Summer holidays are looming, budgie smugglers and bikinis are being dusted off, but dreams of sun could turn to financial nightmares if you don't spot the loopholes in your travel insurance.

Our Cheap Travel Insurance guide has all the key info but, for ease, here's a quick masterclass to help you sizzle in the sun, safe in the knowledge you're fully protected.

1. Hols booked but no insurance? You need to sort it NOW. Travel insurance doesn't just cover you while you're away, it'll also cover you for cancellation or anything else that might go wrong before you leave. So if you don't have it and you need to cancel, you've no protection. See Cheap Travel Insurance for full info.

2. Beware the insurance Breathalyser - one drink and you could be out. Many insurers make your average headmaster seem lenient. In some cases, even if you've had one drink and you lose something or have an accident, they may say NO if you claim. Insurers have even been known to test blood samples for alcohol.

We're not saying you shouldn't enjoy yourself, but just be aware. Full info on what to check and what's covered in Holiday drinking warning.

3. Annual policies win if you jet off at least 2x a year. Our analysis shows that in every scenario we tested, an annual policy is cheaper than two single-trip policies.

We compared 18 different insurers based on the cheapest deals that meet our minimum criteria (which include at least £1,500 for cancellation and £2m for medical cover - for a full list see Min level cover). Here are our top picks:

Annual travel insurance best buys

For individuals Holidaysafe Lite* wins for almost every age group up to 65. Eg, a year's cover for a 35yr-old in Europe is around £9, and £19 worldwide. If you're 55-60ish though you might want to try Coverwise (Bronze)*.

For families Holidaysafe Lite* currently wins with annual Europe cover from £17 and worldwide costing from £37, depending on the age of the oldest member.

If you want one with good claims feedback, higher limits and cover for up to 90 days per trip, our top-value pick is LV Premier*. It offers individual insurance from £67 in Europe and £111 worldwide, or for a family it's £113 in Europe and £187 worldwide.

You can also do a full comparison via MoneySupermarket*, Confused*, Gocompare* and Comparethemarket, which sometimes have exclusive deals that beat these.

4. Over 65? Don't pay through the nose - you can get insurance from £25. It's a sad fact of life that as you get older, travel insurers see you as a bigger risk, and costs rise accordingly. Yet there are still good deals to be had.
- Europe: Our current winner is Holidaysafe Lite* which offers cover from £25/yr for a 66-74yr old. Aged 80+? Try Insure and Go (Silver) from £252/yr.
- Worldwide: Leisure Guard* usually wins at £50 for a solo traveller aged 66-74.

For more options see Over-65s' Travel Insurance.

5. Get family travel insurance + mobile phone/breakdown cover (can be worth up to £600) for £120. Many bank accounts with a monthly fee include different types of insurance, including travel. So if you pay for yours you may already be covered. Check the terms to see if it's appropriate for your trip, eg, does it cover extreme sports?

- Nationwide's FlexPlus* is a cracking deal for £120/yr - you get worldwide family travel insurance up to age 74 (which can cost more than the account charges alone), UK and European breakdown cover for all account holders and family mobile phone insurance. All this bought separately can cost £600/yr. For more see Best Packaged Current Accounts.

- Do NOT confuse this with a credit card benefit called travel accident insurance, which only covers accidents on a train, plane or in a hire car paid for on the card. NEVER think this means you're completely covered.

6. With valid annual insurance you're covered if an incident happens now, even if you're due to travel AFTER your insurance runs out. We get this sort of question a lot: "My annual policy runs out in October, but I'm going away for Christmas - am I covered?"

If you need to cancel your trip now, the answer is "yes", as insurers base decisions on the date you cancel, NOT the date of the trip. Yet ensure you renew (if it's cheap) or get new cover immediately after it expires so you're continuously protected for cancellation and when on holiday.

7. Some 'European' policies don't cover Spain, while others cover North Africa. European cover is generally defined geographically, and not just for the EU. But bizarrely some don't automatically cover Spain (and the Balearic/Canary Islands) in their, er, European insurance. You may have to select 'Europe with Spain' and pay extra. All our best buys cover Spain automatically.

Many insurers also cover a handful of non-European countries on a European policy. So if you're off to Egypt, Morocco, Turkey or Tunisia, it's worth getting a quote for European cover first and then checking the policy's geographical area definition to see if the country's included. Full info in Insurance in Europe.

8. Going away once a year? Grab cover from £5. If you only plan one trip, cover can be seriously cheap.

Single-trip insurance best buys

For individuals and families Leisure Guard Lite* generally wins, with cover from £5 for a single, one-week trip in Europe for an individual or £10 for a family. But try Holidaysafe Lite* to compare, as prices vary depending on age, location and family size.


As above, you can also do a full comparison via MoneySupermarket*, Confused*, Gocompare* and Comparethemarket, which sometimes have exclusive deals that beat these.

9. Your claim could fail if you haven't declared all medical conditions (for you, your family or a travelling companion) before you travel. No matter how minor you think it is, tell them EVERYTHING. This applies to you, anyone you're travelling with or a family member at home (who you'd fly back for if they got ill).

Many mainstream insurers will charge high prices to cover pre-existing conditions. So specialists to try are Staysure* (which accepts an extensive range of medical conditions, and some at no extra cost), Insurancewith, Avanti*, MIA Online, Orbis, Good to Go Insurance and Global Travel Insurance*. There is no one winner - it depends on a number of factors incl medication, illness and age.

See Pre-Existing Medical Conditions for help and best buys.

10. Check your EHIC - 5.3m are out of date. Everyone (including children) should have a valid European Health Insurance Card if travelling in the EU (and a few more countries). It gives you state-run medical treatment in EU countries (+ Iceland, Norway, Liechtenstein and Switzerland) for the same price as a local. So if it's free for them, it's free for you. Never pay a shyster site for one though - see how to get a free EHIC.

11. You still need insurance even if you have your EHIC. Travel insurance does MUCH more than cover medical emergencies. You're also covered for theft, lost luggage and repatriation, which an EHIC doesn't do. But having an EHIC means you don't have to pay the excess on your policy if you show your EHIC when getting treatment. See EHIC vs insurance.

16 things about travel insurance they DON'T tell you
Annual policies win if you jet off at least twice a year

12. Beware if taken to a private hospital in Europe - you may not be covered. Many insurers don't cover private treatment unless it's an emergency, and there's no state-run hospital nearby. If you get it wrong you could end up with a bill of £1,000s - or worse. Check with your insurer before you go. For example, some insurers might want you to call them first if it's not a life or death situation. See Private hospital warning.

13. You can cut costs by insuring granny separately if she's part of a family trip. If you buy family or other types of group cover, the price is based on the oldest traveller or the person deemed to be the highest risk. Anyone over 65 usually pays more, and this could push up the price for everyone else, so check if buying a separate policy for them is cheaper. See Over-65s' Travel Insurance for help.

14. Lose your mobile/e-reader/laptop and you're probably not covered. Many travel insurance policies won't automatically include gadget cover. If you need it, select it as an add-on extension to your travel insurance, check your home insurance cover or consider a specialist gadget policy.

15. You normally only get basic cover on cruises. Most travel insurance policies cover medical treatment, theft or loss, but you usually need to buy an add-on from your insurer for anything else, such as cancelled excursions. See Cruise travel insurance help for what's covered and how to get it cheapest.

16. You're never covered in dangerous destinations. If you visit a country the Foreign Office warns against travel to, you won't be covered for any claims as you're deemed to have ignored Govt advice. Check the foreign travel advice site before you go. Also, check out our backpacker travel insurance guide for more information.

Similarly, if you're worried about terrorism in your holiday destination and decide not to go, you won't normally be covered for cancellations. Standard travel policies don't tend to include cover for any terrorism-related threats or incidents.

PS: According to reports, UK police are investigating growing incidents of fraudulent claims made when abroad. Don't ever lie, and beware claims firms that get you to embellish the truth.

This article first appeared in the weekly email on 7 June 2017.