by Louise Greenwood Radio 4's Money Box

Many of us will be packing to go on holiday in the coming weeks.

But Money Box has discovered a worrying loophole which means your travel insurance is useless for a large part of your journey should you suffer loss or theft of your bags.

The vulnerable period begins when you check your luggage in and lasts until you take it off the carousel at the other end.

Money Box spoke to Ian from Cardiff who flew home from Uganda after working on a charity project.

His suitcase contained clothes and a valuable Psion personal organiser which he inadvertently packed in his suitcase rather than keeping in his hand luggage.

When he arrived at Gatwick he found the lock had been forced and his goods stolen.

He immediately tried to make a claim with his travel insurer, but to his dismay was told they were unable to pay out and was referred back to his airline.

The Warsaw Convention

Many insurers refuse to pay out because of a 70 year-old piece of legislation called the Warsaw Convention.

These are rules which govern the agreement between passengers and airlines.

The rules state that airlines, not insurers, are the ones who should pay compensation if your luggage is stolen in transit.

Most travellers are unaware of the loophole

Air Transport Users Council Chief Executive Simon Evans says:

"It was put in place in 1929 basically to protect a young industry from claims.

It is certainly a practice we would like to see changed... it is the one that makes it very difficult for passengers to get decent levels of compensation"

Poor compensation

When he tried to claim from his airline Emirates, Ian had another dissapointment.

"It became clear... that the compensation they would offer me was limited to $20 dollars per kilogramme stolen".

This is because the Warsaw Convention compensates passengers based on the weight of the goods taken.

The rate of compensation is just �14 pounds per kilo - and this has not changed since 1929.

As Ian's stolen items did not weigh much the airline offered him very little in return.

Ian feels this undermines the principle of buying travel insurance but the Association of Travel Insurance Intermediaries' Peter Hayman defends the policies.

"Travel insurance is fundamentally there to provide cover for medical cancellation.

The baggage cover gives essential cover... It is not a substiute for having valuables properly insured under a household insurance."

Airline responsibility

But Ian also tried claiming on his household insurance.

Again he was told it was the airline's responsbility to pay out because he was robbed while on a plane.

If it had been anywhere else on his travels he would have been covered.

However, there is some hope for travellers.

Next year Warsaw will finally be replaced by a ruling called the Montreal Convention.

It is slightly more generous, offering passengers a flat rate of compensation set at �850 pounds per person if they are robbed in transit.

But the Air Transport Users Council says even this could present problems with the airlines wanting to see proof you were carrying the valuables you are claiming for.

So this year perhaps you should keep all receipts for expensive items you take on your travels.