Travel insurance "too cheap"? hmmm...

By Jennifer Hill

LONDON (Reuters) - Holidaymakers have been warned that some travel insurance policies are too cheap to be able to pay out.

Independent financial research company Defaqto found 30 separate single trip policies that charge 10 pounds or less for a week's travel to Europe -- with one quoting just 5.49 pounds per person.

In its report "Travel Insurance in the UK -- Cheaper is rarely better" -- which is based on an analysis of 986 travel insurance policies -- it urged travellers to beware buying insurance on price alone.

Brian Brown, author of the report and Defaqto's head of insight, said: "The insurance industry and the government must to do more to ensure that all consumers are aware that when it comes to travel insurance, low cost is not always best."

He said areas of particular concern included a lack of understanding on how baggage cover works and a requirement for insurers to obtain original receipts even for minor claims.

"Consumers are being let down by the insurance industry which has made travel insurance policies jargon-heavy to the point that the only thing they can easily compare is price," continued Brown.

"This, compounded with increased competition, means that too many people are now travelling abroad with inadequate cover.

"With the continued growth of overseas travel to increasingly exotic places, more people are likely to end up on the wrong side of an insurance claim."

Defaqto estimates that around 10 million overseas visits are uninsured each year.

It believes many holidaymakers mistakenly believe that a European health insurance certificate removes the need for travel insurance.

[Reuters]