Despite this, six in 10 claims are paid within a week or 10 days, said Mr Dear, former managing director of Comprehensive Holiday Insurance.

Mr Dear was angered by a report in the Australian Consumers' Association magazine, Choice, which investigated 76 international travel insurance policies.

Choice claimed too many travel insurance policies offered unfair conditions and exclusions.

"Every insurance policy, whether it's for your car or home and contents, has exclusions and restrictions," Mr Dear said, adding that the range of plans was created so travellers could choose the cover that suited them.

Mr Dear rebuffed suggestions that travel insurers should offer similar luggage limits (which range from $2,000 to $20,000) for travellers regardless of their destination.

Choice said: "The amount you stand to lose if your baggage is lost or stolen is the same whether you're in Bali or California".

Mr Dear said: "If you're going to Bali for a month, you're going to unwind and relax.

"You probably won't need that much baggage cover ...the environment is totally different."

The Choice report also found a number of policies were written in a manner that enabled insurers to refuse allegedly reasonable claims.

Choice noted a large number of claims had been rejected for belongings that had been left unattended in airport lounges, hotels, restaurants, train stations and bus stops.

The basis for the rejection was that the person hadn't taken "reasonable care" to protect the property.

"If you're checking into a hotel and you put your gear down and someone comes along and takes it that would not mean it was left unattended," Mr Dear said. "But we have knocked back a claim where the person left a suitcase outside a toilet and it was gone when they came out."

Many of these types of claims were tempered with fraud, he said.

Choice also questioned policies which offered "unlimited" medical or dental cover.

Choice found insurers only covered pain relief and the repair of a tooth up to the dressing stage after an accident. The travellers would have have to pay for subsequent work on the tooth on his/her return to Australia.

Mr Dear agreed that the word "unlimited" may be misleading. He said most of these policies were there to cover emergency treatment only.

An Insurance Council of Australia spokeswoman warned that travel policies had to cover a wide range of possible claims, such as medical, lost luggage, trip cancellation and liability, which made them different to many other policies and often more complex.

"Therefore, travellers are advised to ensure they check travel insurance policies before they leave home," she said.

"Travel, like other insurance, is highly competitive. If people are not happy with the terms of a policy they are advised to shop around to seek the best option."

• Choosing travel insurance got trickier for travellers with a pre-existing medical condition.
• A few plans do not cover you at all, while different policies vary on what they cover, such as asthma, diabetes, or high blood pressure.
• Older travellers may find it difficult to find travel insurance.
• Single parents will find some policies place restrictions on the number of children that can be covered.
• Adventure travellers face restrictions or heavy conditions if they want cover, while travellers who work on holiday may find themselves not covered during working hours.

How to find the best policy

The Australian Consumers' Association recommends that when selecting travel insurance you should be aware that the level and type of cover varies according to the destination. Factors to consider include:

Luggage: Are you travelling light or with expensive equipment such as laptops and video equipment?

Activities: Will you be skydiving, bungee jumping or hiring a car?

Health: Do you have special medical needs? Are you travelling with children, or do you have a relative who may become ill while you're away so you have to cut your trip short?

Travel insurance policies include varying degrees of cover for medical and dental treatments, personal liability, legal costs, rental car excess cover, cancellation, delay, resumption of journey and some baggage and belongings.

Advance bookings: If you are booking fares, accommodation and tours in advance you need to look at cover for cancellation. Also, look at cover for additional expenses and delays.

• Always keep receipts, such as when buying essential items because your baggage is delayed.
• Report all incidents as soon as they happen. Make your reports to the local authorities and the insurer in writing and keep copies of them so you have proof.
• Be aware that some policies have a time limit for accepting claims around 30 days after the incident or 30 days after returning to Australia.

If you have a complaint about a company or a problem with a claim, phone the General Insurance Enquiries and Complaints Scheme on 1300 363 683.