if you are planning on taking larger amounts of cash with you.
Policy excesses: Under £100
The excess is how much you will have to pay towards your claim. For example, if your excess is £200 and you claim £500, your insurer will pay out £300.
The more you pay for your excess, the cheaper your policy will be. But watch out - if you increase the excess too much, you could find yourself out of pocket if you later have to make a claim.
It’s therefore better to keep your excess relatively low and pay a little more for your policy.
Additional extras to opt-in for: Cover for scheduled airline failure and end-supplier failure, and delay cover (e.g. £20/hour for first 12 hours)
Cover for end-supplier failure will ensure you get a full refund if your airline or accommodation supplier goes bust.
Similarly, cover for delays will ensure you’re compensated if your flight is delayed for more than 12 hours. It will cover the costs of essentials such as food and drink, so make sure you keep hold of any receipts. 

Insurance tax rise makes shopping around vital

The increase in insurance premium tax (IPT) at the beginning of November – when the standard rate will rocket from 6% to 9.5% of the premium – makes shopping around for products such as car and home insurance more important than ever.
This is because insurers offer their best prices to new customers, simply to tempt people through the door. They reckon on making their money back in subsequent years by increasing their prices when people renew.
And they often use a process called auto-renewal to increase the likelihood of a customer staying put. You can read here why we think this is such a bad practice for insurance customers.
It makes sense to become a ‘new’ customer every year by scouring the market for the best deal possible.
And with IPT shooting up by 58% in November, you need to make sure your base premium is as low as possible for the level of protection you require.
What is IPT?
- Insurance premium tax is charged on policies such as car, home, travel, pet and private medical insurance (PMI)
- Life insurance and income protection insurance are exempt from IPT
- The increase in the standard rate of IPT at the beginning of November, from 6% to 9.5%, was announced in the July summer budget
- The rise will hit car, home and PMI insurance
- Travel insurance, along with extended warranty insurance, is taxed at a higher rate of 20%
- Doom-mongers fear the next Budget might introduce a universal rate of IPT at 20%.
How will the rise affect me?
There’s nothing you can do to avoid paying IPT – and there’s very little you can do to avoid paying the higher rate of IPT if your current policy expires after 1 November.
If your policy renews before November, you’ll pay IPT at 6%.
If your policy renews after 1 November, you’ll pay 9.5%.
Even if you run a quotation now for a policy that renews next month, the premium you’re shown now will include IPT at the higher rate applicable at the point of renewal.
It’s unlikely to be worthwhile cancelling a policy that renews after 1 November in order to take out a new one in October.
You’d probably have to pay a cancellation fee – and, for car and home insurance, you’d risk invalidating any no claims discount you’d accumulated.

Five Insurance Mistakes to Avoid

Saving money feels good. And shopping around when you’re looking for insurance coverage is a great way to do it. However, simply reducing your coverage or dropping important coverages altogether is like diet without exercise—focused only on numbers, not on results. Don’t risk ending up dangerously underinsured and on the hook for much bigger bills in the event of a disaster.
Following are the five most common auto, home, flood and renters insurance mistakes people make, along with suggestions to avert those pitfalls while still saving money (we call them, “better ways to save”):
1. Insuring a home for its real estate value rather than for the cost of rebuilding. When real estate prices go down, some homeowners may think they can reduce the amount of insurance on their home. But insurance is designed to cover the cost of rebuilding, not the sales price of the home. You should make sure that you have enough coverage to completely rebuild your home and replace your belongings—no matter what the real estate market is doing.
A better way to save: Raise your deductible. An increase from $500 to $1,000 could save up to 25 percent on your premium payments.
2. Selecting an insurance company by price alone. It is important to choose a company with competitive prices. But be sure the insurer you choose is financially sound and provides good customer service.
A better way to save: Check the financial health of a company with independent rating agencies (some well-known ones: A.M. Best, Moody's), and ask friends and family members about their experiences with insurers. Select an insurance company that will respond to your needs and handle claims fairly and efficiently.
3. Dropping flood insurance. Damage from flooding is not covered under standard homeowners and renters insurance policies. Coverage is available from the National Flood Insurance Program (NFIP), as well as from some private insurance companies. You may not be aware you’re at risk for flooding, but keep in mind that 25 percent of all flood losses occur in low risk areas. Furthermore, yearly weather patterns—spring runoff from melting winter snows, for example—can cause flooding.
A better way to save: Before purchasing a home, check with the NFIP to determine whether a property is situated in a flood zone; if so, you may want to consider a less risky area. If you are already living in a designated flood zone, look at mitigation efforts that can reduce your risk of flood damage and consider purchasing flood insurance. Additional information on flood insurance can be found at www.FloodSmart.gov.
4. Only purchasing the legally required amount of liability for your car. The minimum is just that—the least you can get away with by law. So buying only the minimum amount of liability means you are likely to pay more out-of-pocket later. And if you are sued, those costs can jeopardize your financial well-being.
A better way to save: Consider dropping collision and/or comprehensive coverage on older cars worth less than $1,000. The insurance industry and consumer groups generally recommend a minimum of $100,000 of bodily injury protection per person and $300,000 per accident.
5. Neglecting to buy renters insurance. A renters insurance policy covers your possessions and additional living expenses if you have to move out due to an insured disaster, such as a fire or hurricane. Equally important, it provides liability protection in the event someone is injured in your home and decides to sue.
A better way to save: Look into multi-policy discounts. Buying several policies with the same insurer, such as renters, auto, and life will generally provide savings.