HOLIDAYMAKERS are being warned not to pick the cheapest travel insurance policies because many do not provide an adequate level of cover and may leave travellers stranded abroad.

Some policies cost less than £6 for a week’s cover in Europe, according to a report from Defaqto, a financial research company. But they are “too cheap” to be able to offer sufficient cover and may have misleading small print, it said. It urges consumers buying cheap policies to consider whether their insurer could pay any claim made.

Many cheaper policies do not cover the loss of cash, baggage or passports, for example, while others have large excesses – the amount of a claim you must pay yourself – or a low payback limit for each individual item lost.

Gosure.com, for example, has a basic single-trip policy for seven days for £6.67, but there is no cash, baggage or passport loss cover. Staysure.co.uk charges £5.50 for a seven-day policy with £200 baggage cover, but it does not cover personal liability or loss of a passport or cash.

Stuart Castledine, 53, a chartered accountant from Cardiff, bought annual travel insurance from Worldwide Travel for £150.

In November 2005, he went on a business trip to Rome and was mugged at a train station as he was returning home. He lost a briefcase in which he had his laptop. His total loss was £2,200.

Worldwide initially said it would pay only £350 because there was a limit on how much each individual item was covered for. However, it eventually refused to pay out at all because a copy of an Italian police report could not be provided.

Castledine only informed the police when he got back to the UK because he did not want to miss his flight and have to spend more money rearranging his plans.

He eventually used his household insurance company, Tesco, which paid out £1,750 for the claim.

Defaqto said that people travelling with a lot of personal belongings, such as cameras, iPods, watches and jewellery, can often get much better cover under their home insurance policy.

“The insurance industry and the government must to do more to ensure that all consumers are aware that when it comes to travel insurance, cheapest is not always best,” said Brian Brown, the report’s author.

He recommends slightly more expensive policies such as Travel Anytime, which offers seven days’ cover for £12.08, but includes £300 cash cover, £1,500 for baggage and £500 for a lost passport.

Cancer sufferers are routinely quoted double or triple the premiums for holiday insurance, according to Macmillan Cancer Support. This discrimination even extends to those who have been clear of the disease for years. If you or a member of your family has a preexisting medical condition, you must tell your insurer.

A number of companies specialise in travel insurance for those with medical conditions. PJ Hayman’s Free Spirit policy would charge a 45-year-old with lung cancer £151.60 for a two-week European holiday. Cover for a six-year-old with leukaemia would cost £76.30 for two weeks’ European cover. All policies have a £75 excess.

If you are travelling to a country within the EU, the European Economic Area or Switzerland, you should carry a European health insurance card, which entitles you to free medical care. Issued by the Department of Health, it is valid for five years.

However, travellers should not rely on it because it only guarantees a minimum level of healthcare. It will not pay for the cost of travelling back to the UK if you need medical assistance on the way home.

You can apply for a card online at https://www.ehic.org.uk/Internet/home.door by calling 0845 606 2030. To apply by post, pick up an EHIC form your post office.

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