A report by a committee of MPs has called for a thorough review of travel insurance policies, as many people may not be covered for certain situations and they must compare travel insurance very carefully if they are not to be caught out by exclusions.

For example, ten million people who travelled last year would not have been covered for medical costs incurred by a terrorist attack, a Treasury Select Committee said, a situation it found wholly unacceptable.

The report was especially scathing about exclusion causes “buried” in the small print, which most people simply did not read, and the way cover is sold by travel agents  – who are not insurance specialists – without enabling people to compare travel insurance.

In 2006, around 20 million people bought travel insurance worth in the region of £670m, and many of these were ‘bundled’ policies sold by travel agents.

Independent research found that almost two-thirds of these policies did not ask applicants about pre-existing medical conditions, even those these are usually the cause of restrictions on what is covered by the policies.

However, Nick Starling, director of general insurance at the Association of British Insurers (ABI), said: “The risk of consumers getting a bad deal is low. The Financial Ombudsman only received 1,700 complaints last year.”