The best travel insurance policies

Independent travellers can protect themselves from financial failures and disruption by choosing the right insurance policy .

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As I pointed out on this page recently. measures to protect the money you pay in advance for package holidays and some flights are being strengthened. But many travellers remain particularly vulnerable especially in these difficult economic times when making travel arrangements independently rather than booking a package.

For example, you might buy a flight directly from an airline and then book your accommodation directly with the hotel. If you are in this situation, and something goes wrong the airline goes out of business, a strike grounds your flight, or the ash cloud blows over again you may be able to get a refund of your fare (through your credit card company, for example), but if you can t find an alternative way of reaching your destination, there is a good chance you will lose the money you have paid in advance for the hotel or other, equally expensive elements of your holiday, such as a villa booking, special excursion, or car hire. Legally, you remain responsible for paying for these even if you can t use them.

Because these losses are a consequence of the first loss, they are often called consequential losses and the only way you can cover them (except by booking a package holiday) is through insurance. The good news is that a few forward-thinking insurers have started to offer this sort of cover as part of a standard travel policy (though sometimes you have to pay an extra premium). I have trawled through what is offered by some leading companies and found a handful that may be of interest to readers. Apologies in advance for the complexities of the terminology, but they are worth grappling with if you make a lot of independent bookings.

Note that the details I give below are not comprehensive, and are not intended necessarily as general recommendations. Everyone has different insurance needs: before buying any policy you should ensure that the levels of cover and the activities included are suitable for yours. Note too that insurance for financial loss usually pays out only if the loss cannot be covered by another means, that there may be an excess deducted from any claim, and that only those named on the insurance policy will be covered.

Do not be confused by policies that cover the financial failure of a scheduled airline that may be useful cover to have, but unless it also covers consequential loss, you will be exposed to losses on other bookings you may have made. And such policies may not cover losses on any other type of failure, such as that of a car hire company, for example.