The unrest in Egypt has highlighted the pitfalls of overseas holiday planning and travel insurance. If you made plans for Egypt this summer before the current crisis started and are now wondering whether to go or not, don't count on your insurer to cover your cancellation costs if you decide not to go.

Travel insurance policies will only cover the cost of cancellation if the Foreign Office specifically advises against travel to the area.

But even then not all policies will pay up according to the Association of British Insurers.

Travel companies are also under no obligation to give you a refund or offer you an alternative destination if the area is still deemed safe by the Foreign Office.

But if you do go and you are affected by the civil unrest, you will also have difficulty claiming.

Gocompare.com's travel insurance expert Caroline Lloyd says: "Most of the big insurance underwriters exclude civil unrest, commotion or rebellion."

The only consolation says Mike Powell, travel insurance expert at researchers Defaqto is that "if you are injured in an act of terrorism, your medical bills will be covered but mainly because insurers don't want the bad PR if they refuse".

One of the reasons some people don't bother with travel insurance at all is because of scepticism about whether travel insurers will actually meet their claims, according to a recent survey.

The number of uninsured holidaymakers is certainly on the rise. The proportion travelling uninsured increased from one in five travellers in 2011 to one in four last year, according to the Association of British Travel Agents (ABTA).

Yet there are plenty of instances where holiday insurance can prove invaluable. Medical claims can run into thousands of pounds - such as the £21,000 for treatment for multiple injuries after being hit by a car in Greece, cited by one insurer on comparison site Gocompare.com's panel.

Loss of baggage can also be serious, with insurer LV= stating that the average Brit now takes over £2,500 worth of luggage on holiday - more than three times as much as the cost of the break itself.

This includes £700 worth of electronics such as cameras, ipads, phones and laptops.

But you would need to check exactly whether these types of personal belongings are covered.

Youngsters are among the worst when it comes to failing to arrange travel insurance for their trips abroad, with nearly one-third (30%) omitting to do so according to Gocompare.com.

But they are not the only ones. Saga's research has found that one in ten over-50s has also travelled without insurance in the last five years.

Paul Green at Saga says: "In contrast to younger people, the most common claims made by the over-50s are for cancellations because they fall ill before their departure date. The average claim for this is £1,200."

There is still an assumption among some travellers that the European Health Insurance Card will be sufficient if medical care is required in Europe. While among youngsters, the prevalent view is that travel insurers hardly ever pay out.

Travel insurance is certainly not designed to cover modest bills.

Mike Powell of information group Defaqto points out the excess on many policies is £100, and is usually no lower than £50 on others.

He says: "With a growing number of travel policies, the excess applies to each section, so if you claim under, say, three separate sections, you could end up paying the first £300 for the claim yourself."

Standard travel insurance policies are also not good for covering risky activities.

Beth Macer at payingtoomuch.com explains: "Banana boat rides and pedaloes are covered by most travel insurance policies, but not all will cover other popular activities such as water or jet skiing and parasailing."

If you crash into someone while you are using a boat or other watercraft, some policies won't pay claims for personal liability if a claim occurs.

According to ABTA, a travel agent can recommend appropriate cover for adventure sports.

Some people don't have to bother to buy a separate policy because they have travel insurance as part of their bank account package in return for a monthly fee.

Nationwide FlexAccount customers get free travel insurance if they pay in £750 per month.

Mike Powell says these policies are normally of a high quality but it is necessary to check whether any pre-existing medical conditions are covered.

ABTA blames the decrease in the take-up of holiday insurance on the tighter controls on its members since 2007.

It would like to see the rules relaxed. Mark Tanzer, ABTA Chief Executive, argues: "The concern ABTA and many of our members have is that the regulations are too burdensome, which means fewer travel businesses are selling insurance, and ultimately that means fewer holidaymakers are taking out the appropriate insurance."