Tuesday 25 June 2019

How to stop your holiday from becoming a financial nightmare

You could face bills running into hundreds of thousands when a holiday goes wrong, writes Louise McBride

Holiday trouble? Photo: Stock image
Holiday trouble? Photo: Stock image
Louise McBride

Louise McBride

Irish drivers who take their car abroad with them on holiday could be out of pocket to the tune of thousands if their car breaks down or is damaged abroad - even if they are insured to drive it on holiday.

Most car insurers - including Aviva, Allianz and Zurich - do not cover drivers for a replacement car if their car is damaged or written-off after they've been in an accident when driving it on holiday in mainland Europe. Most car insurers don't cover drivers if their car breaks down in mainland Europe either.

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This could see a driver hugely out of pocket if they need to arrange a replacement car so they can carry on with their holiday - or if they simply need a car so they can drive to a nearby ferry port or airport and return home. In such cases, the driver is very likely to have to cover the cost of a replacement car themselves - particularly if it's a crash they are liable for, or a breakdown.

The driver is also likely to have to arrange the replacement car themselves - not an easy feat if you, or others travelling with you, have been injured or are badly shocked after an accident.

It could cost thousands of euro to hire a replacement car, particularly at short notice - which is likely to be the case if you've been in an accident or if your car has unexpectedly broken down. (Remember, should another driver have accepted full liability for the accident, that driver's insurance should cover the cost of a replacement car and towing charges - though you may have to wait until you get home to get that money back).

By contrast, you will usually have no problem getting a courtesy car from your insurer - at no cost to yourself - if you have comprehensive car insurance and your car is damaged whilst driving it in Ireland. Your insurer will also usually arrange that replacement car for you - and may even drive the courtesy car to your home, rather than requiring you to pick it up at a nearby car dealer.

This shortfall in cover for a courtesy car when on holiday could catch many Irish drivers out.

Hundreds of thousands of holidaymakers a year take the car ferry from Ireland to France - and since last year, it has been possible to take the car ferry to Spain too.

So with this bank holiday weekend marking the beginning of the annual exodus of Irish holidaymakers to sun getaways, here are some important steps you should take to ensure you will be in the best possible financial position in case things go wrong on holiday - whether you're driving abroad or not.

Check car cover

Take any blanket statements from your car insurer that it will provide you with identical cover when you drive your car in the EU with a pinch of salt. With most comprehensive car insurance policies, you are automatically covered to drive your car in the EU for a certain amount of time - typically for 30 to 60 days, depending on the insurer. However, the cover provided is usually the minimum required by law for you to drive the car in any EU country. That minimum cover usually won't provide a courtesy car - or cover towing charges - in the event that your car breaks down or is damaged while you are driving it in mainland Europe. (FBD and Zurich cover towing charges abroad - up to certain limits).

FBD is one of the few insurers which provides its policyholders with a courtesy car in the event that their car is written off in an accident when holidaying in mainland Europe. "In such cases, we will provide a courtesy car for up to 10 days in a row if the insured's car is damaged beyond economic repair or stolen and not recovered," said a spokesman for FBD. "The courtesy car will typically be up to a 1.2 litre, subject to availability, and may not match the size, value or performance of the insured's car." The FBD spokesman said it would "make every effort" to arrange the replacement car in such circumstances. "If for some reason we are unable to provide a vehicle, the policyholder may hire a vehicle and FBD will cover the cost of this as per the policy limits."

Bear in mind that even if your insurer does provide you with a courtesy car, if that car is smaller than the one which you initially took on holiday, you could struggle to fit all of your luggage into the car - and if travelling with young children, you could struggle to fit them all safely into car seats in the back row of the car.

Pack your EHIC

The European Health Insurance Card (EHIC) allows you to get public healthcare for free - or at a reduced cost - in another EU or EEA (European Economic Area) state if you are on holiday or a short-term stay over there. It also covers Switzerland. The EHIC is invaluable if you find yourself in hospital in the EU, EEA or Switzerland as a result of an accident, injury or illness. Even if you are not covered for the full cost of public healthcare, the EHIC will cover a good chunk of it. For example, in France, the EHIC usually covers you for up to 80pc of the cost of hospital treatment. You may not have to pay the balance at the time you receive the hospital treatment either - hospital bills (for the balance) may be posted to you at your home address a month or two later (or longer).

Apart from Switzerland, the EHIC won't cover you for public healthcare received outside the EU or EEA - so it will be no use to you in the US or Australia for example. The EHIC is free and you typically apply for it at your local health office or by post. You may also be able to apply for it online.

Get travel insurance

Having a good travel insurance policy in conjunction with private health insurance could save you tens - if not hundreds - of thousands if tragedy or misfortune hits on holiday.

The cost of a lengthy stay in hospital abroad could run to more than €100,000 - particularly in the United States. The cost of repatriation (getting remains flown home) could be more than €10,000, depending on the holiday destination.

This is why the cover provided by travel insurance for medical expenses is so important. With travel insurance, you are usually covered for millions - and in some cases, tens of millions - of emergency medical expenses arising from hospital treatment. Private health insurance however will typically only cover you for up to €100,000 of expenses that arise from a medical emergency abroad so it is a mistake to rely solely on private health insurance when travelling. Travel insurance usually covers repatriation too.

Making a successful travel insurance claim can be time-consuming and difficult. Travel insurance policies are long and complicated - so unless you read a policy in its entirety, and fully understand it, you may not be covered as well as you think you are. Despite these shortcomings, you should still get travel insurance before heading off on holiday - but get a good policy and read the small print before you buy. Buy an excess waiver if you have the option to do so as this will prevent you from being hit with an excess (the first part of a claim you must pay for yourself) should you make a claim. Without this, often there is no point making a small travel insurance claim (for a few hundred euro or less) because the excess on your policy could be higher than the actual claim.

Should you have a medical condition, disclose it to your travel insurer before you buy the policy - even if you believe you don't need to. Otherwise, you could find that you're not covered if you later make a claim. There are a number of medical conditions which must usually be disclosed to travel insurers before you buy their policy. For example, some of the medical conditions which must be disclosed to Blue Insurance before buying its travel insurance include Type 2 Diabetes, asthma, epilepsy, Parkinson's disease, arthritis, high blood pressure, depression, post-traumatic stress disorder and cancer.

You could face a higher premium after disclosing a medical condition but this is better than not being covered at all. You could also find that your travel insurer will cover you - but not for any claims related to your condition. With some medical conditions, you may need to arrange specialist travel insurance cover.

You may not need to disclose a medical condition to your travel insurer, or pay any additional premium as a result of that condition,if you have private health insurance which includes a certain amount of overseas cover. It is always worth checking directly with your travel insurer what needs to be disclosed though. Better safe than sorry, particularly when on a foreign holiday.

5 must-do's ahead of your holiday

Have emergency numbers to hand

Have all of the following numbers to hand when on holiday: the 24-hour contact numbers of your car insurer (if driving abroad), travel insurer and private health insurer; the number of the emergency services - and the Irish embassy - in the country you are visiting; and the number of a close friend or relative. You will need to be able to get these numbers quickly if you are in an emergency. Pack your credit card too as the costs incurred during an emergency can be high and so your spending money may not cover them.

Pack the right driving papers

Pack your driving licence and Vehicle Registration Certificate if planning to drive your own car on holiday. Have a front and rear dashcam on your car. Make sure you have comprehensive car insurance and that the policy will be valid for the entire duration of your trip. With Aviva, you're covered to drive your car in the EU for up 31 days; with Allianz, it's for up to 60 days; with FBD, it's up to 40 days; with Zurich, it's up to 30 days.

Buy car breakdown cover

Buy car breakdown cover which will cover you if you will be driving your car in mainland Europe. Allianz Global Assistance offers such cover for €99 a year.

The car breakdown cover included in standard car insurance policies usually only covers you in Ireland and the UK. This is the case with the standard car insurance of Aviva, Allianz and FBD for example. Zurich's breakdown cover only applies in the island of Ireland. Breakdown cover covers you when your car breaks down as a result of a mechanical fault, punctures and so on.

Book with a Licensed travel agent

Should you be planning to book your holiday through a travel agent or tour operator, only use one that it is licensed with the Commission for Aviation Regulation (CAR). The CAR runs a scheme which protects customers of Irish-licensed travel agents and tour operators from losing their money or being stranded abroad should the agent or operator go out of business. As long as a company is licensed by the CAR, you should get a refund for the cost of your holiday if the company goes bust before you head off on holiday. Similarly, if stranded abroad at the time of the collapse, you should be covered for the cost of alternative travel arrangements home.

Be fussy with travel cover

To protect yourself from any financial fallout as a result of strikes or airline insolvency when on holiday, buy good travel insurance before you head off - but make sure that policy covers scheduled airline failure and strikes, advised Martina Nee, spokeswoman with ECC Ireland. Not all travel insurance policies cover strikes or the collapse of an airline so check the small print.

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