Scramble for cover

PREPARATIONS for a holiday usually start at a travel agent and end at a bank. The agent books your holiday and more often than not sells you travel insurance. Your bank will supply traveller's cheques and foreign currency.

Commission charges and handling fees, in addition to a wide spread between the buying and selling prices of even commonly used currencies such as the lira and the peseta, are a standard grouse that even competition has been unable to eliminate. But at least bureaux de change guarantee that currencies and traveller's cheques are widely available, usually on demand.

For many years, banks have also provided travel insurance, though they have not actively promoted the fact. Of course, prospective holidaymakers who started planning their journeys at travel agents are likely to have already been sold cover by the time they reach the bank. However, there are sufficient numbers of independent travellers to make it worth the banks' while.

Building societies have sold travel insurance since the late 1980s. To many customers, it makes sense to have their home and holiday insurance from the same source. But like banks, societies have not actively promoted the policies.

This is likely to change. Ironically, the trigger for a more aggressive approach is the holiday price war that has been raging since the end of last year.

However, to secure discount percentages in double figures, prospective holidaymakers have to buy insurance as part of the deal. The agents are cutting the margins on holidays and subsidising the discount with the commissions they earn from selling insurance. Furthermore, their premiums are not the most competitive in the marketplace.

For example, Going Places charges £30.95 per adult for 14 days in Europe. How does this compare to the best buys from banks and building societies? For the same period of cover in Europe, the TSB charges £19.90, while at the Coventry Building Society the cost is £l5.41. The cover provided by the three policies does vary. Barclays cover for 14 days in Europe offers unlimited medical expenses and costs £19.95.

lt therefore makes sense to shop around for the most competitive cover. You may well find that when the compulsory insurance policy is taken into account, the discount from the travel agent is not as good as it first seems . However, it is necessary to look at what is covered and to compare restrictions and exclusions. For example, medical cover varies widely; and if you have expensive camera equipment, a limit of £150 per item will not be adequate for your needs.

Financial institutions are likely to become more active in the future in promoting annual travel insurance. This is particularly attractive for those who have more than one holiday a year. Not only does it save the hassle of arranging cover for each trip, it is also cheaper.

A family comprising two adults and two children is likely to incur travel insurance premiums of £320 for a two-week, long-haul holiday plus a one- week vacation in Europe. As shown in the table, an annual policy from a bank or building society can lead to savings of around £200 for such cover. Couples without children who take more than one holiday a year are also likely to benefit from annual cover.

There is another advantage of arranging cover through a bank or building society. Should a claim meet with resistance, there is another line of attack. Banks and building societies do not like unhappy customers. If your grounds for complaint are reasonable, you are far more likely to win the day with a large financial institution supporting you than you are on your own.

Annual travel insurance premiums

Bank/Building Society Cover

Family* Single Person

Bradford & Bingley £140.00 £80.00

Co-op £148.63 £85.00

Halifax £128.13 £92.25

Lloyds £129.41 £97.38

Midland** £125.00 £90.00

NatWest £132.23 £90.20

*Two adults and two children

** Currently only available to customers. Will be made generally available before the summer.

Coventry Building Society is on 01203 839333