A lot of people can’t be bothered to buy insurance when they travel abroad. Those who do get one merely comply with a visa requirement and they always choose the cheapest package.

Insurance is supposed to be an important element of every trip, as it seeks to protect a traveler against a number of what ifs. You meet an accident on the way to the airport; you lose your luggage; a pickpocket steals your wallet and passport or you have food poisoning while on holiday.

If any of these happens, you can get compensated and avail yourself of emergency service and assistance in a foreign country. An insurance policy may also protect you in cases where you face a legal case for causing injury or damaging property abroad.

However, in the UAE, nearly six out of ten people (58 per cent) never take out a travel insurance plan when they go overseas, according to a Zurich-commissioned research released last December. Only one in ten residents seem to be diligent and always make it a point to get an insurance when traveling abroad.

The travel insurance penetration rate in the UAE is low compared to those in other countries, such as the US, Canada, Europe and Australia, where around 60 to 70 per cent of consumers buy travel insurance when they purchase air tickets.

The local figures could be worrying for a couple of reasons: two thirds of residents in the UAE go abroad up to three times a year, according to Zurich’s survey; and most travelers go overseas with just enough pocket money to cover their holiday or business expenses, making them vulnerable to financial losses in case of unforeseen incidents.

However, there are caveats to be aware of when buying travel insurance. For one, you may not get the insurance cover you think you are entitled to.

Some case studies compiled by the Financial Ombudsman Office in the UK, which has official powers to settle financial complaints, highlight how travelers struggle to seek compensation from insurance providers. One such traveler, identified only as Miss J, purchased an insurance policy in October 2004 to cover her holiday trip in June 2005.

Just a few weeks before she was scheduled to fly to Greece, Miss J was forced to cancel her trip to attend to an ailing father. When she submitted a claim for the full cost of trip cancellation, the insurer rejected her request because, among other reasons, Miss J waited until the last minute to cancel her trip.

The insurer argued that the customer had been aware of her father’s condition in January, about three months after she purchased the insurance, but never bothered to cancel the holiday at that stage. Had she canceled the trip earlier, the insurer would have paid less, only 15 per cent, of the cost. In the end, the ombudsman ruled in favour of the customer and Miss J got the compensation that she deserved, but not without getting into a legal tussle with the insurance firm.

In another case, a male traveler landed in the hospital after he collapsed while on holiday. The medical emergency may sound like a valid ground for the insurer to compensate the customer. However, the insurance firm refused to cover his medical and associated expenses because it was later found out that the illness was due to the customer’s severe and chronic alcoholism: he had been downing whisky for a few days before he collapsed. The policy he had signed up to stated that he won’t be entitled to “any claim resulting from being under the influence of or in connection with the use of alcohol or drugs”.

The lesson learned here is that there is no 100 per cent guarantee that you will be covered in case your holiday or business trip goes wrong. Insurers are out there to make money and they impose stringent limitations for filing claims.

“Many customers expect travel insurance to cover any and every eventuality. But travel insurance policies contain strict limitations and exclusions as to the cover provided and the amounts the insurer may have to pay. These are often not discovered by the customer until they need to make a claim – and they form the basis of many of the complaints we see,” the ombudsman said on its website.

To avoid any surprises, always read the fine print.