Look, before you leap on travel insurance fine print

Travellers are increasingly turning to web-based providers in search of cheaper travel insurance options – just as they have already done with accommodation, flights and most other travel components.

A new wave of new online providers has brought the travel insurance industry to a new level, with promises of massive savings on travel agents’ prices. Travel insurance has traditionally been a lucrative earner for travel agents, with a typical 40 per cent to 50 per cent commission on policies, compared with about nine per cent on international air fares and 10 per cent on holiday packages.

The difference in the quoted prices offered by online purchase and travel agents can reach as high as USD 1200, because the travel agencies’ prices are massively inflated by commissions. Online travel insurance providers are claiming a boom in business from older travellers trying to avoid expensive age-based premiums. Policies available through travel agents are typically twice the price of online policies for travellers aged 60 and over.

While there are few who would dispute that online policies are cheaper, it is fair to question to what extent consumers are equipped to make informed decisions about travel insurance policies. Most insurance products are sold with the advice and guidance of an agent who is trained to ask the right questions and point out any exclusions and required declarations, while those booking travel insurance online are left to read the fine print.

There might arise some problems if travel agents are cut out of the equation. If travellers incorrectly fill in application forms or fail to take out the appropriate level of cover, they might find trouble when trying to make a claim.

Moral of the story? If you want to buy cheaper online travel insurance, be sure to read everything!

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