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What affects the price of travel insurance?

Posted on April 8, 2022 by Vicky Smith
Older couple on holiday having fun in the sea with colourful inflatable rings

While travel insurance isn’t an exciting part of planning your trip away, it is really important. Taking out travel insurance means your dream holiday is protected from the moment your cover starts to when you arrive back home. 

Insurance is there to protect you financially and practically should any unforeseen events happen before or during your trip. A policy will generally cover things like your possessions, such as luggage and valuables, emergency medical treatment, and being forced to cancel your trip.

The cost of insurance should form part of your budget planning when it comes to setting out your holiday finances – but what affects the price of your holiday insurance premium?

We explain how travel insurance costs are calculated. Some of the factors that influence the cost may surprise you… 

How much does travel insurance cost?

Travel insurance costs can vary wildly. 

Insurers consider a range of risks when calculating your travel insurance premium. Costs are based on how likely you are to make a claim before and during your trip away. 

The key factors tend to be your age and any pre-existing medical conditions you may have. Although, other things such as your holiday destination also come into play. 

Senior couple giving the thumbs up while swimming in the sea with goggles and snorkels

How is your holiday insurance premium calculated?

The factors considered when calculating your travel insurance premium include: 

Age

You’ll find that travel insurance premiums tend to increase with age.

This is because the risk of illness, both diagnosed and undiagnosed, and making a claim is higher than when you were younger. So much so that some travel insurers only offer policies up to a certain age.

Travel insurers usually place travellers into age bands, with under 65s often placed in a lower risk bracket. So you may notice your travel insurance premium creeping up after your 65th birthday.

Medical conditions

Among the questions you’ll need to answer when taking out your policy are details of pre-existing medical conditions. 

This can impact how much your insurance costs, as existing health factors can increase your chance of requiring emergency medical treatment when abroad. There’s also a greater chance of having to cancel your trip if you’re not well enough to travel, or having to cut your holiday short.

Length of your trip

As you may expect, the premium for a fortnight abroad will usually cost you more than a short weekend away to the same destination.

The longer you are away from home the chance of you having to claim on your insurance for emergency healthcare or misplaced possessions increases. 

View over Park Guell in Barcelona

Destination

There are a number of ways your destination can impact the cost of your policy. 

Insurance will be cheaper for countries seen as ‘low risk’ by insurers compared to countries that are a safety risk due to natural disaster or conflict.

European destinations are considered lower risk, so you’ll find it cheaper to holiday in Spain than Sri Lanka. Holidays to Europe are typically cheaper to insure as the distance travelled is shorter, which means the costs of repatriation, for example, would be lower.

The price of healthcare at your destination also influences insurance premiums. When going to Europe, holidaymakers can access free healthcare with a European Health Insurance Card or Global Health Insurance Card (EHIC or GHIC). The card covers the cost of state healthcare, which means travellers are less likely to make a claim on their travel insurance.

Higher risk countries tend to be long-haul destinations. Healthcare in the US, Canada and the Caribbean is notoriously expensive. The cost of repatriation home from one of these countries is high too, hence the higher premium when jetting off to these places. 

Details of cover

The finer details of what you’ll be doing on your trip and the things you’ll be taking along with you will also affect the cost of your travel insurance.

If you need to insure expensive gadgets like cameras or valuables like watches and jewellery, your premium will be higher as there are pricier sums involved. 

Your holiday itinerary also impacts the cost of your travel insurance policy. If your trip is jam-packed with sports and activities, it will cost you more than a quiet pool-based holiday, as your risk of accident or injury is greater.*

Crowds of tourists gathered in New York’s Time Square surrounded by colourful advertisement boards

Why is travel insurance to America so expensive?

You may notice when shopping around for travel insurance to the USA that it costs a lot more than for holidays to Europe. 

The reason for this is the US is deemed a higher risk destination because healthcare is much more expensive than the rest of the world. The USA is the most expensive country to have a medical emergency in – the average cost of medical treatment comes in at £9,941!**

Tips for keeping the cost of travel insurance down

If you’re wondering how to keep your travel insurance price within budget, here are some handy tips for cutting the costs: 

Choose your destination wisely

Research the rough cost of travel insurance for your chosen destination, and compare it to other potential holiday locations. A change of country could save you a little cash. A holiday to Paris will usually cost you less in insurance premiums than a trip to New York. 

It’s also important to check the country you are travelling to is actually covered by your travel insurer. Some places in the world are considered too high risk. 

Avoid travelling with expensive valuables

You’re hopefully going abroad to relax and get away from the office. So consider leaving expensive valuables such as laptops, watches and jewellery at home. Travelling without these items can help to lower the cost of your travel insurance policy. 

Get quotes for different types of cover

Think about the level of cover you actually need for your trip. Picking an adequate level of cover of travel insurance can easily lead to a cheaper policy. 

Do you need £5,000 cancellation cover if you only paid £500 for your holiday? Don’t pay for levels of cover that you don’t actually need for your trip!

With the right travel insurance in place, you can go on holiday knowing should the unexpected happen, you’ll be protected. And for added peace of mind, all new policies come with COVID-19 cover as standard. Get your quote today.

*Always check your travel insurance policy to make sure you’re covered for sports and activities when abroad.
**All data Jan-Dec 2018 provided by Staysure’s underwriter

Vicky Smith

by Vicky Smith

Vicky Smith is a journalist and freelance content creator. She loves to travel with her family. Her favourite place in the world is a sandy beach in Cornwall.