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On the road to the comprehensible policy

Buying insurance must rate as the least attractive part of booking a holiday. Vacations are supposed to be about fun and relaxation, not about accidents, illness, lost baggage and cancelations.

Unless you happen to book for two weeks bungee jumping in the Andes, the chances are that insurance requirements will not have formed part of your deliberations. The result is that many people embark on their holidays with insurance cover that is either unsuitable, too expensive, or both.

Travel insurance is a very competitive and lucrative market so there is no shortage of people who want to sell it to you. But some do it better than others and last week the Office of Fair Trading announced it will be investigating the sale of travel insurance policies. The OFT is concerned that the consumer is not getting sufficient advice or value for money.

Two issues will come under the microscope. The first is the sale of compulsory insurance. It is common practice now for the larger travel agents to offer discounts on their holidays if you buy an insurance product through them. Going Places, for example, will demand that you by its travel insurance if you want its advertised discounts at certain times of the year - usually before the peak season starts after Easter.

Such policies offer the basic essentials such as cancellation, which accounts for nearly 40 percent of all claims. They will also cover delayed departure beyond a number of hours; personal accident and medical expenses as well as personal liability and loss of personal belongings.

However, the OFT is concerned that travel agency staff are not trained to sell insurance. Since most travellers buy the policy to benefit from the discount on the holiday, there is a strong likelihood that they are not getting proper advice.

The second area of concern relates to the policy document. The small print and vague wording of some policies - often on a single sheet of paper - is a problem. That said, the Association of British Travel Agents has just introduced a new clause to its Code of Conduct relating to the sale of insurance policies and some companies are already responding.

Thomas Cook has tried to make the terms and conditions of its insurance products as wide as possible. It has introduced a book, explaining, in plain English, exactly what you are covered for. There is also a cooling off period of 14 days when people can cancel the policy if they are not happy with it.

Regrettably such transparency is by no means universal and it is up to travellers to make sure they have the right insurance. The Association of British Insurers (ABI) advises the public to shop around. First check what you are covered for under your household policy .

You can also buy insurance through a broker or directly from an insurer, or through your bank or building society. Intermediaries, such as Club Direct, which specialise only in travel insurance, can tailor a policy specifically for your needs.

The Post Office has also moved into the market, offering very competitive rates and offering your money back if you can find a cheaper policy within 14 days.

If you buy your holiday using a credit card you usually get free travel accident insurance. But this only covers you while you are travelling to and from your destination.