Customers warned about package insurance

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Insurance comparison site Compare Cover is warning customers who rely on their packaged bank account insurance products to double check their included travel insurance policies before they set off on holiday.

The site analysed the packaged bank account market, finding that most cover provided as part of these packages has limitations of which the customer may not be aware, including a limit on the amount of cover a customer has, or an age restriction.

Although packaged bank accounts can be useful and easy for customers, said Simon Williams, head of travel at Compare Cover, customers need to be more careful when checking whether their policy actually provides them with sufficient cover.

“Travel insurance attached to a bank account may not cover you if you’re older, have a pre-existing medical condition or if you’re going on a cruise or winter sports holiday,” Williams warned. “Similarly, if you are going on a golfing holiday or a business trip, some policies included with bank accounts won’t cover loss of or damage to the equipment you take.”

Packaged bank account products have come under scrutiny in the UK in recent years, with the Financial Conduct Authority (FCA) telling banks in 2013 that they should be informing customers if they are no longer covered by the insurance products in the package. However, complaints to the FCA about packaged bank accounts increased sharply from 1,629 in 2013 to nearly 45,000 in 2016.

Simon continued: “Packaged back accounts can be great if you use the benefits offered and save money, but they could end up costing you more in the event you need supplementary cover. Adding additional travel cover to an existing packaged insurance product can cost more than taking out an entirely separate policy.”