That ‘free’ insurance your travel agent sold you could be costing you a packet. Cover is rarely gratis. The cost is almost always built into the price of your holiday, with the agent making a very tidy commission from selling the policy.

Leading insurance companies claim that up to two-thirds of British holidaymakers buy insurance from high street travel agents and could be paying as much as five times over the odds. And the high prices don’t necessarily mean satisfactory cover: some policies sold with winter sports breaks don’t even cover injuries sustained on the slopes.

You’re not legally obliged to take out travel insurance before going abroad – contrary to the advice of some travel agents – but it makes good sense to protect yourself in case you are injured, fall ill, lose your passport or travelling money, become the victim of a robbery, or are forced to cancel your holiday. Policies can be found easily and cheaply, too – so there’s little excuse not to buy one.

Shopping around

Banks, retailers and the Post Office (www.postoffice.co.uk) as well as numerous insurance companies all offer travel cover. There are many policies available to buy over the Internet, -UK Net Guide’s Travel Insurance sites provides a huge selection of links to leading insurance companies and brokers, all offering travel insurance (www.uknetguide.co.uk/Finance/Insurance/Travel_Insurance.html).
A number of companies offer travel insurance that can be bought at the last-minute. But it is advisable to sort out your insurance before you arrange your holiday, so that you can give your travel agent the name of your insurer when you come to book. Often the agent will ask you to sign a form declaring that you were offered but declined the company’s travel insurance.

Value for money

Around half of all families who holiday each year do so more than once, making it good financial sense to buy an annual policy instead of a one-off that only covers a single break. Year long policies usually cost about two-and-a-half times the price of week’s cover. Plus, they remove the inconvenience of having to arrange cover for each trip is removed.

Premiums can vary a great deal from one lender to the next, as does the excess. Always find out how much the excess is and whether it applies to one amount per claim or for each part of a claim. Also, check the limit on individual items because you may need higher limits if you are taking expensive belongings like jewellery.

Be sure to get several quotes before choosing a policy. You may also want to get recommendations from acquaintances who have made claims.

Adequate cover

Cost should not be your sole concern. It is also important to ensure that the cover you pay for is adequate for the kind of holiday you have planned and that it will cover every member of your family. Some underwriters’ policies include all children under 16, while other insurance providers limit the number of youngsters covered by a single policy. Certain policies will provide cover for children should they travel abroad without their parents – on a school trip, for example.

Some policies do not require you to be abroad and will cover you in the UK as long as your trip is pre-arranged and for more than a minimum number of nights (usually two).

Lovers of active holidays should be aware that there could be limitations on the type of pastimes your insurance will cover you for. Many lenders will not cover ‘extreme’ activities - such as sky diving, heli-skiing and mountaineering - as part of a standard policy, although they probably will do so for an additional premium.

Several insurers apply restrictions to how or how often an activity is carried out. You may be able to enjoy only one bungee jump, experience white water rafting to grade three or maybe five, and there might be a depth restriction to scuba diving (around 30ft) and a demand that all divers are properly qualified and supervised. However, most lenders now include a certain amount of winter sport cover in all their policies, allowing both single travellers and families to enjoy the slopes with peace of mind.

And finally…

Always take a copy of your insurance details with you on holiday, along with the numbers of any emergency help lines your insurer operates.

And fill in an E111 form. It is not a substitute for travel insurances, but could prove to be a welcome addition to it by entitling you, as a UK citizen, to free or cheap emergency medical treatment in all EU countries. The form is available from the Post Office and will be valid for as long as you remain resident in the UK.