Getting away from it all

Watch for foul play; Thinking of making your escape from the World Cup? Don't pay too much for holiday insurance - and look before you leap with cards

IF YOU want to escape the World Cup, which starts on Wednesday, there are some excellent travel bargains around.

But if you do decide to head for the sun, or even plan to head for France to watch the football, don't take the first travel insurance you are offered.

Travel agents and tour operators make big profits on selling insurance, and several offer discounts on holidays only if you take out their cover, which is often expensive. The value of the discount may be eroded by higher insurance costs. For example, cover from Lunn Poly would cost a family with two teenagers pounds 159.80 for a two-week holiday in Europe, compared with pounds 30 with Worldwide Travel, a direct travel insurer. For a two-week holiday in the US the family would pay pounds 259 with Lunn Poly, pounds 73.75 with Worldwide Travel.

Margaret Beckett, President of the Board of Trade, is expected to outlaw deals tying holiday discounts to insurance after criticism in a Monopolies and Mergers Commission report published last November.

Sonia Haines, of Lunn Poly, said its cover was not compulsory and denied it was overcharging. "The bottom line price is what matters to the customer. If a customer comes into our shop he or she can take a 15 per cent discount with our insurance, or not take the discount and get insurance elsewhere. Often it is cheaper to take the discount and insurance."

Cover bought from specialist insurers is expected to rise from 1 August when Budget measures to extend the higher-rate insurance premium tax (IPT) of 17.5 per cent to all travel insurance are introduced. Currently IPT is charged at the higher rate only on insurance sold by travel agents and tour operators, with others paying 4 per cent.

Brent Escott, managing director with Club Direct, a direct insurer, says premiums may rise but the difference in price between specialist and tour operators' cover is so wide that the increase in IPT will do little to close it. He claims travel agents and tour operators mark up the net cost of travel insurance by anything up to 400 per cent.

Mr Escott fears agents and tour operators will sidestep moves to outlaw the link between discounts and cover, maintaining their profit margins by, for example, adding the price of cover into the holiday cost and claiming the insurance is free.

There are several ways to keep the cost of insurance down, particularly if you travel independently. The first is to compare quotes from travel insurance specialists. Your bank or building society may also give you a good deal.

If your personal possessions are covered for travel loss under your household contents cover, some insurers may allow you to exclude luggage from your policy and cut premiums by up to 20 per cent. Insurance offered by tour operators rarely allows you to tailor cover to meet your individual needs in this way.

An increasingly popular way for regular travellers to cut premiums is to take out an annual policy to cover a number of overseas holidays each year.

Don't just look at the price of the policy, but check it meets your needs. A good policy should offer a minimum pounds 1m cover for medical expenses and for personal liability (pounds 2m for the US), adequate cancellation and early curtailment cover, and loss of passport and money cover, the last to a typical limit of pounds 200.

q Club Direct, 01243 817781; Columbus, 0171-375 0011; Whiteley Insurance, 01422 348 4111; Worldcover Direct, 0800 365121; Worldwide Travel, 01892 833338.

q Harvey Jones is editor of 'Financial Pulse' magazine.

Cheapest deals

Single adult

Two weeks in Europe

Worldcover Direct pounds 11.46

Worldwide Travel pounds 12

Columbus pounds 12

Two weeks in USA

Columbus pounds 29

Worldwide Travel pounds 29.50

Whiteley pounds 31

Annual worldwide policy

Single adult

Worldwide Travel pounds 69

Whiteley pounds 81

Woolwich pounds 81.30

Family

Worldwide Travel pounds 99.10

Barclays pounds 100

Bradford & Bingley pounds 112

Source: Moneywise magazine, June 1998