Beware cheap travel cover that could cost you dearly

THOUSANDS of holidaymakers will be escaping abroad this week to enjoy Easter in the sun after weeks of winds and storms. But whether you are travelling or spending the bank holiday planning your summer break, don't forget to think about travel insurance.

We are expected to take 46 million holidays abroad this year, and although you can now buy insurance for as little as a fiver, millions leave these shores without it.

But Brian Brown, travel expert at market researcher Defacto, warned against buying the very cheapest contract you can find, arguing: "If you pay £5 for a policy, don't be surprised when you receive a standard of service which matches that price. The insurer will not pay any claim unless it absolutely has to. Certainly they won't entertain anything there is a question mark about."

Financial Ombudsman Walter Merricks warns customers to read carefully the cover provided by either very cheap contracts or those given away with a banking, credit card or holiday package. He said: "There can be a mismatch between expectations and confusion on both sides about the exact nature of cover."

Some groups, particularly older travellers or those with health problems, can face difficulties finding appropriate cover. But next month the Association of British Insurers (ABI) will launch a new service aimed at helping them find reasonably priced protection.

Meanwhile, the high street can be a good place to begin, with reasonably cheap but good value contracts available from Tesco, Asda, Sainsbury's and the Post Office. Marks & Spencer or John Lewis's money arm Greenbee sell quality comprehensive policies if you pay a bit more.

Whereas cover for a single trip to Europe bought over the internet can cost £5, you might pay around £20 with M&S and John Lewis.

If you plan to take more than one holiday this year, then you can save money with an annual policy which insures you for as many trips as you wish to take. Similarly, families can cut the cost with a family contract.

You can buy cover from your bank, building society, insurance company or broker. Finally, though generally less recommended, you can pick it up from your travel agent.

Primarily you need travel insurance to protect you if you get ill or have an accident and need medical treatment or to be brought home in an emergency.

A European Health Insurance Card (EHIC) will allow medical treatment for free in EU countries plus Iceland, Liechtenstein and Norway, but this can be dangerous to rely on exclusively as it only funds treatment to the same level as is enjoyed by the locals, which will be significantly less comprehensive than the NHS and could leave you with a significant bill.

Similarly many private medical policies extend cover worldwide, so further protection may not be necessary.

Finally, if all your personal belongings are already covered under your home contents policy, these arguably don't need to be insured again.

However, Chris Price, head of travel at Direct Line, argued that buying a packaged travel policy as well will always bring peace of mind: "A travel contract aims to look after you and every aspect of your holiday. We are expert in finding you every kind of help you need in most tourist locations. A private medical insurer may not have such good local contacts in these destinations.

"But it is about much more. Last year one of our policyholders had a motorcycle accident in the Thai jungle. We had to charter a helicopter from the local military to get him out and to medical help. Without that policy, he would have been stranded in agony."

Young travellers

Young people love to travel, but are the group least likely to buy cover. However, if mum and dad buy the right kind of family annual policy this can cover students and other teenagers when abroad, provided they are still in full-time education.

Alternatively, when abroad for prolonged trips, they may need to opt for a backpacker contract, as most ordinary family policies restrict cover to a maximum of around 40 days.

Backpacker policies cover trips lasting a year or 18 months. Ian Crowder of AA Insurance said: "These can be useful for anyone studying abroad for several months, as it can be very difficult to find them cover any other way."

Families

The cheapest way for a family to travel is with a family policy, which begin at £20 and rise to around £50. If any family member holidays more than once a year, cut costs further with an annual contract.

Make sure it allows the children to travel separately, so you need not buy extra cover for school trips and exchanges.

Single parents can buy family policies in the same way. They are unlikely to receive much of a price reduction, although there may be a small discount.

Extended families must ensure the policy protects everyone travelling together, as most are designed with the traditional family in mind. Most contracts will exclude children who do not live with you permanently.

Brown explained: "You might have the situation where a husband and wife are travelling with her two children who live with them; but his two, who are also among the party, are not protected because they normally live with his former wife."

Over-65s and health problems

Most contracts have an automatic cut-off age at 70, and will not protect individuals with pre-existing health conditions. However, it is still possible to get cover.

Saga, Age Concern and Help the Aged, through its subsidiary Intune, all offer travel cover up to any age, and RIAS will issue policies up to 89. Next month the ABI is launching its own internet portal, with a telephone helpline service to help the over-65s find good cover. They are also working on a separate package for those with health problems.

It is vital to always declare pre-existing medical conditions, but once you have done so, many insurers will issue cover provided you are not travelling against your doctor's advice. They may, however, demand an additional premium or higher excess.

If you are having difficulties finding a policy, there are specialist underwriters and intermediaries for those with health conditions, including Free Spirit, owned by Axa. Health charities such as Cancer Research and the British Heart Foundation can be a useful source of information about companies sympathetic to your particular health problem.

What to look for in a policy

Minimum medical protection recommended for Europe is £1m; £2m for the US. Quality policies will automatically cover up to £5m

• Cancellation cover from £500 to £3,000

• Baggage cover of £1,500

• Personal accident protection

• Third-party liability of £2m

• Legal expenses insurance of around £15,000

• Travel delay cover (usually pays out £20 after 12 hours)

• Missed departure payment of £500

I was on the ball with Italy trip cover

VICTORIA Jackson couldn't have been more excited when she received a last-minute invitation to join her brother and his friends to celebrate his 21st birthday in Milan watching their favourite team, Liverpool, play Inter Milan, writes Teresa Hunter.

Though she has lived in Scotland since she was nine, Vicky, 19, of Edinburgh, was born in the city of the Beatles, and she and her family have followed the team ever since.

When the invitation came in to join the birthday party, she didn't have to give insurance a minute's thought.

She said: "I bought an annual policy when I went to Greece last summer, so I knew I was covered. There was no last-minute messing about."

They couldn't insure against disaster on the football pitch, however. But then they didn't have to: Liverpool won the two-leg tie three-nil.