Beware of travel insurance policy wording that can leave you out of pocket for lost valuables – as six out of 10 policies do not cover ‘new for old’
- Over half of travel insurance deals will not pay an item’s full replacement price
- This common practice can trip up unwary holidaymakers making a claim
- Finding this out often means checking the small print of your insurance deal
Holidaymakers booking trips should be aware that they may be left out of pocket for lost valuables and luggage if they do not have the right travel insurance deal.
Six out of 10 of the best value travel insurance deals analysed by This Is Money will not cover the full cost of replacing lost items with brand new equivalents, which insurers call ‘new for old’. Instead, many deals pay out for what the insurer sees as the current value of the lost item.
New for old cover means you will be paid the equivalent value of a lost or stolen item by your insurer, or get a brand new one, regardless of how old the missing item is. In other words, wear and tear and depreciation are not factored into the insurance payout.
Check your travel insurance policy wording carefully to see what is – and isn’t – covered
So for example, if a traveller buys a bag for £200 then has it stolen on holiday two years later, if they have new for old cover they will get an equivalent quality new bag when they make a claim.
Without new for old cover the traveller’s insurer may pay out a fraction of that amount, as they would argue the two-year-old bag is now used and worth less than £200.
Charity Citizens Advice said: ‘An insurer may refuse to pay out some or all of your claim because your cover does not replace new for old. Insurers may pay out less than you’re claiming for, to allow for wear and tear of your belongings.’
|Insurer||Policy name||Premium||New for old included?|
|Ergo||Element||£6.04||Yes – if item is less than one year old|
|Start Travel||Essential Single||£7.41||Yes – if item is less than one year old|
|Ergo||Protect||£8.25||Yes – if item is less than one year old|
|Cheapest 10 single trip travel insurance deals, 9/2/2023|
Insurers do have to state if a particular travel insurance deal includes new for old cover – but often that information is tricky to find, and requires digging through your policy document small print.
For example, Admiral’s standard single trip travel insurance policy wording says: ‘If your claim is successful, we will decide how to compensate you. This can include paying the cost of replacement, cost of repair or a cash payment. This is not a new for old policy and no payment will amount to more than the original purchase price.’
Other travel insurance policies put a time or cash limit on new for old cover.
As an example, Ergo Element travel cover will pay out new for old, but only if the lost or stolen item is less than one year old.
This Is Money looked at an example list of the 10 cheapest travel insurance deals for a solo traveller spending a week in France. The nine cheapest policies had no new for old cover.
Travel insurers paid out £250 million in claims in 2020, according to the latest figures from the Association of British Insurers.
Of that, £148 million was compensation for cancelled trips and £63 million was for emergency overseas medical treatment.