Sellers have a responsibility to highlight key exclusions and enquire about the health of consumers

Financial Services Ombudsman

One problem is that insurance policies are sold by travel companies, supermarkets, banks and building societies, and not by trained insurance professionals who understand the risks involved.

David Cresswell of the Financial Ombudsman Service said: "One of our main concerns is around the circumstances of the sale of the policy.

"Sellers have a responsibility to highlight key exclusions and inquire about the health of consumers."

Stolen baggage troubles

The ombudsman has identified four main areas of concern - curtailment, baggage, medical expenses and cancellation.

Wealth warning: travel insurance policy may not cover you

One common source of disputes reported to the ombudsman is when insurers refuse to pay out if bags have been stolen.

Refusals occur because the bags were 'unattended', or because policy holders have not obtained a police statement, even though the need to do so may not have been specified clearly in the policy.

"Travel insurance is perhaps the most complex financial product consumer purchase during the year. Each policy carries an enormous range of risk from losing your baggage, plane delays to having to repatriate a dead body.

"People assume it is simple but in reality they are only covered for certain risks", said Mr Cresswell.