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Honestly, pick the best policy for a spring break

The Easter and May bank holiday weekends could see thousands of Scots booking last-minute holidays, if they haven't already planned a trip abroad or "staycation".

But those of us planning a break from the day-to-day grind can easily forget to prepare for the worst. What if disaster strikes and we can no longer go? What about the unfortunate souls who have an accident or fall ill when abroad? And we've all heard horror stories about lost baggage, stolen wallets and cancelled flights.

The Financial Ombudsman Service reported this week that complaints about travel insurance rose by 13% last year. It currently receives 45 complaints a week, and in more than half of cases the insurer was at fault. Problems included delays, cancellations, curtailed holidays, stray luggage, medical claims and expenses, and personal possessions.

The FOS said: "The cheapest policy isn't always the best, and any savings you make when taking out a policy may cost you when you come to make a claim."

It added: "Think about when you want the cover to start, most policies will only cover you for the days that you take the policy out for, which could mean if you have to cancel the holiday before the policy begins you won't be covered."

Gocompare.com recently revealed that about one-third of travel insurance claims made by UK holiday-makers in 2012 related to cancellations and were typically worth £700.

The reasons most likely to be accepted by your insurer are illness, an accident, or being called up for jury duty - all of which can be proved in the event of a claim.

But those who opt for the cheapest cover available could find the benefits diminished by a large excess. Moneysupermarket.com says apparently bargain travel insurance from OUL Direct, for example, enables a family of four to cover themselves for a fortnight's holiday in Europe for just £10.69, providing cancellation cover worth £750.

However, policy-holders would have to pay the first £250 worth of any claim. That leaves only a maximum of £500, which may well not cover the whole cost of your holiday. Paying a little bit more with CoverForYou (£23.25) under the same circumstances would give you £3,000 worth of cancellation cover with a much lower excess fee of £100.

CoverForYou also offers £15m of medical expenses cover and £1,500 of baggage cover, compared to £10m and £500 respectively with the cheaper policy. Medical expenses cover is particularly vital, given that many countries expect you to pay for at least some of your treatment should you be admitted to hospital.

A valid European Health Insurance Card could help you to access free medical care in some countries within the European Economic Area, but this is no replacement for decent medical cover on travel insurance. Sadly, more than half of UK consumers believe that an EHIC entitles them to free emergency medical care anywhere in Europe, according to Gocompare. Even worse, travellers are being conned into buying this card from apparently respectable websites, at up to £24.99 a pop, though it can be obtained from the NHS free of charge.

Those intrepid travellers who plan their own holidays should also look for 'end supplier cover' within their insurance in case travel companies, hotels or airlines go into administration beforehand. The failure of Scottish airline Flyglobespan in 2009, alongside many others, is a reminder of how important this cover can be. Insurers who currently provide this extra cover include Swiftcover, Columbus, MRL Travel Insurance and OUL Direct.

If you're giving overcrowded airports a miss and going on a road trip instead, don't forget about breakdown cover. The cheapest UK cover listed by Moneysupermarket is on offer from The Green Insurance Company at under £30.

Rail travellers, meanwhile, should avoid putting luggage on a rack, out of sight, as they may not be covered by their travel cover in the event of loss or theft. This may be tricky on crowded trains, but try to keep valuables on you or nearby. Greg Lawson at Columbus Direct suggests clipping a rucksack to your seat or another immovable object to act as a deterrent.

Finally, don't be stung by high exchange rates at the airport or charges on your credit card as both can really eat into your holiday budget. Pre-ordering your foreign currency at a site such as ICE or FairFX, rather than exchanging your money at the airport, could save you £82.41 on €1,000.

Bob Atkinson at Moneysupermarket.com said: "Most credit cards will start to charge you interest the moment you make a withdrawal from an ATM, which could mean a hefty bill on your return, in addition to currency loading and cash withdrawal fees."

Debit cards also typically charge a usage fee of up to 3% for cash withdrawals overseas plus an ATM fee (£1.50 to £5) plus a transaction fee of £1.50 - whatever the purchase.

A cheaper option may be a prepaid currency card in euros or dollars from the likes of FairFX, Caxton FX or WeSwap. They are loaded from your debit card and lock in a known exchange rate at the time of purchase.

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