Go to the B&B for a good deal on travel

Building society raises the stakes in the holiday insurance battle

The Bradford & Bingley building society has fuelled growing competition in the travel insurance market with a price-beating annual policy that has been awarded "best buy" status in this month's Holiday Which?

The travel policy, which covers holders for any number of trips anywhere in the world lasting up to 90 days each, costs pounds 70 for an individual. Importantly, there is no excess on claims; with most policies, unless you pay an additional premium, you are liable for the first pounds 30 or more of any claim.

It is believed to be the cheapest on the market for a policy with no excess that also covers holidays outside Europe, although if you want a policy covering your whole family Which? says there are better deals around.

The policy includes 17 days of winter sports cover, pounds 5m of medical insurance, pounds 1,500 of baggage cover with a pounds 250 single-item limit, cover for pounds 500 of money (pounds 250 of hard cash), pounds 5,000 for the costs of having to cancel or cut short a holiday, and pounds 2m of personal liability insurance. One notable exclusion, however, is business trips: if you want cover for these, there is an additional premium of pounds 20.

Buyers who do not make claims will also be entitled to no-claims discounts if they renew their Bradford & Bingley policy in subsequent years. After one year this discount is worth 10 per cent, and after two years 15 per cent, with a maximum discount of 20 per cent after three years.

The building society claims the deal reflects its aim to prove that it can offer customers better value than a bank or insurer that is under pressure to maximise profits for shareholders (see back page). But the offer also comes at a point when the travel insurance market could be due a significant shake-up.

Annual travel policies can be worthwhile for anyone taking two or more holidays a year; one-off insurance bought for a fortnight's holiday can easily amount to pounds 30 or more. But the hitch of buying an annual policy of this kind is that you might still end up having to buy insurance from the holiday companies you book through.

It is all too frequently a condition of a particular holiday deal that you take out a company's own insurance policy (even if you have your own) - and these policies are normally poor value. This conditional selling has come under a great deal of criticism and the practice has been referred to the Monopolies and Mergers Commission, which is expected to ban it.

The discrepancy in value is likely to be further highlighted after a tax change comes into force next month. From 1 April insurance premium tax, which is built into the price of policies, will go up from 2.5 per cent to 4 per cent on policies bought from insurers or insurance brokers. But the tax will go up to 17.5 per cent on policies bought from travel agents.

Insurers might absorb the smaller increase in their existing prices (as the Bradford & Bingley is, for example) but agents will be under more pressure to try to pass it on, which consumers are unlikely to overlook. Alternatively, agents might stop selling insurance altogether, so allowing holiday makers to take full advantage of competitive moves such as that from the Bradford & Bingley.

q Details: Bradford & Bingley, 0800 435642.