Passport, tickets, money – what could possibly go wrong?

Neglect buying the right holiday cover and you could find yourself in deep water, says Ian Taylor
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The Independent Travel

Two million people will head off from Britain this weekend following a similar exodus a week ago. Most will have a trouble-free time, but of those who have a problem, more than one in seven will be uninsured.

That might not be a disaster if the problem is petty, but it could be costly if you have to fly home early, break a leg or worse. The Foreign Office points out that being sick or injured to the point of needing an airlift in the US could cost you £45,000. Even two days in hospital around the Mediterranean might cost £1,600.

However, simply having insurance might not be enough. The UK travel-insurance market may be worth £670m a year, but it is fiercely competitive on price, leading companies to reduce the cover on cheaper deals. So knowing the cover you require, and whether you have it, is key.

This does not depend on how you buy the insurance. More than a third of the 20 million policies taken out each year are bought from a bank, broker or supermarket, one quarter from a travel agent or tour operator, another quarter direct from insurers. The important thing is to understand what you have bought.

Travel policies tend to be complicated, consumers tend not to read them and some sellers of insurance appear not to explain them. Research by the Association of British Insurers suggests that more than a quarter of customers are not advised of the excesses they will have to pay in the event of a claim.

Up to three-quarters are not advised about terrorism exclusions and at least a third are not told of the limits on policies. A survey by the travel association Abta found almost one in five consumers was not asked about pre-existing medical conditions – when a failure to declare these is a sure-fire way to nullify your cover.

So check you have the right level of insurance and are aware of the exemptions and excesses. In the words of Essential Travel finance director Stephen Smith: "It is only when you face an excess of up to £250 that you realise the policy was anything but a bargain."

Do not just go by price. The cost will depend on where you are going, what you plan to do and the policy's duration, in addition to your health and age. Expect to pay more for travel to the US because of the cost of medical treatment. Multi-trip policies are a good buy if you expect to travel several times in a year, while a family policy may cover school trips and other travel as well as a group holiday.

Policies should include medical, baggage, personal liability – damage to a person or property by you – and cancellation cover. If you plan an active holiday, check your insurance covers that. Jet-skiing or scuba diving, for example, may not be covered. Ask the provider if in doubt.

Look for medical cover of at least £1m for Europe and £2m for the US and elsewhere, £1,500 or above for baggage and belongings, £3,000 in cancellation curtailment cover, personal liability of at least £1m and 24-hour emergency cover. Declare any medical conditions that might affect the cover and, if a standard policy does not cover you as a result, find a specialist insurance broker on the British Insurance Brokers Association (Biba) website. However, this should not be necessary in the case of pregnancy, which is not classed as a medical condition unless there have been problems previously.

Unfortunately, a change in the regulation of travel insurance next January – bringing everything under the Financial Services Authority – may lead to more people travelling uninsured even as it tightens the rules on selling.

Most travel agents are expected to stop selling insurance because of the cost and direct customers to an insurer instead. Citybond Suretravel broking director Greg Lawson warns: "Individuals are less likely to search for insurance themselves; 85 per cent of people travel with insurance at the moment and it might drop to 75 per cent." If you prefer not to risk a holiday going wrong, make it a policy not to drop the insurance.

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