Got the passport? Dont forget the travel insurance!

As the summer holiday season gets underway, it is time to review your travel insurance policy. Despite travel insurance being relatively easy and cheap to arrange around one in seven of us goes on holiday without it, according to the Association of British Insurers.

This is despite the huge risks involved in doing so - the cost of repatriation, medical treatment and legal fees, in particular, can be prohibitively expensive. Few holidays pass entirely without mishap.

Furthermore, according to research from Saga Travel Insurance, we dont always take out insurance at the time of buying our holidays, Instead 40% of us delay doing so until the month before departure, leaving ourselves without cancellation cover until that time.

You can avoid this problem by taking out annual cover. Not only is this more cost-effective than buying a separate policy for each holiday, but it will also cover you for all those short breaks you take which you might not normally buy cover for.

Most travel polices consist of four types of cover: medical, cancellation, personal liability and personal baggage.

Of these, the medical cover is probably the most important. Medical fees in North America can easily run into thousands of pounds, even for fairly minor illnesses or injuries. Check that you have cover of at least £1m, but preferably more if you are travelling to the US or somewhere exotic.

Remember to read the small print!

The wording of the cancellation cover is also important. Check that it runs from the time you purchase the policy, not from the date of your holiday. Cancellation cover should cover you if you need to cancel your holiday due to illness of yourself, a close relative, jury service or various other unexpected events such as redundancy, strikes or even severe weather.

If you are booking an expensive holiday, make sure the cover at least matches the cost of the holiday. Personal liability is arguably as important as medical insurance in that it pays your legal fees if you are responsible for an accident, injure someone else or damage their property. Such events can be a nightmare in North America.

Baggage cover will usually compensate you for loss of luggage, money and credit cards, but the upper limit for lost money can be surprisingly low - usually around £200-£300, so it is not a good idea to carry a lot of cash around.

Similarly, the individual item cover limit can be relatively low at £1,000 to £2,000 so expensive items such as jewellery and computers are best left at home where they should be covered by your contents insurance.

The cost of travel insurance will reflect your age, length of stay, where you are travelling and the type of activities you are likely to participate in. Any dangerous sports should be declared at the outset to ensure that you have cover.

For frequent travellers, annual cover is a no brainer and can be bought for as little as £80 for a couple, excluding ski insurance. Otherwise, expect to pay around £20-30 per adult for a 14 night European trip and around twice that for North America.

24 May 2005 © Moneyextra.com

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