Travel insurance

Travel insurance

Buy car hire insurance in the UK before you leave. The alternative? You arrive at the airport and the car hire desk presses you to buy an additional policy, sometimes costing £10 a day. They say that if you have an accident, you're liable for (say) the first £1,000 of any damage unless you buy a "super-CDW" (that's Collision Damage Waiver) policy.

But there is a much cheaper way of insuring your hire car. Buy an annual policy back in the UK - they cost around £50 for Europe, or £110 including North America - which covers your liability for the car hire excess, not just if the car is stolen but also for some damage. Find policies at insurance4carhire.com, worldwideinsure.com and dailyexcess.com.

Advanced saving tips

1. Avoid paying pointless travel insurance

Step 1 Obtain a European Health Insurance Card from ehic.org.uk or at your local Post Office. This has replaced the old E111 forms and gives you reduced-cost or free medical treatment in EU countries plus Iceland, Liechtenstein, Norway and Switzerland.

Step 2Check your home insurance policy. Many have clauses that already cover personal belongings (eg your suitcase) outside the home.

Step 3Check your private medical insurance policy, if you have one. These frequently cover the cost of treatment incurred abroad. For most holidaymakers who travel to.....continued below

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2. Buy an annual policy

If you are travelling outside the EU, it's essential that you buy insurance. Annual worldwide multi-trip policies always make sense if you go on more than one trip a year. Buy at one of the comparison sites, and aim to pay no more than £40 (individual) or £60 (family). That's about what many companies charge for insurance for a fortnight in Spain! But don't just opt for the cheapest policy - those tend to have a limit on baggage claims of £500 or even less, and are hardly worth buying. In a recent Which? test, the best buy was TravelPlanDirect's £23 Europe-only policy for an individual under 65 (£45 family), or £38 for worldwide cover (£59 family) from Travel Insurance Web - both deals are only available online.

Single-trip policies are only worth buying if you are travelling just once or maybe twice a year, and not going to the US - although they can be better value for older travellers (see below).

3. Don't buy insurance from a travel agent, or your bank

Estate agents' travel insurance offers are nearly always ludicrously expensive: you can do much better online. As regards banks, customers with "premium accounts" such as Lloyds TSB Platinum have travel insurance included in the cost - but this is an expensive way to buy it. Ditch the account (they can cost upwards of £300 a year) and, again, buy online instead.

4. Check those definitions