Before purchasing an insurance product, you should be provided with a Product Information Document which is a very short document containing the main features of the product such as the cover, any exclusions, the name of the insurer, duration of cover, cancellation rights.
Before you Buy a Policy
What should I keep in mind when purchasing travel insurance?
- The purpose for which you are travelling. Are you going on holiday or is it a business trip? Does your holiday involve activities such as rock-climbing or sporting activities such as skiing? This is all information which you must disclose in order to be able to ensure that you are covered for any possible losses or injuries you might suffer in participating in such activities. You might be required to pay a higher premium in such instances. If you are attending a particular event as part of a group such as a sport tournament, it might be best to organise a group policy specifically for the event.
- The kind of medical treatment to which you will be entitled if you suffer an injury or illness whilst travelling. Remember to ask about emergency and rescue services particularly if you intend to visit remote areas and whether there are any thresholds to refunds. Think of the least expected possibility such as a toothache! Remember that there is no cover for treatment of any pre-existing medical condition such as any chronic illness like asthma or diabetes. Enquire what happens if you have to stay longer or less than your intended holiday period due to illness.
- You will be required to sign a health warranty stating that you are not suffering from any serious or chronic illness or receiving or awaiting to start medical treatment for any condition. Read it well before signing. Any misrepresentation or failure to disclose any condition will render your insurance void.
- Ask what costs are covered in the unfortunate event of death. Enquire what cover you have for repatriation and burial costs.
- Whether you will need cover for valuables. This term includes items such as jewellery, watches, photographic equipment and sports equipment amongst others. Assess whether you will need to take such items with you and make sure the limit on your insurance policy is enough. There may be a limit for each item and a maximum limit. So take the time to check the value of the items you and any other travelling companions will be carrying. Remember you must keep these items in your hand-luggage and not in an unaccompanied suitcase whilst travelling. Most travel policies define what is considered as valuable item.
- Check on the possibility of covering cash and travellers cheques. Some policies do not give this cover when travelling in certain territories. Remember you will be expected to take good care of your cash while travelling and it is always advisable to keep the cash level to a minimum. Check what rates of exchange will be used in the event of a loss.
- Make sure you understand the cancellation and curtailment cover given under the travel policy. The policy will list specific circumstances which may cause you to cancel or curtail your journey and which are covered. Only in these instances will the policy refund you any non-refundable deposits you had paid in advance. Remember the cover under this section will start from the date you purchase the travel policy and that it is therefore important to take out the insurance policy as soon as you pay any deposit to the travel agent/airline/hotel.
- Enquire what excesses apply to the different sections of your policy. If you have two unrelated claims, two different excesses may apply.
- Are you adequately covered? Ask your insurer to guide you select appropriate cover for the value of your property – the amount insured. Many insurance policies would normally include a condition in your policy (usually under personal belongings) whereby if at the time of any loss or damage your amount insured is inadequate, the amount you may recover will be a proportion of the amount insured to the value of your property at the time of the loss or damage. This means that if you claim for more than you are insured, you are most likely to get a lower amount by way of proportion.
So don’t organise all your travelling arrangements and leave the insurance as an afterthought!
Exclusions and Cancellations
What is excluded in a travel insurance policy?
Carefully check all the exclusions before you decide on a travel insurance policy. They should be clearly identified in the policy document. In many travel policies loss or damages suffered in the following circumstances are often excluded:
- You have a pre-existing medical condition which is not advised to the insurer or you travel against medical advice. This exclusion may also apply for any members of your household or any persons with whom you intend to travel or stay.
- You join in “adventure”, “danger sports” or other hazardous activities. “Adventure” activities often include bungee jumping, white water rafting, ballooning, snow skiing and scuba diving.
- You leave your luggage “unattended” in a “public place” and it is lost or stolen.
- Your valuable items such as cameras, sound equipment or mobiles are lost or stolen when left “unattended” in a motor vehicle or put in unaccompanied baggage.
- You exceed the age limit. Some insurance companies will not insure you if you are over a certain age.
- You cancel plans because of a change in your financial circumstances or business obligations
When is cancellation covered under your policy?
Make sure to check what coverage you have under the policy before you actually sign (unless this is offered as an added benefit to a specific debit or credit card). Pay particular attention to when cancellation under your policy is covered and when this is excluded. Don’t assume that your policy covers you for any eventuality that leads to cancellation of your trip. Below we describe typical cancellation scenarios that are covered or excluded under a travel insurance policy.
What may be covered:
- Accidental bodily injury to or illness or death of the insured person, any immediate relative, close business colleague or any person with whom the insured person has arranged to travel;
- You or your travelling companion being summoned for jury service or called as a witness in a Court of Law during the period of insurance;
- Your home becomes uninhabitable following a fire, storm or flood.
What may be excluded:
- Withdrawal from service temporarily or permanently of any ship or aircraft on the orders or recommendations of any port authority or the civil aviation authority or any similar body in any country;
- Pre-existing medical condition or travelling against medical advice;
- The insured person or travelling companion is not inclined to travel, suffering from anxiety or are in financial difficulty.
Some policies may offer additional cover for cancellation as a result of adverse weather conditions. Check with your insurer about such cover and the applicable limits and conditions. Always keep an eye for specific exclusions under a travel insurance policy, such as one-way journeys, winter and extreme sports (unless the last two exclusions are specifically catered for under the policy). Other common exclusions are unattended personal effects (such as luggage), valuables and money.
If luggage is lost or damaged while in the care of a transport company, authority or hotel you must immediately write to them and give details of the loss or damage. If the luggage is lost or damaged by an airline you must obtain a property irregularity report from the airline desk and keep the damaged items, travel tickets and tags as you will need these to file a claim under your travel policy. Insurance companies may also require a written police report when personal belongings are lost or stolen and normally this has to be obtained within 24 hours of discovering the loss. The insured person must provide the insurer, at his/her own expense, with all the detailed particulars and evidence relating to the cause and the amount of the loss, damage or expense.
The extension of cover will depend on the type of policy chosen; the one with the lesser cover (basic policy) will obviously be the less expensive. Insurance companies will usually not make good for the whole amount of the claim and the policy holder will have to bear a part of the cost of a claim himself. This is known as the excess. The amount of excess will vary between insurance companies and even between insurance policies, with the basic policy usually having the highest excess.
There are time limits during which a travel insurance policy will be considered as valid. The period of insurance under the cancellation section starts from the date the schedule is issued and ends when you begin your holiday or journey. The period of insurance for all other sections starts when you leave your home or workplace and ends when you return home from your holiday or journey. Cover applies for the number of days shown on the schedule (which might vary from 3 to 6 months)
From whom can I buy and insurance policy?
Insurance Undertakings Issuing the Policy
Certain insurance companies also distribute their products directly to clients. Accordingly, it is possible to purchase an insurance policy from the insurance company issuing the product itself. Such companies are required to abide by the relevant provisions in the Conduct of Business Rulebook which apply to persons who distribute insurance products, which mainly transpose the requirements of the Insurance Distribution Directive. This means that even when purchasing a policy directly from the insurance company issuing it, the latter is bound to make certain disclosures to the client and to ensure that it acts in the best interest of the client.
An introducer is a person or company that enters into an agreement with an insurer, an insurance agent or an insurance broker so that he introduces clients. This individual is not licensed by the MFSA and may only introduce you to the insurer/agent /broker that he is tied to. An introducer is not permitted to give advice to prospective clients, or give or collect documentation or any money from clients. This intermediary may only offer to give you a contact with an insurer, broker or agent i.e. he will normally provide your contact details to the insurer, broker or agent and they will do the rest.
An intermediary is an individual person or a company who brings together prospective clients and insurance companies for the purpose of issuing an insurance policy.
There are five types of intermediaries that offer a direct service to clients in the insurance market. These are:
- Ancillary Insurance Intermediary (AII)
- Tied Insurance Intermediary (TII)
- Insurance Agent
- Insurance Broker
All intermediaries, except for introducers, are licensed by the MFSA and regulated under the Insurance Distribution Act and the Rules issued thereunder. The introducer, TII, the AII and Insurance Agent are dependent insurance intermediaries because they are acting under an agreement with specific insurers but an Insurance Broker is independent.
Tied Insurance Intermediary (TII)
The TII was previously known as a sub-agent or a salesman. This intermediary is appointed by one or more insurers but for different classes of insurance. This means a TII should not offer you a motor policy of two different insurers but he may offer you a motor policy of one insurer and a household policy of another insurer. The TII is licensed by the MFSA and is permitted to assess the insurance demands and needs of prospective clients and assist them in the completion of proposal forms and will normally deliver policy documents to the client and collect the premium from the client. The TII cannot accept the risk on behalf of the insurer. Only the insurer can decide whether the risk is acceptable or not and at what premium. The TII should always identify himself to the clients and inform the client of the identity of the insurer he is tied to. Moreover, if the TII collects money from the client, he should give the client a receipt immediately. This receipt should show the enrolment number of the TII, his name, address/identity card number and a reference to the policy in respect of which premium is being paid. Above all the receipt should show full details of the amount paid but not as one amount. It should show the premium separately from the relevant document duty and any fees charged by the insurer or the TII for the service. The fee charged by the insurer is normally a policy fee which is a charge for the cost of issuing the policy document. This fee may vary from one insurer to another. The client should always make sure he is aware of the name of the TII and his business address, the name of the insurer and the address of the insurer.
The TII may also be tied to the insurer through an insurance agent. This means that he will introduce the client to an agent of an insurer instead of directly to the insurer. In these cases the client should make sure he also knows the name of the agency and the relevant address. These details are important if the client requires any additional information at a later date or in the event of a claim. Should there be a claim, the TII may assist the client to obtain a Claim Form and deliver it to the insurer or the insurance agent. However the claim is then handled directly by the insurer or agent. The TII may also collect the excess relating to the claim and pass it on to insurers. Again a receipt should be provided for this excess. Once the claim is agreed, if there is a settlement due to the insured, the insurer may send the settlement, payable to the insured, with the TII. Otherwise the settlement is given directly to the client.
It is important to note that a TII is not permitted to introduce business to insurance brokers. TIIs may also be appointed by EU companies, i.e. companies that are authorised in another EU territory. So make sure you understand who the insurer is and where he is authorised. If the insurer is not authorised in Malta, he will not be regulated by the MFSA and in the case of insolvency of this insurer, there will be no compensation offered under the local Protection and Compensation Fund.
Sometimes banks offer insurance policies too. The bank is acting as a TII when it does so and is tied to an insurer or insurers. The banks may only introduce life policies and premium payment protection policies. Always make sure you know who the insurer is. In the case of life insurance policies and payment protection policies purchased for loan purposes, the bank must clearly explain that you may purchase such policies from other insurance companies that also satisfy the bank’s requirements and that you are free to choose from where to purchase your policy. In fact the bank should exhibit a notice that states this on the counters where you are served. You should also be given a copy of this notice for you to sign in acknowledgement.
An insurance agent is a professional that is tied to one or more insurers, even in the same classes of business. Therefore you may find insurance agents who are able to offer your two home policies of two different insurers, or two motor policies of two different insurers, after assessing your demands and needs. However most agents are only tied to one insurer. The insurer may be a locally authorised insurer or a foreign insurer who is authorised in an EU or non-EU territory. An insurance agent enters into an agreement with one or more insurers and is given the authority by that insurer to underwrite business on its behalf. Therefore an insurance agent may offer you policies in different classes of business that are issued by its principal/s, i.e. the insurer. The agent may decide to accept or refuse the risk on behalf of the insurer and issues the policy documents as well. Always make sure you have understood clearly who the insurer is. The agent is also authorised to collect premiums and also handles claims until settlement. All the activities of the agent are governed by the agency agreement between the agent and the principal and will vary from one insurer to another. The agent may give you advice on the product and cover chosen and should provide you with a receipt on collection of monies. This too should give details of the premium separately from the document duty and any fees charged by the insurer and by the agent.
The insurance broker is the only independent intermediary who may offer you the products of any insurer in the market. A broker is bound by Conduct of Business Rules issued by the MFSA its Conduct of Business Rulebook . The broker should be objective in his advice and should provide you with alternative quotations (at least three or four) so that you may choose the product best suited to your needs. Do not limit your choice to the price. There are other important aspects to consider, such as the claims handling service of the insurer. The broker will perform the preparatory work such as assisting you to complete a proposal form and get you different quotations from different insurers. The broker should assess your insurance demands and needs and act with complete freedom and inform you of the advantages of one policy over another, clearly identifying the relevant insurer. The insurer will issue the policy documents and send them to the broker who should check them to make sure they are in line with your negotiations. Once satisfied, the broker will forward the policy documents to you. The broker is also authorised to collect insurance monies and should also provide you with a receipt showing the premium separately from the document duty and any fees charged by the insurer and by the broker. In the unfortunate event of a claim, the broker should also assist you in the completion of a claim form and liaison with the insurer until settlement of a claim. Settlement may be channelled through the broker but the insurer may sometimes choose to settle directly to clients.
There are certain situations where the broker does not act with complete freedom in choosing the insurer. These are as follows:
- In some instances brokers may enter into what is called an underwriting agreement with an insurer for particular classes of business. This means that the insurer would allow the broker to accept risks on its behalf under that agreement for that specific class of business. In that case the broker would be able to issue the policy documents for those risks itself. This happens mostly with motor and travel insurance. If your broker accepts your risk under such an agreement, the broker is duty bound to inform you that he is placing your risk under an underwriting agreement with that specific insurer.
- The broker may also have a computer link arrangement with certain insurers. This means that he enters into an agreement with certain insurers for certain classes of business and will have a specific computer arrangement with the insurer to accept those risks and issue the policy documentation immediately from the system. This too is very common for motor and travel policies. Again, if the broker places your risk under such a computer link arrangement, he should inform you of this.
It should be noted that a broker may also introduce you to insurance companies that are not locally authorised. These may be companies registered in the EU or in any non-EU territory. In such instances the broker should explain clearly who the insurer is and that it is not regulated by the MFSA and in the event of insolvency would not be covered by the Protection and Compensation Fund. The broker also needs to explain possible difficulties that may be encountered in the event of a claim if there is no local representative. Moreover the policy may not be subject to Maltese law and you may not have the right to choose the applicable law. Therefore it is important that you ask questions and ensure you understand the implications. The language of the policy may also be an issue. If the insurer is in a non-EU territory check carefully where it operates and ask whether it is regulated in any way.
An insurance broker may also offer to place your business with Lloyd’s. In this case the broker should explain particular issues regarding Lloyds as regards its Central Fund, the Lloyds syndicates and possible compensation under the Protection and Compensation Fund amongst others. The client should be informed of the local Lloyd’s representative and the exact Lloyd’s syndicates that are insuring his risk.
Ancillary Insurance Intermediary
An Ancillary Insurance Intermediaries (AIIs) is a person whose main activity is not insurance distribution but who, for remuneration, on an ancillary basis, distributes insurance products which are complementary to a good or a service. The AII can only distribute products covering life assurance or liability risks, only if that cover complements the good or the service which the AII provides as its principal professional activity. An AII cannot be a credit institution or an investment firm.
AIIs may be appointed by insurance companies, insurance agents or by insurance brokers subject to certain restrictions with respect to the classes which they may distribute and must enrolled with the MFSA. The AII acts under the full responsibility of the insurance company or of the insurance broker which appoints them.
With respect to non-life insurance, an AII may be appointed by two separate insurance companies on condition that the products offered are different. Accordingly, for example, an AII may not offer the home policy of two different insurers. An AII may only be appointed by one insurance company or agent for the distribution of long term business such as life insurance products.
When an AII is appointed by a broker, such appointment may only relate to non-life business and may only be made in the context of one particular product.