TRAVEL agents, department stores or online specialists are just some of the places you can pick up travel insurance premiums for the price of a new pair of sunglasses, if not free with another product.

However, this does not mean you shouldn't consider your travel insurance options carefully. Not all policies are the same and you could be left with a hefty bill if you are not covered for a problem while you are away.

The following guide explains what your options are when choosing a travel insurance policy and the essentials that every policy should include. If your insurance is free, check the small print. The chances are it will not be as comprehensive as you think, and it might be wiser to pay for a higher premium for your trip.

The basics

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Background

• How to choose travel insurance

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• The beginner's guide to private health insurance

• Pet insurance explained

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The Foreign & Commonwealth Office recommends that every travel insurance policy should at least cover the following:

Medical and health cover for an injury or sudden illness abroad - Which?, the consumer association, suggests £1 million worth of cover for European trips, and £2 million for the rest of the world, including the US.

24 hour emergency service and assistance.

Personal liability cover of up to £1 million in case you are sued for causing injury or damaging property.

Lost and stolen possessions cover

Cancellation and curtailment (cutting short your trip) cover - about £3,000 to £5,000 according to Which?.

European travel

If you are staying in Europe, remember to fill out a European Health Insurance Card, which replaced the E111 form. It entitles you to free or cheaper healthcare in the European country that you are visiting. However, you should not consider the card as a low-cost alternative to travel insurance.

Single-trip or annual cover?

For regular travellers, annual, or multi-trip travel insurance makes sense, as it is often cheaper and avoids the hassle of organising cover for every trip you make. The price will typically vary depending on whether you choose European, worldwide excluding USA, or worldwide including USA.

If you opt for an annual policy, it is important to find out what the limitations are. For example, some policies limit the length of individual trips that are covered to 21, 35 or 42 days. If you go away for longer you may not be insured.

Also consider when you want your policy to begin - you could opt to begin your cover from the day you fly off on your first trip, rather than the date you purchase the policy.

Lost luggage

Airlines lost 42 million bags last year so it is hardly surprising that the most common fear for holiday-makers is problems with their luggage. In light of this, you would think insurers would have this area covered. However a study by Defaqto, a financial information company, found that 14 per cent of single-trip policies do not provide any compensation for delayed baggage.

After the chaotic launch of Heathrow's Terminal 5, many insurers also refused to pay out on lost-baggage claims, arguing that customers used the terminal at their own risk. It is always a good idea to check with your insurer before you travel.

Winter sports, backpacker, and over-65s

If you are planning an active holiday, as opposed to lying by the pool for a week, you may need specialist insurance. Winter sports cover is often an optional extra on many standard policies, but you may want to consider a specialist quote.

This also applies if you are back-packing, a business traveller, or if you are over 65. Policies that cover travellers aged over 65 sometimes include medical cover up to £10 million, rather than the usual £2 million. However general policies can be considerably more expensive for the over-60s, so it is worth shopping around for a specialist.

Family cover

The definition of family cover varies between insurers so it is worth double-checking before you travel, or your family might not be covered. Generally it means two adults and up to four children, but some insurers stipulate that all members of the family must live at the same address, while others do not. Also, some policies class students up to the age of 22 as children, because they are in full-time education, while others stick to an age limit of 18.

Check the excess

As with any type insurance, you should check the excess that you will be expected to pay on any claim, as it can vary between providers. Some policies include an excess waiver, but there is usually a charge.

Shop around

You can pick up travel insurance on the high street, the internet and over the phone. However, the chances are if it is being sold along with something else, be it your holiday, flights or credit card, you might not be getting the best deal. Check comparison sites, such as travelsupermarket.com and squaremouth.co.uk to find the best price for the most comprehensive cover. There are also a number of internet-only providers, such as insureandgo.co.uk. The cost of travel insurance can be 75 per cent more expensive if bought from travel agents, so it is better to look online.

Before you travel

Check the Foreign & Commonwealth Office website for up-to-date information on the country that you are travelling to, particularly if you are visiting an area which has been considered risky in the recent past.

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Five websites

www.fco.gov.uk

www,direct.gov.uk

TravelInsuranceGuide.org.uk

ec.europa.eu/youreurope/

Kelkoo.co.uk