The Office of Fair Trading is warning people to be wary of those insisting that they take out travel insurance, especially when the travel operator itself markets the policies.
The OFT is scrutinising all forms of insurance, but the travel insurance specialist Club Direct wants the office to launch a formal investigation into those agents - such as Thomson, Owners Abroad and Going Places - which make overpriced insurance a compulsory part of package deals.
More than 11 million people buy package deals every year, and of those about 90 per cent take out travel insurance.
Not all operators insist on insurance: Lunn Poly makes it optional, but clients who do not take it out have to sign an indemnity form.
Thomas Cook, which also offers travel insurance as an option, has an 11 per cent share of the package deal market. It refused to reveal how many of its clients take out its own insurance.
Bob Clark, commercial director of insurance products at Thomas Cook, warned travellers to check the small print of their policies very carefully. He also pointed out that holidaymakers could already be covered through their own existing policies.
'It is particularly important to check the types of sports that are covered. Most policies cover water-skiing, parascending and windsurfing, but extra cover may be needed if, for instance, the holidaymaker plans to go scuba diving.'
Mr Clark offered the cautionary tale of a traveller injured while parachuting during a holiday in America. The insurance policy involved did not cover that particular sport.
Many insurance sellers double the premiums for people over 65, although Lunn Poly does not.
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