The great holiday rip-off

By Sarah Modlock

18 May 2005

The sun is shining, the birds are singing and as spring drifts fragrantly towards summer, we are all getting in the mood. For a holiday, that is. So I have a couple of words for you about travel insurance: rip-off. Or is that one word? Anyway, this has to be one of the easiest ways to lose money. If you don't plan ahead then you will end up paying way over the odds for holiday cover.

The first rule of buying travel insurance is: don't talk to travel agents. The second rule of buying travel insurance is: don't talk to travel agents. Of course the main reason to avoid them is that their policies will usually be over-priced. When Nationwide Building Society took a look at the figures, it found that insurance bought through tour operators and travel agents can be three times more expensive than policies available elsewhere.

'We urge travellers to be extremely wary about accepting those policies offered by travel agents,' agrees Richard Mason of insurancesupermarket. 'Although it may seem easier and less time-consuming to tag your insurance onto your holiday package deal, if you take a little time to do your own research, you could save yourself up to 80% by opting for the best value deal from an independent provider.' Adding insult to injury, the sales tactics may not leave you with a warm feeling, either.

Double agents

Research from Sainsbury Bank shows that in a 12 month period around 726,000 people were told by travel agents that they could not book their holiday unless they also took out the cover being offered by the agents. This is simply not true. Although it is essential not to travel abroad without insurance and many countries will insist on you having it anyway, there is no rule which requires you to buy your cover from your travel agent. The bank's research also highlights that misleading tactics used by travel agents could potentially leave thousands of people with inadequate cover. As many as 1.89 million people who purchased cover from travel agents last year claim they were not asked about any pre-existing medical conditions. A similar number also said that their travel agents did not explain what their policies covered.

'Our findings are disturbing because it shows that some travel agents are either intentionally or unintentionally misleading customers when selling insurance,' says Sainsbury's Michael Liddell. Agents are also accused by the bank of bullying customers. 'In some cases pressure tactics are used to help close the deal,' adds Liddell. Sounds pretty sinister. But the solution is simple. If your travel agent insists that you purchase its insurance policy before it can sell you a holiday, find another travel agent.

From January this year, all insurance products - including travel cover - became regulated. This means that only firms authorised by the Financial Services Authority can now trade, and they are subject to strict guidelines on how policies are promoted and sold. Insurers' extra costs are expected to be passed on to consumers, and a £2.80 average policy price rise is estimated but this is small price to pay for added protection. As if you needed one, there is another good reason to avoid agents when you buy insurance - they are not covered by the new rules and so you wont be covered by the additional protection if you buy through them. Go figure.

So when you drooling over travel brochures and thinking about buying sun lotion, add insurance to your shopping list. Here's my factor five:

•  Unlike size, price isn't everything. The most important thing is that your insurance must be right for you. But this doesn't mean you can't find a bargain. Make sure the policy covers the main problems you may encounter on your travels. And no, there is no insurer who can protect you from the advances of amorous waiters or leather jacket salesmen. But as well as covering the cost of cancellation and medical treatment, make sure you are protected if your money or valuables are stolen or lost or if you miss your flight. You should also check the full range of benefits and exclusions within the policy. If you are planning any special excursions or sports then ensure they are covered. Take a copy of your policy with you.

•  Book your travel insurance as soon as you can after you have booked your holiday to safeguard you if the trip is cancelled or, in certain circumstances, if you are forced to cancel yourself.

•  If you are planning to take more than one trip during the year, one of the best ways in which to reduce the cost of travel insurance is to buy an annual policy as opposed to single trip cover. This also means you don't need to worry about forgetting to organise insurance for your summer holiday or any last minute weekend breaks.

•  I know it seems that life is too short to read the small print on financial documents but it's better to go through it now than in a hospital bed or police station - especially if you find there is something missing or the cover starts on the wrong date.

•  If you do have anything lost or stolen whilst on holiday, make sure that you obtain a report from the police – this is a condition of many policies and claims are often not covered if a report has not been obtained, especially for valuables and cash. Lots of people try to make false claims on travel insurance policies - mainly because they did not need to use the cover and so feel they 'deserve' their money back. The knock-on effect is that insurers will expect you to prove your case.