Insurance: Are you protected?

Travel agents are under scrutiny over how they're selling insurance, says Mark MacKenzie

Organising your travel insurance at the same time as buying your holiday makes sense. But buy it from a high-street travel agent and you could be inviting trouble.

According to a survey in this month's Which? magazine, the way travel insurance is sold by some leading high-street agents could result in holidaymakers travelling with their belongings underinsured or, worse, being liable for hefty medical bills if they fall ill while away.

Among the worst offenders are familiar names, well-known retailers that, according to Which?, fail to follow even basic procedures to ensure customers are adequately covered.

In search of a standard policy for a two-week holiday in Spain, Which?'s mystery shoppers spent three months visiting branches of high-street travel agents, as well as 10 independent agents. Alarmingly, only in 19 per cent of enquiries did retailers explain the level of cover a policy provided and only once were any exclusions made clear.

"The onus is on the company selling the product to explain what's included and what isn't," says Ashley Gunn, head of money research at Which?. "Unfortunately they just don't."

More disconcerting, however, was the fact that only 35 per cent of enquirers were asked to declare any existing medical conditions - a potentially disastrous omission given that something as simple as a previous slipped disc can invalidate medical cover.

"It's very worrying," says Gunn. "If something happens to you in America, for example, and an ongoing condition affects your claim, you could be liable for expenses running to millions of pounds." In comparison with policies bought from high-street agents, those purchased over the phone fared better - but only just. Of 36 additional insurers contacted by researchers, only half asked about medical history.

In addition to reading policy small print very carefully, Which? advises travellers to get a European Health Insurance Card, available from the Department of Health. Many insurers will waive a policy's medical excess if you have one and need treatment within the EU.

A crucial difference between high-street agents and other retail channels is the way they are regulated. Products sold by financial services organisations are regulated by the Financial Services Authority, which means that dissatisfied customers have recourse to a financial ombudsman in the event of a contested claim. "In theory," explains Gunn, "you can take a complaint about a travel agent to a financial ombudsman, but the problem is proving you've been misled."

And even insurers who do fall within FSA rules have room for improvement; in Which?'s survey, only two-thirds correctly informed customers they were regulated. Which? has handed the results of its survey to the FSA and is lobbying the government to bring high-street agents under FSA rules when a review of travel insurance takes place next year.

"There's no reason why travel agents should be excluded from insurance regulation," says the editor of Which?, Neil Fowler. "People should have the same protection, regardless of where they buy insurance."

Which?'s experience on the high street contrasts sharply with that of buying insurance online. Most websites ask about existing medical conditions during the quotation process, and potential purchasers can usually download policy documents before making a transaction.

The survey also uncovered a number of policy booby traps. While most operate a standard excess of £50 or £100, some people have been charged separate excesses when claiming for more than one item. Another useful tip is to check the details of your home contents insurance, as most policies offer some level of cover for belongings away from the home.

Which?'s findings come in the same month that Sainsbury's Bank, a relative newcomer to the travel insurance market, published its own research claiming that this year up to 8 per cent of British holidaymakers, an estimated 2.5 million people, will travel without any insurance whatsoever.