The secrets to cheap travel insurance:  Ditch luggage cover – and don’t pay for unlimited medical expenses

Holidaymakers could save hundreds of pounds by ditching the travel insurance extras they don’t need.

But cut back too far and you risk a bill several times that sum if it turns out you are underinsured.

So how do you strike the ideal balance? Money Mail investigates.

How much do prices vary?

Many ‘gold-standard’ policies can cost more than double that of basic cover offered by the same company.

Insurance firm InsureandGo, which we picked as an example because its budget cover is reasonably comprehensive, quotes £25.12 for insurance for a two-week trip to Spain in late August.

Its top package costs an extra £40 at £65.25 — and that’s without optional extras to cover gadgets and hazardous activities.

Such price disparity is common among insurance companies, says Rory Boland, editor of Which? Travel magazine. ‘You don’t have to buy the most expensive cover,’ he adds. ‘It is all about working out what you need.’

InsureandGo was approached for comment.

1. £5m of medical cover is likely to be ample

Arguably, the most important aspect of travel insurance is for medical expenses, along with repatriation, which can be eye-wateringly expensive, particularly for travel in the U.S.

This is an area holidaymakers are unlikely to want to skimp on. However, you probably won’t need anything close to the £20 million offered by some policies.

The average emergency medical treatment claim was £1,750 in 2022, according to the Association of British Insurers. Even if the worst should happen, it is rare that claims breach £1 million.

However, the British Insurance Brokers’ Association says that the largest recent claim was for more than this amount.

And consumer association Which? advises you opt for medical cover of £5 million — which many basic policies do include. You are very unlikely to need more than this.

Essentials: Arguably, the most important aspect of travel insurance is for medical expenses, along with repatriation, which can be expensive, particularly for travel in the U.S

2. Cover the full cost of your holiday

Make sure that the full cost of your trip is covered by your insurance should you need to cancel. 

Policies generally don’t have unlimited coverage — for example, InsureandGo’s budget policy only covers up to £1,000 for cancellations due to events beyond your control.

Meanwhile, its gold policy includes £7,500 for cancellation and its black policy covers up to £10,000. 

For a top-whack trip or a luxury cruise, you could need more coverage. Alice Lawson, associate director of insurance for Holiday Extras, says the company has paid out £15,000 to a client for a cruise cancellation.

3. You may not need baggage cover

So long as you don’t travel with a suitcase full of designer labels or expensive equipment, £1,000 is probably sufficient, especially as insurance policies often deduct for wear and tear.

Bigger ticket items, including jewellery, phones and computers, may already be covered through household insurance. Check what your policy covers to avoid paying twice.

For this reason, True Traveller doesn’t include baggage insurance on its standard policies. ‘So many people are already covered on their home contents insurance,’ managing director Tim Riley explains.

InsureandGo charges £40.05 if you take out additional gadget insurance in our Spain example — up from £25.12 for a basic policy.

Don’t pay twice: Bigger ticket items, including jewellery, phones and computers, may already be covered through household insurance

4. Package holidays come with extra protection

If you have purchased a package holiday — two or more items that are booked and paid for at the same time from a travel organiser, such as a travel agent — you are already covered by the package travel regulations.

It is the responsibility of your holiday company to get you to your destination.

They would normally also rebook or refund a holiday should you choose to abandon your travel plans after a 24-hour delay, negating the need for travel abandonment insurance.

‘If you book a package holiday there are going to be fewer things you need from your travel insurance,’ says Mr Boland, adding that cover in case your holiday provider goes bust isn’t necessary either.

Even if you don’t purchase a package, if you pay with your credit card and your holiday provider goes bust, you are covered under Section 75 of the Consumer Credit Act for items over the value of £100.

5. Don’t skimp on your personal liability cover

You may wonder whether you really need cover in case you injure someone or their property on holiday. 

But, in some cases, it can be invaluable. Both Which? and consumer specialist Money Saving Expert recommend travellers have £1 million coverage, although you might want to consider increasing that under certain circumstances in America.

‘The big one is a skiing accident. If you are skiing in North America, you definitely want £2 million covered,’ says Mr Riley.

Be prepared: Both Which? and consumer specialist Money Saving Expert recommend travellers have £1 million coverage

6. Check if you are covered by your bank

See if you already have travel insurance through your bank account too, though be sure to check the small print. 

Some only include coverage within Europe and might not cover you if you carry out certain activities such as scuba diving, horse riding or zip wiring.

7. hazardous Sports may be included

Travel insurance often includes optional add-ons for hazardous activities such as horse riding or skiing, but before you pay extra, check if your activity is already covered.

Insurance essentials

1. Always buy before you fly

Take out insurance the day you book your trip. Comparison website Go.Compare said that 23 per cent of people take it out the same day they travel — which could mean that cancellation insurance is invalid — while another 23 per cent take it out just a week before departure.

2. Remember your EHIC/GHIC in Europe

Essential: Your EHIC card isn’t a replacement for travel insurance

While essential, your EHIC (European Health Insurance Card) or the newer GHIC (Global Health Insurance Card) isn’t a replacement for travel insurance, as they only entitle you to treatment at the same price as that paid by residents of the country you visit.

Despite the name, the GHIC is not valid outside Europe.

3. Declare pre-existing medical conditions

If you don’t declare any pre-existing medical conditions when purchasing insurance, this could negate your coverage. 

There are specialist companies who deal with people who have serious medical conditions, such as All Clear.

• Do you travel without insurance? Email moneymail@dailymail.co.uk