Holiday in the sun? Take cover

The travel company has sold you the package deal - now you're an easy target for the hard sell on insurance for your trip. It pays to shop around, advises John Andrew

It is one thing to pay over the odds as a tourist when travelling, but there is no excuse to pay more than you need before you start your holiday. However, many people do so either out of inertia or because of pressure from their travel agent. A little research could prevent you paying 400 per cent more than you need for an essential part of your holiday.

Everyone realises it is foolhardy to holiday abroad without travel insurance. At the time a holiday is booked we are all an easy target for the persuasive sell. You are delighted that you have managed to book your chosen destination for the dates that you want. The sales person tells you the total cost and adds, "Then there is travel insurance of pounds 37.50 per person."

It is not a case of, "Would you like us to arrange your travel insurance?", but an assumption that while you have probably looked around for the best holiday deal, your quest to obtain value for money has ended.

Yet to buy travel insurance as part of a holiday package has always generally been expensive. As from 1 April, this is invariably the case.

This is because the Government introduced new rules relating to Insurance Premium Tax (IPT). Now, if you buy the cover directly from a travel agent, you will pay IPT at 17.5 per cent. However, if you buy it directly from the insurer or an insurance broker such as a bank, building society or specialist travel insurance company, IPT is only 4 per cent.

The change was introduced because Kenneth Clarke, the then Chancellor, considered that travel agents were reducing the cost of holidays and adding the "discount" to the insurance cover they sold. The result is that the difference in the cost of cover can now be enormous.

For example, my local branch of Thomas Cook quoted a premium of pounds 150 for insuring a family of two adults with two children for a fortnight's holiday in Europe. This compares with pounds 29.50 for comparable cover from Premier Direct, which incidentally is the "Best Buy" in this month's Which? survey.

The cover for both policies is very similar: money - pounds 500; luggage - pounds l,500; personal liability - pounds 2m. Whereas the Thomas Cook policy gives unlimited medical cover, Premier Direct's is pounds 5m. However, this level of cover is more than adequate for Europe.

Several ploys are used to sell insurance as part of the package. "Attractive" discounts on holidays are available to those who take the packaged insurance. However, the discount could be more than offset by paying over the odds for the insurance. It could be worth your while foregoing the discount and making your own arrangements for cover.

Then there are the disclaimers presented to non-takers. Although tour operators have the right to decline to take you on holiday if you have no cover, they cannot force you to take a particular policy. Neither can they absolve themselves from all responsibility while you are away, so do not sign any document which relieves them of their responsibilities.

Even the quite innocuous request for details of the policy under which you are insured can be off-putting. The chances are you have nothing arranged when you book and consequently feel obliged to take what is offered. It therefore makes sense to research what is available elsewhere before you book your holiday, so that you can arrange a better deal elsewhere quickly.

If you take a holiday more than once a year, an annual policy can be good value for money. For example, when I booked three weeks' exploration of Burma earlier this year, the travel agent quoted pounds 66.12 for insurance cover. However, I was able to obtain an annual policy for pounds 62 using a few loyalty points earned with my credit card. This will also cover my winter vacation.

Price is only one of the considerations when choosing a policy - the cover you obtain is paramount. Look for the following as minimum levels:

l Medical expenses: pounds 250,000 for Europe; pounds 2m for the rest of the world.

l Personal liability: pounds 2m for the US; pounds 1m elsewhere.

l Cancellation and curtailment: pounds 3,000. Ideally this should cover illness, accidents, redundancy, witness or jury service, and burglary or damage to your home, not only for yourself, but also for anyone else on whom your holiday depends.

l Luggage and belongings: pounds l,500. Watch out for single-item limits (typically pounds 200-pounds 300) - you will need to insure expensive items separately.

l Money and documents: pounds 500.

Finally, check that the policy suits your needs. For example, make sure that the policy covers sporting holidays; ensure that you are covered for valuables kept in a car overnight when camping; make sure the policy covers an on-going health problem or pregnancy and delayed internal flights if you are touringn

BEST TRAVEL INSURANCE BUYS

Europe US (3 weeks) Rest of World (3 weeks) Worldwide (annual)

Adult Premier Direct pounds 11.50 Family Care pounds 31.50 Family Care pounds 31.50 Inter Assurance pounds 55.00

Family Care pounds 12.80 Inter Assurance pounds 31.70 Inter Assurance pounds 31.70 Travellers Protection pounds 69

Family (2 adults, Premier Direct pounds 29.50 Matthew Gerard pounds 76.75 Matthew Gerard pounds 76.75 Inter Assurance pounds 89

2 kids under 16) Inter Assurance pounds 30.75 Premier Direct pounds 79.90 Premier Direct pounds 79.90 Direct Travel pounds 102.96

Older people Premier Direct pounds 11.50 Premier Direct pounds 34.50 Premier Direct pounds 34.50 Bradford & Bingley pounds 75

Direct Travel Ins pounds 15.50 Matthew Gerard pounds 38.38 Direct Travel pounds 36.00 Travellers Protection pounds 69

Health condition Premier Direct pounds 11.50 Family Care pounds 31.50 Family Care pounds 31.50 Travellers Protection pounds 69

Direct Travel Ins pounds 13.00 Whiteley pounds 32.00 Whiteley pounds 32.00 Club Direct pounds 69.00

Telephone numbers: Bradford & Bingley O800 435642; Club Direct 01243 787835; Direct Travel Insurance 01903 812345; Family Care 0990 561224; Inter Assurance 01252 747747; Matthew Gerard 01483 730900; Premier Direct 0990 133218; Travellers Protection 01603 767699; Whiteley 01422 348411; WorldCover Direct 0800 365121.

Source: 'Which?' magazine, May 1997 (The cost of cover may change for some older groups).

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