Holidaymakers are being warned that they shouldn’t simply rely on the travel insurance policies which come as part and parcel of a bank account they’ve previously arranged, due to the inescapable fact that such coverage offered in this less orthodox context falls short of consumer expectations; and more than that, might leave unsuspected travellers up the proverbial creek without the equally familiar paddle. www.thisismoney.co.uk recently ran a story about how it’s investigations found that travel cover provided in this guise is more often than not significantly limiting and represents what it believes to be poor value for money.
Typically costing the bank account holder (to which the travel policy is often bolted on to as an incentivizing feature) in the region of £5 to £25 per month, these extra-curricular coverages (which can also include motor breakdown and mobile phone insurance plans) can be punctuated by exclusions and clauses which could, effectively offer the (alternatively) ‘insured party’ severely compromised financial protection when they need it most. Of course, it’s not the first time that so-called ‘packaged bank accounts’ have been subjected to such scrutiny; which routinely ends up with experts criticising both the actual remit and worth to the customer. Especially as it’s been discovered that too few customers make use of the benefits they pay for, or worse than that, aren’t even eligible under the T&C’s of the cover offered with the account.
It transpires that back in 2013 banks were instructed by City watchdogs to forward warning letters to customers if and when they were adjudged to no longer meet the qualifying criteria to extend the pre-arranged insurance policy agreement with a particular account. However such ‘eligibility statements’ don’t elaborate enough on the current state of play according to sceptical insurance brokers here in the UK, and as highlighted by a number of high profile cases whereby customers unwittingly went on holiday uninsured. This is Money illustrated this by reporting an incident where one customer (who was under the assumption that their bank account-linked travel policy was still providing a safety net) returned from holiday to find out that due to his age he had exceeded the policy’s age restrictions.
Often Unforeseen Age Limitations and High Monthly Fees Are Amongst Reasons to Weigh up Pros and Cons of Bank Account-derived Travel ‘Packages’, Note Observers
Indeed, it’s these age limitations which are proving to be a moot point with banking-based travel insurance packages, as despite in more recent times insurers are reminded of their obligations to readily address this critical area and ensure that consumers are aware of the implications, it wasn’t the case a few years back. Which, explains consumer champion, Fairer Finance’s MD, James Daley (whilst speaking with This is Money of late); “Is why we’re now seeing a spike in complaints.” The Financial Ombudsman Service (which is tasked with overseeing a range of consumer-based matters) go as far as to stress that – and according to its statistics – travel insurance policies latched on to current and savings accounts supplied by banks are the second-most complained about financial product; bettered only (for want of a better word) by complaints regarding Payment Protection Insurance. At the heart of the problem is the underlying fact that standalone travel plans afford their policyholders to renew existing agreements annually; which takes into revised account any health changes, et al which might have surfaced during the past 12 month period; and are more likely to seek alternate deals when the renewal time is upon them. Conversely people signed up to packaged account travel insurance (on a rolling basis) are less predisposed to check whether or not their current plan is still right for their potentially changed circumstances.
Naturally not all packaged travel plans agreed through banks offer poor value (or are littered with holes), with experts observing that they tend to range from poor to excellent when it comes to value to the consumer, with a spokesperson for the Financial Ombudsman Service citing that; “Some deluxe policies cover families worldwide, individuals up to a ripe old age with few exclusions, and allow lots of time abroad. Others may only cover a single person for travel in Europe, end when you reach 65, or even limit the amount of time you can spend travelling before cover is withdrawn.” But at the end of the day it’s common knowledge within the financial world that packaged accounts represented the most profitable variation on current accounts from a bank’s perspective, largely courtesy of the monthly fee which regularly exceeds the cost of the benefits made available to the account holder.