Cover that is miles better

Holidaymakers have never had it so good, with a strong pound and low-cost travel insurance. Steve Lodge shows how to cash in

It has long been a gripe of holidaymakers that they have to buy uncompetitively priced insurance from a travel agent to get advertised holiday discounts. But for those who can sidestep this "catch" and shop around for insurance, there is more and more choice to exploit.

Tesco, the supermarket now expanding into financial services, is the latest company to start selling travel policies through a link-up with Direct Line. It offers policies for one-off trips as well as for any number of holidays in a year at prices which, it claims, are up to 50 per cent cheaper than many agents. For example, insurance for one person holidaying in Europe for two weeks costs pounds 17.80, and annual cover for anywhere in the world pounds 89. But despite its "guarantee" to offer "outstanding value", holidaymakers can probably do much better by going elsewhere. Moreover, buyers do not earn Tesco loyalty points.

Credit cards can offer a range of insurance benefits for holidaymakers, but this very rarely amounts to anything like full-blown travel cover. It is important not to read too much into a card's free "travel accident" insurance, which simply offers a lump sum if you should die or are injured in the course of, say, a flight that has been paid for on your credit card. It is not the same as medical insurance, which will pay for treatment for the duration of your holiday.

That said, if you use a card to pay for a holiday or any element of a holiday costing more than pounds 100, you can claim from the card company if the trip or purchase turns out to be not as described or not up to scratch. Some card firms will also extend this legal right, under the 1974 Consumer Credit Act, to purchases made abroad and many - including Liverpool Victoria's new card (see article above) - offer free "purchase protection" insurance against theft or damage of goods for a certain period.

Given the choice, it is almost certainly worth buying a travel policy from an insurance broker (which includes banks and building societies) or direct from an insurer, rather than a travel agent. Not only do agents generally offer poor value, but since April they have been subject to insurance premium tax of 17.5 per cent, compared with just 4 per cent on policies bought elsewhere.

Comprehensive travel insurance can be obtained for as little as pounds 12 a person for a two-week holiday in Europe, or pounds 55 for a policy covering a number of trips during a single year. Which? magazine's May issue (available in many libraries) carries a series of "best buy" travel policies for a range of different buyers, including families and older people.

Annual policies can be worth while for anyone going away as few as three times a year. Inter Assurance - a company linked to Green Flag, the road- rescue operation - offers some of the cheapest deals around, including an annual "anywhere in the world" policy that costs just pounds 55. But you are limited to 45 days of cover a year in total, with no trip lasting longer than 24 days and a maximum of 10 days' skiing.

The Bradford & Bingley building society offers another highly competitive annual deal with more generous cover: pounds 70 for any number of trips a year lasting up to 90 days each, and no excess on claims (with most policies, including those of Inter, you are liable for the first pounds 35 of any claim).

If you are planning any "way out" sports on your holidays, it is important to check a policy to ensure they are or can be covered, and if there is any extra charge. Most beach-based water sports are covered at standard rates, although even the most comprehensive policies often exclude damage caused to others (liability cover) through collisions on jet skis or even while windsurfing or surfing.

q Contacts: Tesco, 0845 3050505; Inter Assurance, 01252 747747; Bradford & Bingley, 0800 435642.