Monday 26 February 2018

Look at insurance before you leap

Gemma O'Doherty

For most of us, travel insurance is an evil necessity we feel we should have when we go abroad. But is it worth it?

One well-travelled reader painted a challenging alternative in a recent email.

It came from Edward, and this is what he said: "I am in my mid-60s, and have been travelling since my late teens. I live in China now, and take about 70 flights a year, inside the country and abroad -- including to some dodgy places.

"I have never once paid for travel insurance. Obviously many of my journeys were made before I (or almost anybody) had a credit card, which made things a little bit harder (imagine having plenty of the wrong currency, and no banks open). And with no mobile phone.

"In spite of these problems, insurance has always seemed to me a waste of money.

"Naturally, I've had mishaps and dozens of cancelled flights. Among the worst incidences: 1968 -- stuck in Amman when a war broke out and all flights were cancelled.

"I treated it as an unexpected opportunity to visit the city;

"1972 -- Rome. All documents and money stolen. I was repatriated by the embassy;

"1974 -- Algeria. Imprisoned for a week (for staying in a hotel with a woman to whom I wasn't married). Pretty bad;

"1978 -- in Kabul when the Soviet army invaded. A bit hairy.

"I think that's enough to make the point. I've always put these incidents down to experience, and have never been tempted to pay for insurance.

"Indeed, it is my firm conviction that in the end I've lost far less cash than I would have paid for policies. Do you sincerely believe that travel insurance would have been worth it for me in the past, or will be in the future?"

That's all very well, I responded by email, but what if, God forbid, he had a heart attack while in, say, California and was kept in hospital for months? He could face a bill of hundreds of thousands of euros.

"If you have a heart attack before you're 40, you're stuffed anyway," he replied. "After 40, it's not worth going to California."

Obviously Edward's approach is not for everyone. He is clearly an experienced traveller and phrases such as 'what if' don't play on his mind. But he did make me think again about the whole question of travelling without insurance.

After all, very few of us would bother to insure ourselves if we were spending a couple of days up in Dublin, so why do we buy cover when we jump on a flight to Paris?

We are just as likely to get mugged in either city. As long as we have an EHIC (European Health Insurance Card), we are entitled to emergency treatment in the EU.

For most people, too, in the unlikely event that things go wrong, the costs of getting yourself home, or losing your holiday altogether because you are forced to cancel, might be painful and annoying, but they are not likely to be financially disastrous.

And even if you have insurance, you can never be sure it will pay out when you need it.

All policies are littered with exclusions and limits, including one that invariably excludes cover if you have consumed alcohol.

However, where Edward's argument falls down is on the question of medical cover. The cost of an air ambulance from the US to Ireland could be as much as €50,000, or €20,000 from the Canaries.

Although the chances of having to use these services are minuscule, the costs are so huge that they would be a significant issue for most of us.

On balance, while Edward's approach sounds temptingly refreshing, he is leaving himself open to some very expensive risks.

My advice is to shop around for a basic policy -- one that covers medical treatment, cancellation costs and personal liability, for example, but not less crucial events, such as lost luggage or delays.

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