TRAVEL INSURANCE:More people are travelling without insurance but if anything happens – unless it's an act of God like the ash cloud – it can be a false economy

THE GREAT ASH cloud crisis of 2010 had all manner of negative and long-lasting effects on travel, quite apart from the many thousands of miserable people who were left stranded for days on end, everywhere from Melbourne to Milan to Marrakech.

Tour operators and airlines were hit hard as they lost hundreds of millions of euro in revenue and had to cover the reasonable expenses of stranded travellers. The fall-out from the crisis played a starring role in Ryanair’s recent decision to introduce a €2 booking levy to fund expenses incurred by cloud-stranded passengers.

One industry largely unaffected by the cloud was, bizarrely, the travel insurance industry because insurers were able to sidestep payouts as the cloud was deemed to be an act of God and so not covered.

When making its announcement of the new levy, Ryanair quite reasonably pointed out how absurd it was that businesses set up to cushion travellers financially if unexpected events ruin their trip were able to wash their hands of all claims while everyone else paid up.

Some companies offer catastrophe cover, including ash cloud cover, as an extra. Web-based company itsforwomen.ie sells such an add-on at a cost of €15.33 per year and will cover you up to €750 if you are stranded overseas.

The manner in which insurance companies avoided payouts made many question the value of the products they sell.

We carried out a straw poll on Twitter last week asking people about the merits of travel insurance, and a surprising number said they thought it was a waste of money, mostly because their policies had let them down at a time when they needed them the most.

Lisa Jackson described it as a “total waste” of money. She got caught out with both the ash cloud and a blizzard in New York last year and her insurer “wouldn’t cover either properly”.

David Crimmins agreed: “A rip-off and I will never get it again. I had four flights delayed or cancelled over December and January and they wouldn’t pay out on any – different excuses,” he fumed.

Some readers felt that the European Health Insurance Card or EHIC was sufficient while others said they circumvented the need for travel insurance by paying for holidays with their credit cards.

While both things are useful, they are no replacement for travel insurance.

The health card won’t help if you have to cancel a holiday or are the victim of a non-violent crime – by far the most common reasons for claims – while most credit-card policies offer only limited cover.

For all its faults, travel insurance is the first thing that should go into your suitcase. Last year, a family on holidays in the US had to bring their child to hospital and the baby quickly racked up medical expenses of just under €200,000. The couple had the safety net of travel insurance but without it, they would most probably have been either brought close to financial ruin, or worse still, been denied the proper care for their child.

The US is by far the most expensive place where a tourist can fall ill and even something minor such as a broken arm will cost €15,000 to put right. An air ambulance to repatriate someone can top €77,000 while an angiogram will cost €22,000. And if you have to stay in an intensive-care unit you will have to pay a heart-stopping €5,500 per night.

Last year, the VHI paid out €4.3 million for medical claims made by travellers to the US and a further €3.5 million to tourists in Spain.

Despite the relatively low cost of the product when compared with the potentially ruinous costs of not having it, a growing number of Irish people seem reluctant to spend the money.

According to a study published by the VHI last month, admittedly a study aimed at promoting its travel insurance product, the number of people taking out policies has declined sharply over the past three years as the recession has deepened.

The survey, carried out by the insurer last October, found that 32 per cent of people had travel insurance compared with 42 per cent in 2007.

In 2010, the most common claims under VHI Healthcare’s Multitrip travel insurance were for cancellation and curtailment of trips, which amounted to 41 per cent of all claims. Outpatient medical expenses made up 32 per cent while loss or theft of baggage accounted for 13 per cent of claims.

A recent UK study found that while 84 per cent of people thought travel insurance was a good idea when going on holiday for a week or longer, only 42 per cent bothered with it if they were only travelling overseas for three or four days.

It is very important to shop around as prices vary quite a bit. By using the web, you can get 10 quotes in less than 10 minutes, although it can take a whole lot longer to actually work out what policy best suits your needs and we would caution against simply opting for the cheapest policy.

While you might assiduously take out travel insurance you could undo all your good work by leaving yourself exposed at home by letting would-be burglars know all about your plans.

A growing number of people are doing just this via Facebook, Twitter and FourSquare. According to a recent survey from AA Home Insurance, 10 per cent of those polled admitted to sharing their travel plans via social media sites.

The number of 17- to 24-year-olds who admitted to indiscriminately broadcasting their travel plans stood at 42 per cent while 26 per cent of people aged between 25 and 35 said they were guilty of the same thing.

“We are encouraging people to be careful,” says John Farrell, commercial director of AA Insurance. “We do sensible things like cancelling milk deliveries and asking a neighbour to keep an eye on the house while we are away. But at the same time, many people are casually telling the world that no one will be at home for the next week or fortnight. A bit like putting out a virtual welcome mat on the internet.”

The AA urges smartphone users in particular to consider the security risks when “checking-in” to location-based social media services such as FourSquare and the newly launched Facebook Places.

“While you might enjoy sharing your location with friends and picking up handy geo-specific information, you could also be tipping burglars off that you’re not home,” Farrell says.

How much insurance costs and how to make it work for you

Travel insurance tips

1: Read the terms and conditions: Okay, so, they might run to 25 pages and come in a font so tiny you'll need a magnifying glass but there's no point in buying a policy only to find it's worthless because you weren't supposed to go rock climbing. If you can't be bothered, at least ask someone when buying if you are covered for whatever scary sport you are about to embark upon.

2. Buy early: Almost two-thirds of all claims are for cancellations due to changing circumstances or family bereavement which can obviously happen at any point between paying for and travelling to your destination.
3. Bring emergency contact details: Also bring a photocopy of your passport. If it is stolen, having all the details makes it easier to get a replacement.

4. Keep all receipts: If you incur any expenses because of lost baggage, crime or illness, make sure you hang on to your receipts. Unless you have receipts, most companies will completely refuse to pay out.

5. Call the police: Always contact the local police in the event of a theft – no police report, no claim.

Compare prices:

Multitrip.com, €36.99;

Getcover.ie, €37.50;

123.ie, €42.47;

its4women.ie, €45.77;

VHI, €49*;

Axa, €56;

insureancebookers.ie, €56.50;

the AA, €59.74;

quoteme.ie €66.70;

AIB €79.11.

Quotes are for the cheapest annual multitrip, covering the US and based on someone not having health insurance. The level of cover differs from policy to policy.

*only available to VHI members