Cheap Travel Insurance Annual single policy £16, family £30

The European Health Insurance Card (EHIC) is free and entitles the holder to medical treatment in state-run hospitals in any EU country - plus Iceland, Norway, Liechtenstein and Switzerland - at the same cost as a local. If it's free for them, it's free for you.

Every traveller to Europe - including kids - should get one and keep it on them as a crucial emergency measure. If you're not holding it, it's not valid. For detailed info, including a country-by-country guide, read the Free EHIC Card guide or get one direct from the EHIC website, post offices or call 0845 606 2030.

If you already hold one, check the expiry date on the front of the card. They last for up to five years, but, if it's nearing expiry, you can renew it online, or by telephone, up to six months before it expires.

What's crucial to understand is...

The EHIC gives valuable protection, but should never be seen as a substitute for travel insurance.

With an EHIC, you can only use hospitals and doctors signed up to the EHIC scheme. These are usually state-run equivalents to the NHS. If you are in any doubt, check with EHIC before starting treatment. See the Free EHIC Card guide.

Travel insurance covers far more than the EHIC. For example, costs incurred if EHIC treatment isn't free, private hospital treatment (prevalent in some European countries) or for cancellations, delays, repatriation, baggage loss or theft and more,

For extra safety, download and print our free Little Lifesaver Travel Guide, full of travel hints and space to write key info such as insurance, flight and passport numbers.

Beware unlawful EHIC refusal

Worryingly, we've heard reports some have had their EHICs refused for public healthcare in some countries. It's only affecting a minority of travellers in a few areas. See which countries have been affected and what you should do.

As a rule of thumb, if you know you're going to travel at least twice in a 12-month period, consider an annual policy instead of single trip cover. It can work out cheaper to have annual cover rather than buying two single trip policies, so do the calculations.

Of course, this varies depending on where you're travelling to and for how long. Also, you have the added comfort of knowing if you have a third trip away within 12 months, you already have the cover in force.

You'd think it would be straightforward to just select European or worldwide cover. But some insurers' interpretations differ from the ones your geography teacher told you.

Europe: Double-check if the country or countries you are visiting are covered. Some insurers don't include Spain (and the Balaeric Islands) as standard. You may need to select "Europe incl Spain" if you want to be covered. Meanwhile, some insurers include Morocco, Tunisia and Egypt as part of Europe, so by doing some homework, you could get cover for a country outside Europe without having to fork out for a worldwide premium.

Worldwide: Insurers' interpretations of "worldwide" are a bit more straightforward. It won't include the whole world, but you'll find insurers are much clearer when giving you options for quotes. Often, you'll be asked if you want to include the US and Canada in your cover or not, while more and more insurers are also asking you to opt in for cover in the Caribbean.

Just a final reminder: Don't presume you're covered for all countries in Europe or worldwide. Also, read the Foreign & Commonwealth Office's Travel Advice By Country, which indicates those areas deemed unsafe and hence not covered by insurers as standard.

If you're planning on going skiing or snowboarding, you usually have to stipulate this upfront. Don't rely on an EHIC when skiing in Europe, as most resort clinics are private.

Budget policies usually cover both skiing and snowboarding basics, like hired or bought equipment, piste closure and avalanches - but check if the limits are enough, and that the activity is covered as part of the policy. If you enter an organised competition, or ski against local warnings, you will not be covered.

Fans of more extreme winter sports such as toboganning, dog sledging, ski-mountaineering, ski jumping or ski-cross - or other more hardcore activities such as stunting, acrobatics, kayaking or whitewater rafting - will find many policies won't cover them for these activities. You'll need to opt for a specialist policy (try somewhere like the BMC or Snowcard).

Competition entrants, instructors or anyone skiing/boarding outside recognised areas will find it even harder, although Snowcard would consider these activities.

If winter sports aren't your thing, other activities may jeopardise your policy cover, such as riding a motorcycle (even as a passenger), quad biking, go-karting, jet skiing, bungee jumping, safari tours and sailing.

In all cases, don't presume - check.

It might sound basic, but it's all the more reason to get it right. You can select policies for singles, couples and families (which can sometimes be an extended family) all under one policy.

Travel insurance premiums are based on the oldest traveller. Insurers become more selective when a traveller turns 65, and hike up premiums, so think carefully before opting for an annual policy for you or the family. If at least one of the travellers is 65 or over, a separate policy may be the best option to avoid everyone else paying over the odds.

If you don't all travel together on holiday, some insurers will provide cover on an annual policy if you travel independently from each other. Even children going on a school trip may be covered automatically (as long as they are with a responsible adult) but check with the insurer as not all policies allow this.

As a rule of thumb, the fewer people travelling nearer to home the better, so don't over-cover unnecessarily.

The thought of having to declare medical conditions can be a scary prospect, but more and more insurers are becoming considerate these days. Take a look at our pre-existing conditions guide, where one insurer accepts about 220 pre-existing medical conditions at no extra cost.

If you don't declare medical conditions, the insurance policy will be worthless and it'll cost you big to get medical assistance, or be repatriated to the UK.

If you're going away for at least 30 days, tell your home insurers. If a home is left empty for at least 30 consecutive days, cover is restricted or excluded with most policies. So check with your home insurer. It only takes a phone call.

Taking your travel documents - including your EHIC - is just as important as taking your passport, money and luggage. So don't leave home without them.

These documents are vital for medical staff or in case of an emergency, as they have your policy details and the emergency numbers you may need. It's also a good idea to take a copy and leave it with a relative in case you lose the original documents while away.

Tell a trusted neighbour you are going away to make sure they keep an eye on anything suspicious that may be happening near your home.

But DON'T tell the world via social media sites, such as Facebook or Twitter, how excited you are about your holiday. It's an invitation for trouble.

Normal annual policies will just not do the job as these usually restrict you to 30 days per trip, meaning you have to return to the UK within that time limit.

However, some insurers offer specific backpacker policies - take a look at Direct Travel*, Insure and Go*, Direct Line and Virgin Money*.

They all sell a variety of cover, usually based around where you are travelling to. Always make sure you have selected a wide enough zone - if you cross the border to an excluded country it could invalidate your insurance.

If you have plans to work abroad or take part part in skydiving, shark cage diving or other risky fun, check with the insurer first if you are covered or can get covered.

Taking note of policy exclusions and excesses, which can vary quite widely between insurers, is just as important as knowing your cover levels. It's a case where reading the small print, whilst time-consuming, can pay dividends.

Reading the 'summary of cover' document can help guide you to the right section of the policy if there is something particular you want to check out. Remember, insurers state the onus is on the policyholder to check the document is correct.

Also, make sure they correlate with your travel habits. For instance, many policies don't cover missed connections, holidaying on a cruise ship or other adventures - so check the small print.

Insurance providers go all out to scare us into upping the levels of cover. Don't be duped!

Don't upgrade for no reason. Platinum policies with £200m medical cover are bunkum. You're charged more without getting more. Our top picks prove you don't need to pay over the odds for 'over the top' cover.

In April 2013, the Consumer Insurance Disclosure Act (see MSE News story) came into force. Now insurers have to ask the questions they want answers to, instead of consumers having to volunteer the information they think may be relevant.

With this in mind, if a claim's rejected and you feel you haven't been "treated fairly" (a key phrase, quote it in correspondence), make a formal complaint. If that fails, you've a right to an independent decision from the free Financial Ombudsman. There's a full how-to in How To Make A Financial Complaint.

If you voluntarily abandon your holiday, don't expect the insurer to validate your claim. But if you have to cancel due to unforeseen circumstances, such as a death in the family, or even jury service, cover is normally provided.

This clause has hampered those who have abandoned trips following airline strikes, or where no-fly zones have been imposed following incidents such as 2010's volcanic ash cloud. Some insurers viewed this as a voluntary abandonment.

If you want catastrophe cover - or the policy states you are covered for one - check the definition. Not all insurers classed the Icelandic volcanic ash incident as a catastrophe.

For multiple people, couple and family policies win but it can also cover solo trips away from your loved ones.

So if you and your partner have arranged, or are planning separate trips, don't presume you have to take out a new insurance policy. Many policies do give cover if you're travelling independently of each other - but do check.

This can also apply to under-18s. Where you have a family policy, children living with you are usually covered to travel separately from their parents, such as school trips, but only if they are travelling with a relative, guardian or person with a legal duty of care.

Most travel insurance policies are designed to cover packages, as 10 years ago that's how 90% of us booked our hols, and providers haven't kept up. Problematically, this leaves them ill-equipped to cover DIY trips, where flights and accommodation are booked separately.

The biggest issue is a lack of cover for knock-on consequences. If a policy covers scheduled airline failure, for example, and the airline goes under, you'll usually be able to claim for the flights and any consequential losses, such as hotel costs. Without this cover, you'll lose the money you paid for it.

To beat this, you need a policy that specifically covers 'indirect loss' or 'scheduled airline failure'. Check the small print as slowly, more insurers are including this cover. For maximum cover, look for special 'independent traveller' policies. They're becoming more common, but cost a bit more than regular policies.

Do remember though, inherent in package holidays are extra ATOL and ABTA protections, which you don't get on DIY trips. If you're booking a DIY trip, if the additional fee isn't too prohibitive, book on a credit card (repaid in full to avoid interest) and then you get Section 75 protection for anything costing over £100.

All insurance policies are based on you taking what insurers deem 'reasonable care' of your possessions. If you've left a bag unattended and it gets stolen, don't expect a payout, as from the insurer's perspective it was your fault.

So take all precautions possible and treat your gear as if it hasn't been insured.

Many people aren't aware that if you have an alcoholic drink on holiday, and you lose something or have an accident, your insurance may not cover you - even if you were only merry.

It varies per policy, but could hit hard, possibly excluding you from medical or possessions cover. So if you're planning to drink, take care and carry as few valuables as you can.

Taking note of policy exclusions and excesses, which can vary widely between insurers, is at least as important as knowing your cover levels. It's a case where reading the small print, whilst time-consuming, can pay dividends.

Make sure it's decent and correlates well with your travel habits. For instance, many policies do not cover cash. Hardly any will cover pre-existing medical conditions where it's a condition you have or a relative has (if you have to abandon your holiday as a result of a family illness).

Time zone differences mean a 24/7 claims line is more necessary than many think. Most insurers now offer one, so keep the number close to hand in case of emergencies (our Little Lifesaver pocket travel guide is perfect for this).

There's a lot of confusion about credit card travel insurance. Often, it's actually only travel accident insurance, which only covers accidents had while on a train, plane or in a hire car paid for on the card, so never think this means you're covered.

A few platinum cards or bank accounts genuinely offer free travel insurance, though the cover levels are usually poor and you often have to pay both the deposit and the full holiday cost on the card or you'll fall foul of their conditions. Always check before relying on this.

This insurance isn't to be confused with Section 75 legal protection, where the same consumer rights from the credit card company as you do from the vendor if something goes wrong (see the Section 75 guide for more info).

All the companies listed use FCA-regulated underwriters, which is the basic check.

Yet there are no hard and fast guarantees - in the past, travel insurers both big and small have collapsed. This shouldn't unduly worry you - it's a rare event - but it's important to be aware of the minor possibility.

The Financial Services Protection Scheme (FSCS) protects you in two ways.

• If you need to claim from a bust insurer
  
  The FSCS's main objective is to 'maintain continuity'. This means if your insurer goes bust, it will try to find another provider to take over your policy, or issue a substitute policy. However, if you have any ongoing claims, or need to make a claim before a new insurer is found, the FSCS should ensure these are covered.
• If it goes bust and you paid upfront
  
  If you've paid for cover for a year, but the company goes bust after a month or two, then you would lose out.
  
  To protect against that, if the FSCS can't transfer your policy to another provider, you'll be given time to take out alternative insurance, and any money you've already paid will be refunded as compensation via the FSCS. To help explain, here's a quick example...
  
  

  You paid for a year-long policy in January and the insurer went bust in September. If the FSCS can't get the policy transferred elsewhere, then you will get back four months of the original cost.

  
  
  The limits of the compensation depend on whether the policy is compulsory or not. Compensation for policies like third party car insurance, which you are required by law to have, are unlimited, so you get 100% of the premium back. Non-compulsory policies (home, travel, payment protection) have to cover 90% of the money paid.

This is where it gets tough. We may think something like the 2010 Icelandic volcanic ash spurt was a natural disaster (and rarely covered), but it could equally be classified as a weather condition (which is usually covered).

For cancellation payouts, this definition is crucial as to whether it'll pay out.

The difficulty here is that we're dealing with unknowns. It's impossible to know what the next volcano or swine flu-type issue will be, and just as tough to second-guess how an insurer will deal with it.

Don't automatically jump to the conclusion that this is about price. Some far from cheap insurers such as Aviva, Barclays, Lloyds TSB and Nationwide, didn't pay out for all volcano-related costs in 2010.

So what can you do? Well our view - and some may disagree - is that you should make sure the common risks such as medical issues, lost baggage, repatriation, stolen cameras, etc, are appropriately covered.

While the price will be low, at least that way you've a bit of cash left over in case unforeseen eventualities do happen.