Holidaymakers face minefield of Covid cover exclusions

Sunseekers eager to book a summer getaway could be left with no cover if the easing of lockdown is delayed.

Britons dreaming of a summer holiday will have to navigate a complex web of Covid-19 exclusions if they plan to travel with insurance, even if they travel after all restrictions are lifted.

Only 1pc of insurers will pay compensation if a trip is cancelled because of further lockdowns or a change in the official advice from the Foreign, Commonwealth and Development Office, according to Defaqto, a ratings agency.

For those holidaying in Britain, most insurers are unlikely to cover certain coronavirus-related cancellations, particularly if the trip is booked while the travel ban is still in place.

Anna- Marie Duthie, of Defaqto, said: “Anyone planning on travelling abroad this summer should not assume that travel will be back to normal. Nor should they assume their travel insurer will pick up the tab if plans go wrong due to Covid.”

Those going away should only make travel arrangements with providers that they are certain will give refunds or allow them to reschedule in the event their holiday is cancelled because of coronavirus, said Ms Duthie. Travellers are highly unlikely to be covered for costs if they must quarantine while abroad or if they are denied boarding on return to Britain after a positive test. Only a third of policies will cover cancellation if holders cannot travel because they have been told to isolate without having a positive test, for example when a member of a household tests positive.

The good news is most travel insurers will cover the cost of medical treatment abroad if customers catch Covid on holiday. Three quarters of providers will also offer cover if customers test positive and can no longer travel.

There has been a rush to book holidays among the over-50s, many of whom have had a confidence boost after receiving their Covid-19 vaccines. However, travel insurers have not yet brought in clauses about vaccinations.

All holidays booked to take place before April 12 should be cancelled, but there is a chance foreign travel will be back on the table from May 17.

Grant Shapps, the Transport Secretary, has urged people not to book yet, as there are no guarantees, but those waiting may get an update on April 12. It is still not known which destinations will allow British tourists to enter.

Safety net A sixth will give up being their own boss and return to employment

There could be light at the end of a long tunnel for self-employed borrowers, as banks begin to relax lending restrictions amid increased economic optimism.

Since the coronavirus crisis hit last year, self- employed home buyers have found themselves shut out of the market. Banks and building societies tightened their lending rules in response, and freelancers were hit hardest due to the often complex nature of their income.

The future looked bleak only last month for the self- employed after banks loosened rules for employed home buyers but kept stricter requirements for freelancers.

However, this drought has now shown signs of ending. Two high street banks relaxed the criteria in the past week. Lender TSB removed its loan-tovalue cap for self- employed borrowers and reverted back to 10pc deposit deals. It will also accept up to 60pc of overtime and commission payments as income.

Santander also lowered the deposit requirement on its self-employed mortgages from 40pc to 25pc.

Chris Sykes, of mortgage broker Private Finance, hailed the latest developments as promising news.

He said: “Lender optimism for a swift economic recovery is leading to these relaxed criteria, which is great news for self- employed borrowers. We expect other lenders to follow suit imminently.”

At the beginning of 2020, the average maximum loan offered to self-employed applicants was just £228,000, according to Mortgage Broker Tools, a data firm. Once the pandemic had taken hold in April, this dropped to £190,500.

In comparison, the whole of market average maximum loan available in that same month was £247,400 – almost £57,000 more.

Even in more recent months, the size of loans available to selfemployed borrowers has shrunk.

In January, the average minimum loan available was £118,800, but this dropped by almost a fifth to £ 96,935 last month. Mortgage Broker Tools said this reflected a “significant tightening” of selfemployed criteria among some lenders.

Mr Sykes warned that selfemployed workers applying for mortgages could still face higher levels of scrutiny for the next couple of years.

“Lenders work on historic levels of income for the self- employed, so if a large dip was seen in the 2020-21 tax year, then they may need to understand it and take a view on the level of borrowing and income,” he said.

Before the pandemic, self-employed applicants were required to provide two years of accounts to prove they could afford monthly repayments on a loan. However, the past year has seen lenders ask for multiple business bank statements to ensure a freelancer’s work has not been affected by the pandemic.

Last summer, some business owners were blocked from taking out mortgages because many banks were not lending to people simply because they had furloughed staff or taken on a government-backed loan, as lenders were concerned about the security of their businesses.

This avalanche of paperwork has triggered a growing trend of lenders taking weeks to deliberate applications that under normal circumstances would have sailed through the vetting process.