Travellers slip up on cover

YOUR MONEY Watchdogs are worried about holiday policies. Steve Lodge reports

A TRAVEL insurance company has had its claim to offer "the world's best-value cover" reinforced by a decision by the Advertising Standards Authority.

The move comes, however, as the industry watchdog, the Insurance Ombudsman Bureau, warns travel insurance is overly prone to mis-selling and "small print" exclusions. Skiers and those planning holidays beware.

The ASA last week ruled in favour of WorldCover Direct, which offers annual travel insurance cover for an unlimited number of trips, including those in the UK, for pounds 75 a person. Competitors in this fast-growing and ostensibly cheap annual policy market had claimed they could offer similar policies at better prices. But the ASA said that although WorldCover's policy - which has been available for three months - is slightly more expensive than those of some competitors, in general it offers a better level of cover. For skiers, for example, WorldCover offers 21 days' cover, on- and off-piste, in as many trips as you want (as well as cover for subsequent non-skiing trips). Some other policies only allow one skiing trip and exclude off-piste.

Separately, the Insurance Ombudsman - which arbitrates on contested insurance claims - says there are continuing concerns about how travel policies are sold and how insurers use "small print" to exclude claims.

Many policies are bought through travel agents, who have an incentive to sell them with holidays but are often ignorant of their value or cover.

"Buyers are in the hands of those selling, more so than for perhaps any other type of insurance," says an ombudsman spokesman. He says it does not matter how cheap a policy is if it doesn't do what it should do. A principle of the ombudsman is that where terms have not been brought to the attention of the policyholder, the onus of showing they are fair and reasonable is on the insurer. More stringent terms are acceptable if they are drawn to the policyholder's attention.

The table summarises recent cases where the ombudsman has upheld consumer complaints against insurers' decisions.

The Consumers' Association and even the Office of Fair Trading (OFT) are also concerned about travel insurance. The OFT is currently inquiring into whether consumers get value for money.

It notes that to get a certain holiday package, or a discount on a holiday, people often have to buy a specific policy that may not be particularly competitive. It is a common accusation that some travel agents make more from selling insurance than they do from many holidays.

The Consumers' Association's Sophie Gumpel says: "People [buying holidays] are a captive market and they go for convenience. But they need to know the policy will cover them."

Here is a guide to getting better value.

o The Consumers Association published a buyer's guide to travel insurance in the February issue of Which?. As well as best buys, it suggests minimum cover levels all buyers should look for. For medical expenses it recommends at least pounds 250,000 for Europe, pounds 1m for the rest of the world. Medical cover may be advisable even where there is a free treatment arrangement (get an E111 form from a post office). Some of these agreements are not comprehensive.

You should look for cover against the full cost of your holiday. On baggage Which? suggests a minimum pounds 1,500. Look out for single-item limits. Check for cover for money and personal liability (in case you accidentally injure someone or damage their property).

o In each case make sure you are covered for anything you might be doing and be prepared to adjust minimums accordingly.

o Check conditions, exclusions and excesses. Most policies, for example, do not pay "new for old" on lost or damaged property.

o See whether your house contents policy covers property that you might be taking on holiday. If so, you may well not need additional baggage cover.

o Ask for an explanation of anything you don't understand. Get a copy of the full policy terms and conditions up front.

o Make certain the insurer is a member of the Insurance Ombudsman's scheme for resolving complaints (0171-928 7600) or at least the Personal Insurance Arbitration Scheme run by the Chartered Institute of Arbitrators (0171- 837 4483).

This is vital given the frequent disappointment on claims. In each case, however, you have to complain to the insurer before you can take your case further.

o Some credit cards do offer free travel cover, although generally it will be insufficient.

o Try an insurance broker, but don't expect the broker to know the whole market.

o Where a policy is tied to a discounted holiday, don't assume this is the best deal. A stand-alone policy may be better.

o Which policy is best depends on personal circumstances. Names appearing a lot in the Which? tables include GA Direct (0800 121007); Whiteley (01422 348411); and Club Direct Elite (01730 817533).

The Association of British Insurers (ABI) says you can expect to pay pounds 25-pounds 30 for each adult (less for children) for up to 15 days' cover in Europe, pounds 40-pounds 50 for North America and the rest of the world.

Annual policies, by comparison, start around pounds 70, and may prove good options for travellers making perhaps three or more trips a year. But cheap annual policies may not be suitable for most round-the-world travellers. Trips of only 90 days are covered by WorldCover Direct, for example.

Beating the small print

Incident Insurer's exclusion Reason for victory

Theft of cash and Property unattended Policyholder sleeping

camera while and lack of on bag containing

asleep on beach reasonable care property

Broken tooth left Only medical Difficulty of obtaining

until return home treatment outside dental treatment in short

UK covered time left abroad

Taken ill on holiday, Holiday not curtailed Overly restrictive policy

missed pre-booked because person not

excursion forced to go home

Cancelled holiday for Cancellation not Fair and reasonable claim

medical required to necessary and not

get a job unavoidable

Source: Recent Insurance Ombudsman Bureau rulings