HAVE you come back from holiday needing to claim for the mobile phone you accidentally dropped in the sea? You might need a police loss report before your insurer will pay out.

Consumers are being warned travel insurers are increasingly reluctant to pay out on claims amid a squeeze on their profits.

Norwich Union, Britain’s biggest insurer, said it expected its costs to be about 6% higher this year than in 2006, when claims were £43.5m.

Insurers blame rocketing lost-baggage claims, largely because of the crisis at British airports this summer. Insureandgo has reported an 85% increase between January and June, while Norwich Union saw a 40% rise over the same period.

James Harrison of the comparison service Insurancewide.com thinks that travel-insurance premiums could go up as a result. “The cost of payouts has increased rapidly and this is inevitably going to have an effect on premiums as well as how readily insurers will pay out,” he said.

He added that claimants needed to be careful about adhering to their policy terms and conditions to avoid having a claim rejected. “Make sure that you know exactly what is and isn’t covered,” he said.

Among the most common holiday claims are lost, stolen or damaged personal possessions, including mobile phones, cameras, iPods and CD players.

Such items are usually classed as “high risk”, so there will be limits on the amount you can claim. AA, for example, has a £300 limit on each high-risk item such as a camera or mobile phone, but a £400 cap on all high-risk items put together.

Travel insurers will usually cover valuables if they are damaged accidentally – if you dropped your mobile in the sea, perhaps – but it is a woolly area.

If you can retrieve the phone, do so. You will probably have to send it off to prove it has been damaged before the insurer will pay out. You may also need a written report from your tour operator or hotel manager, so check the small print.

If you cannot retrieve your valuables, however, it is more tricky. The insurer will classify it as a loss and you will need to get a police report, usually within 24 hours.

A spokeswoman for AA said: “We accept that most people will not think to report lost valuables to the police if they have dropped them in the sea, but we would urge customers to read their policy documents before they travel.”

When travelling, always carry valuables in your hand luggage because most insurers will cover them for loss, theft or damage only if they were “with you at all times”.

Equally, never leave your mobile phone under your sun lounger while you take a swim in the sea, as the insurer will more than likely refuse your claim.

One of the most common problems with lost or stolen valuables is that holidaymakers do not report the loss quickly enough. Insurers normally demand that you make a report to the police within 24 hours – though if that is not practical, insurers will normally accept a claim if you tell your tour operator or hotel owner, and get a written police report at a later date.

If you think your insurer is being unreasonable, however, it is worth putting up a fight. The Insurer Axa PPP turned down one reader’s claim when his bag and its contents were stolen at an unmanned railway station outside Amsterdam. The reader could find no railway officials, police or even a phone box, and had to board a train, and then a flight, to return home to Britain.

Axa PPP initially turned down the claim, but once The Sunday Times got involved it changed its mind given that it was unreasonable to suggest the crime should have been reported within 24 hours.

It may be easier to claim for valuables on your home-insurance policy because they are unlikely to have the same reporting restrictions, but check that you have cover for personal possessions. It normally costs an additional £15 a year.

Another bugbear with travel insurance is where you put your luggage on a bus or train. Gus Zogolovitch, 35, a property developer from London, was refused a payout earlier this year after he lost his luggage in India.

He had placed his bag on top of a bus – after being told to do so by transport officials – from where it was stolen. His insurer, Insureandgo, argued that because the bag was not in his possession, his claim was invalid.

“I couldn’t believe it,” said Zogolovitch. “I was specifically told to place the bag on top of the bus as you weren’t allowed to bring it in.”

Experts say that such circumstances are common on British trains, too, where your claim could be turned down if you had put your luggage at the end of the carriage – even though that is where the racks are provided.

USEFUL TIPS

- You normally have to report something lost or stolen to the police within 24 hours. If this is not practical, tell your tour operator or hotel owner. If your insurer turns you down, put up a fight – if it was not reasonable to expect you to report within 24 hours, it may back down.

- Always carry valuables in your hand luggage.

- Be careful if you have to leave luggage out of sight on a train – even if the train company encourages you to do so. Your insurer could refuse your claim if your property was not with you at all times.

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