Losing out on holiday insurance cover: Tour operators have the right to make insurance a condition of selling their packages, but some deny they are motivated by the prospect of commission

PEOPLE who take several foreign holidays a year may save on their insurance by buying an annual policy - but not if they buy holidays from companies that force them to buy insurance as part of the deal.

Club Mediterranee, for example, automatically includes insurance with all its holidays and you cannot opt out of it.

A spokeswoman said: 'This is part of our all-inclusive philosophy. Customers buy everything at once. They do not have to worry about buying anything else. Everything is taken care of.'

Holiday companies normally receive commission on the insurance they sell, although Club Med's spokeswoman did not know what the arrangement was for her company.

VFB Holidays specialises in holidays to France and also includes insurance policies automatically with all its packages. VFB buys the policy in bulk from an underwriter and adds a profit margin - the equivalent of commission.

John Ash, marketing manager for the company, said commission was not the motivation for insisting that customers bought cover from the company.

'We started to sell insurance automatically with our holidays some time ago because we want to ensure that our customers are covered, especially for cancellation,' he said. 'We do not make any exceptions.' The premium was always included in the overall price of the holiday, he added.

Bob Clark, commercial manager for UK insurance products at the travel agent Thomas Cook, said it was quite unusual for holiday companies to insist on customers buying their own cover. But it was common to insist that they had insurance offering protection equivalent to their policies.

Saundra Satterlee, a financial services researcher for the Consumers' Association, said: 'There is nothing to stop holiday operators making insurance part of the package.

'You are not legally bound to take their insurance products, but they have the right to make it a condition of selling the holiday.'

People who buy annual travel policies may also find they are denied some special holiday deals.

There is a trend for travel agents to offer discounts on holidays on the condition that the customer buys a certain insurance policy.

'This arrangement generates two sets of commission for the agent,' said Ms Satterlee. 'One comes from the holiday company for selling the holiday and the other from the insurance company.'

Lunn Poly is currently offering discounts of up to pounds 180 on a range of 1993-94 winter holidays. The customer must buy a Bishopsgate travel policy from the agent. Two weeks' cover for a sunshine holiday in Europe and the Middle East costs pounds 26.95.

Abbey National would charge pounds 18 for similar cover in Europe and for Middle Eastern countries on the Mediterranean coast. Abbey's annual policy would cost pounds 89 for worldwide cover.

Norwich Union sells holiday cancellation cover which costs pounds 20 for holidays up to pounds 500, pounds 25 up to pounds 750 and pounds 30 up to pounds 1,000.

Portuguese banks are now charging up to pounds 9 plus the 0.9 per cent government tax for cashing traveller's cheques. But there are ways to avoid heavy charges.

American Express will cash cheques free, except for the government tax.

AIB Bank, Girobank, Chelsea and Yorkshire Building Societies are offering their customers free withdrawals of up to pounds 250 from cash machines in Spain and Portugal.

(Photograph omitted)