How is the price of travel insurance policies calculated?
Travel insurance policy prices vary between trips, travellers and travel insurance companies. This is due to a number of factors including:
Policy benefits
Different travel insurance policies will offer different benefits. Some policies provide comprehensive cover that includes cover for emergency medical and hospital expenses, unexpected cancellations, lost or stolen luggage, travel delays and perhaps rental vehicle insurance excess. Other policies will not include as many benefits or as high level of cover for these benefits, and you can also find policies which do not include cover for luggage, travel delays, missed connections for special events or rental vehicle insurance excess. This can result in a cheaper policy.
Holiday destination
Some destinations pose higher risks to travellers, or generally are more expensive for travellers seeking medical treatment. For example, staying overnight in hospital in the United States can be significantly more expensive than staying in a hospital in Thailand. For this reason, travel insurance policies for individuals travelling to the United States will generally be more expensive than travellers going for the same period of time to Southeast Asia.
Length of holiday
If you are travelling for a longer period of time, you increase your risk of experiencing an unexpected emergency. The policy premiums for people going on longer trips will generally be higher for travellers going to the same destinations for a shorter period of time.
Activities you are participating in
Different activities involve different levels of risk. Some travel insurance policies will automatically cover some holiday activities such as bungee jumping, trekking to a specified altitude, and snorkelling. However there are activities which may not be automatically covered due to their higher risk, such as skiing or snowboarding, riding a moped, scooter or motorcycle, quad biking and scuba diving to 30 metres. If you are planning on doing higher risk activities, you may need to pay an extra premium.
Your age
Older travellers are generally found to be more likely to make a claim from an incident while travelling. The cost of these claims can also be more expensive due to their severity. For example, Fast Cover found that half of their top ten highest claims pay-outs were from travellers over 70 years old. The highest claim, for over $190,000, was made by an elderly woman who injured her back after falling out of bed while on a cruise.~
Pre-existing medical conditions
If you have a pre-existing medical condition (this can include a medical condition you’ve been diagnosed with, being treated for, had surgery for, or simply be a condition which is symptomatic or which you are experiencing complications of) a travel insurer may either automatically provide cover for the condition, not provide cover for the condition, or provide cover for the condition if you pay an additional premium.