Buried in the depths of the brochures is a provision that you can arrange your own cover if it is comparable. However, most holidaymakers are completely unaware that they have a choice.
Saundra Satterlee, a spokesman for the Consumers' Association, said: 'There should be better flagging in the brochures. If you are not aware that you can arrange your own insurance until you actually go to book and you then have to produce evidence of your insurance, it will cause a delay and you could lose your holiday.'
You automatically buy the package insurance unless you delete the option on the booking form. You virtually need a magnifying glass to read the wording on some of the forms.
You then have to confirm that your insurance provides comparable or greater cover than the package insurance in all sections before you send off the form.
It would take hours to compare policies. It is a hardy holidaymaker who is prepared to incur the wrath of the family by going home and poring over insurance for the next few days before confirming the holiday booking.
Many travel agents will also be keen to clinch the deal there and then. However, Joanne Bechman, a director of Fortune Travel in north London, said: 'Any good travel agent will be quite happy for you to make a provisional booking and go away and check out the insurance. You can then come back with your choice of insurance. You can always change it at a later date if you wish.'
Tour companies are justifiably concerned that people do not go on holiday uninsured. But David Gray, a spokesman for the independent insurers MKC, said: 'If you take the tour companies' insurance they make more money. It is also easier for their reps.
'But in reality it frequently makes no difference to holidaymakers, particularly for the bucket-and-spade brigade who perhaps are in an apartment in Spain. They are pretty independent anyway.'
The best advice is to check the insurance before you go to the travel agents to pick up the brochures. You can often save pounds if you buy insurance independently.
A family of two adults and two children would pay pounds 30 on the budget plan, or pounds 40 for more comprehensive cover, with the independent insurer Crispin Speers for a one-week holiday in Europe.
MKC charges pounds 42.10. Buying your insurance through a branch of Barclays Bank would set you back pounds 49.80. However, if the family went on a Thomson holiday and bought its package insurance the cost would be pounds 79.80. With Inghams it would be pounds 82.
People always tend to think about holiday insurance for foreign holidays. However, it is just as important to be covered for a holiday in the United Kingdom.
Families lay out hundreds of pounds in pre-payments for anything from a week on a farm to a luxurious weekend in a country house hotel. They could be liable for hundreds more if they cancel at the last minute.
A weekend at Le Manoir aux Quat' Saisons in Oxfordshire will set you back pounds 550 for two nights in a superior room and that is before you pay for breakfast at pounds 14.50 a head and dinner at pounds 59.50.
You will be asked to pay pounds 150 a night in advance. If you cancel within two weeks of your arrival date you are charged the full rate if the room cannot be re-let.
A weekend at the Savoy in London in a room overlooking the Thames will cost pounds 570 including breakfast. It is usual to pay in advance by credit card. If you cancel within 48 hours of your expected arrival you will usually be charged for one night's accommodation if the room cannot be re-let.
The cost of insurance for a UK holiday is peanuts compared with the losses you could incur if you cancel, lose your baggage or have an accident.
Crispin Speers offers budget cover for pounds 2 a person and pounds 1 a child for holidays up to four days. For a week a family of four will pay a total of pounds 8.
If you are on a UK package holiday the tour company will try to sell you its insurance and there is less likely to be an option for you to take your own.
However, if independent insurance is cheaper, try to persuade the tour operator to give you a choice.