But if you fall ill before the holiday starts, insurance may not help you. Which? has exposed a loophole used by 10 in 12 of Britain's largest travel insurers that means they will not always continue to provide cover for customers who fall ill before they travel.
Travel insurance is a big and competitive market, with apparently bargain basement deals available online. But the Which? study illustrates that the cheapest policies may not necessarily do the job. For low cost, the magazine features best rate providers such as AnnualTravelInsurance.com, Greatcover.com, and Avanti Travel. However, none of these companies are listed as one of the Which? recommended travel insurance providers based on product features and customer satisfaction. The top four companies in this list are LV, Saga, Age UK and First Direct.
Most people are aware that they must declare any existing illnesses before they take out a policy, but Which? has found another clause in the small print of travel policies that requires holidaymakers to inform their insurers about any new illnesses which occur after they have taken out the policies.
The insurer may then increase the premium, advise the policyholder to cancel the holiday and make a claim, withdraw the cover and refund the premium, or exclude the new condition. Two exceptions were Axa Travel Insurance and Age UK.
When you travel abroad, one of the main reasons for having holiday insurance is to cover the cost of medical treatment if you fall ill or have an accident. Your insurer will also pay for your transfer back to the UK.
Naturally, you will not have these problems if you are planning a break in the UK because you can use the NHS. However, other setbacks can occur that can make travel insurance worthwhile for UK trips. Stuart Bensusan of EssentialTravel.co.uk points out: "They will still require cover for delay and cancellation, personal belongings, pre-paid excursions trips and unexpected strikes."
A family with two children could take out one week's cover for the UK for as little of £5.10. However, if you have an annual travel policy, including one provided in conjunction with your bank account, cover for UK holidays will often be included automatically. To qualify, it must be a pre-booked break, typically for a minimum of two nights, although around one in 10 policies will cover you if only one night has been pre-booked, while a few require the booking to be for at least five nights.
If you have already arranged your holiday, don't wait until the last minute to take out travel insurance in case the trip has to be cancelled. This is particularly important in the current climate where there might be a greater risk of redundancy. However, the level of cancellation cover can vary. Researchers Defaqto Matrix recommend cancellation cover of up to £5000 but benefit levels for nearly half of all annual trip policies fall below this amount.
The number of visits abroad by UK travellers fell in the first three months of this year compared with last year, according to official statistics. However, the weaker euro could encourage more trips to Europe and some holidaymakers may be tempted to take larger than usual amounts of euros.
If you are thinking of taking more cash, Mike Powell, travel insurance specialist at Defaqto Matrix warns: "You need to check your insurance policy to find out exactly what cover they have. Cover for theft or loss of money cover may be may be higher than the amount of cash covered because 'money' also includes travellers cheques."
Although around half of all annual and single trip policies provide cover up to £500 for lost or stolen "money", only 8% give £500 of cash cover, Defaqto Matix says. Nearly half provide cover for cash of less than £250.
These differences in cover underline why comparing policies on cost alone can be misleading. Another example is cover for valuables. If you have an expensive camera, it may not be covered by the typical limit on valuables of £250, although you may be able to claim under your household policy instead. Mobile phones may be excluded. If you have an expensive phone, you will be better off with mobile phone insurance, which is also sometimes provided as part of a bank account package.
If your main aim is to keep costs down, there are plenty of cheap deals available. But if you are travelling as a couple, new research by Which? has found that cheap deals on joint policies are not always what they seem. When analysing travel insurance prices for two sets of couples aged 60 and 75, the consumer magazine found that it was invariably cheaper to buy joint policies rather than individual ones. However, when the couples were different ages, this wasn't always the case, especially where one was aged 60 and the other was older. In this situation, two individual policies can work out less expensive.
Another way of finding out how policies rate on product features is to visit Defaqto's comparison tool for annual travel insurance at www.defaqto.com/star-ratings/travel-insurance.
