When Is Travel Insurance a Rip-Off?

Currently, many travel agents offer travel insurance as part of the package when you reserve your flights, accommodation, rental car, travellers' cheques and anything else you are planning to include to make your trip a perfect one.

It often seems like the easiest way of sorting things out to just go along with the agent's suggestion, cough up an extra twenty quid or so, and have your insurance all dealt with by the time you walk out of the agency.

However, voices which suggest that this is usually a more expensive way of ensuring that you are covered if the worst should happen are growing in volume and the financial watchdog, the Financial Services Authority (FSA), has now also joined the discussion.

One of the reasons for the difference between buying your travel insurance at the agent's and buying it separately from a specialist insurance provider is that, at the moment, the two vendors do not have to follow the same rules as each other.

Building societies, banks and insurers are all carefully watched and regulated by the FSA, but travel agents are not, which means that they do not have to stick to the same rules about competition, transparency and fairness.

So it looks as though the FSA may want to regulate the travel agents as well. But will this be good news for the consumer? Insiders seem to suggest that the answer will overwhelmingly by yes: competition will improve, which should therefore lower prices and improve services.

Premiums will not be allowed to be artificially raised to increase profit margins, and people are likely to become more aware of the options available to them and therefore more able to shop around and find the best deal and the best policy for them.

However, the travel agency sector has moved to defend itself and a spokesman for the Association of British Travel Agents (ABTA) has said that a new exam has been introduced, which travel agents must now pass before being able to sell insurance.

"We have now required that every single member of staff at an ABTA travel agent or tour operator, if they're selling travel insurance, must have sat and passed an exam," said the ABTA spokesperson Sean Tipton. "2000 of them have done so. We have gone further than we had to, even though there wasn't a problem."

In the meantime, the best option is not to take the first policy when you are offered travel insurance. In the same way as with your car, shop around for the best deal with all the trimmings.

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