Travel insurance: pick your way to the best policy

Y ou've booked the holiday, updated your summer wardrobe and checked the neighbours will water the plants. But have you bought travel insurance? If you are one of the millions turning to price-comparison sites to search for a policy the choice can seem baffling.

Cash logged into Moneysupermarket.com to search for a Europe-only annual policy to cover two adults and two children under 16. It offered 94 policies from just 22.80. The same search on Gocompare.com returned 95, from 24.64. The startlingly low prices are thanks to intense competition among an expanding list of providers.

However, table-topping names were mostly unrecognisable. We scrolled past a dozen or so before coming across a well-known brand. So how do you know you are buying from a reputable company?

Large insurers tend to trade under a range of different names, and an unknown brand could actually be backed by a company you have heard of. For example, Travelinsurance.co.uk is a trading name of InsureandGo, which is part of massive Spanish insurer Mapfre. You can check the about us section of a provider's website to see who they are. Picking one that is part of a big insurer should give you peace of mind, says Malcolm Tarling of the Association of British Insurers.

There is a handful of standalone players, including Explorer Travel Insurance. Traveltime, Starttravel.co.uk, Planet Earth and goPanda. In this case check who underwrites the policy – this is the company paying in the event of a claim, says Tarling.

If you are buying through a comparison site, the brands are authorised and regulated by the Financial Conduct Authority and you are covered by the Financial Services Compensation Scheme (FSCS).

In the unfortunate event you pick a small brand and it goes bust, the scheme will step in. We may first try to transfer the policy to another insurer, says a spokesman. If there is a claim already in process, we may be able to offer compensation, but this would be on a case-by-case basis.

Whether a provider pays out is what consumers really want to know. The Financial Ombudsman Service received, on average, 43 complaints a week in the year to April 2014, ruling in favour of the consumer in more than half the cases.

One of the most common reasons for a claim being rejected is when an insurer relies on a particularly restrictive or onerous term in the contract.

A spokesman for the ombudsman says: Should the worst happen, keep a note of any correspondence. Keep electronic copies of your policy saved to your email account so the documents can be accessed wherever you are in the world. Taking pictures of an incident is another great way to record what's happened.

Complaint disputes make it important to consider how companies deal with customers. Look for 24-hour helplines, and check online forums to see if there are any comments about a brand.

Gocompare.com offers star ratings beside policies from independent financial researcher Defaqto. Some of the cheapest are only awarded one star out of a possible five. Consumer ratings are also a useful way of understanding which companies look after their customers. Of 20 travel insurers listed by consumer group Which? it only recommends Saga and Marks Spencer Bank based on customer feedback.

Fairer Finance, a service set up to help consumers choose the best financial products, ranks insurers based on what customers think of the brand, how good they are at handling complaints, and how transparent they are. The best score highly across all of these areas.

Among travel insurers LV=, First Direct, Tesco, Amex, M S and Saga are gold-rated, while Aviva, HSBC, Staysure and the AA are silver-rated.

It's worth going to a comparison site first to see what the cheapest available policies are – but if you don't see any of these brands it could be worth going to them directly, says James Daley, founder of Fairer Finance.

Before any search make a list of what cover you need in a policy, says Tarling. If you are unsure if the policy will pay out for your needs, you could also call a broker. A list of these is available at biba.org.uk. They can advise you of the right policy for your requirements.

Graeme Trudgill, executive director of the British Insurance Brokers' Association, says: Numerous brands listed on comparison sites are actually brokers. You could give them a call to check the policy definitely covers your needs – they will have different types and strip down the cover to get a competitive quote.

Here are some relatively unknown insurers that may crop up: ■ Staysure: This is a specialist insurance broker for the over-50s known for being prepared to cover holidaymakers with cancer or other serious pre-existing medical conditions. Staysure has above average happiness and trust scores from customers on Fairer Finance – in spite of having the longest policy document of all travel insurers (at almost 38,000 words).

■ BigBlue Cover: Listed by Which? as offering attractive rates with a good level of cover for singles, family and couples. It is part of the larger Rock Insurance Group.

■ TopDog Insurance: Surprisingly, it isn't a pet insurer. Cover is underwritten by Mapfre, which has a below average record on complaints handling, says Fairer Finance. In the last six months of 2013, the Financial Ombudsman received 310 complaints about Mapfre compared to 115 for Saga. Its policy documents are among the longest – at a little over 25,000 words.

■ Explorer Travel Insurance: It specialises in insurance cover for over 65s. It is listed by Which? as providing among the best value European single trip policies for those over 80 with a good level of cover.