What affects the price of travel insurance?

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 premium costs are calculated, what can affect the price, and why travel insurance has gone up. Some of the factors that influence the cost may surprise you…

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.

 

There are a few key factors including age and any pre-existing medical conditions that can affect the price of travel insurance. Although, other things such as your holiday destination and broader reasons like inflation, also come into play.

You may notice that the cost of your travel insurance policy has gone up. This is due to many different factors. Travel insurers calculate premiums based on how likely it is that you’ll make a claim.

We know that seeing a change in your travel insurance renewal price can be concerning. The good news is you can make changes to your policy to reduce the price, and we’ll give you a few more details on that below.  

 

Some key things that affect the price of your travel insurance include: 

Travel insurance premiums tend to increase with age. This is because the risk of illness, both diagnosed and undiagnosed, and making a claim is increasingly higher as you get older. 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.

Among the questions you’ll need to answer when taking out your policy are details of any 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.

 

Find out exactly what pre-existing conditions you need to declare on your travel insurance in our blog post, and more about medical travel insurance here.

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.

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 usually considered lower risk, so you’ll find it cheaper to holiday in France 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.

 

European destinations that are more affordable for travel insurance include Italy, France, Germany and Portugal (including Azores and Madeira). Worldwide destinations that are more affordable for travel insurance policies include Australia, New Zealand, Japan and Singapore.

 

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

 

Higher risk destinations tend to be long-haul countries. 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.

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.*

 

Read our guide to what travel insurance covers to find out more.

 

Inflation

 

Rising costs in healthcare, travel, and general living expenses affect insurance premiums, as the cost of providing services and care increases.  

 

Medical assistance and repatriation

 

The cost of overseas medical treatment and repatriation (returning a traveller home in case of illness or injury) has been steadily rising. These critical services can be expensive, especially when they involve long-term care or complex logistics.  

 

Higher number of claims

 

Over the years, there has been a rise in the number of travel insurance claims made, particularly in areas like medical emergencies and cancellations. As a result, premiums are adjusted to help cover the increasing costs of these claims.  

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**. We recently paid a claim of  over £655,000 for a customer who had to be repatriated home from the USA.

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

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.

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.

Think about the level of cover you actually need for your trip. Picking an adequate level of cover of holiday 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. Get your quote today. Read our guide to buying travel insurance to help you choose the right cover for you.

 

_{^ Based on Mintel UK travel insurance 2022 report covering 2016-2020 claims data.
*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}