THE belief that travel broadens the mind can be threatened by the strange behaviour of holidaymakers when it comes to travel insurance. Otherwise financially prudent people travel without arranging cover or they opt for the expensive and sometimes inadequate policies sold by holiday companies.

Those who do buy insurance usually fail to acquaint themselves with the policy exclusions before making merry on their fortnight in the sun. This small print reveals that the insurer will not pay out for accident, loss or injury suffered when you are under the influence of alcohol. Indulging in hazardous sports may also invalidate the policy.

When Times Money readers go on holiday, they will, of course, be anxious to avoid such pitfalls. This guide explains what to look for and how to find the best deal.

• All policies are not identical, which means that there is no alternative to checking the scope of the cover offered by your insurer.

  Richard Mason, of Moneysupermarket.com, the price comparison website, says: “We recommend that all holidaymakers check that their policies include cover for medical expenses of £2 million, cancellation cover of £3,000, personal liability insurance of £2 million, baggage cover of £1,500 and cover for £250 cash at the very least.”

• The cost of cover is falling thanks to increased competition and high street retailers such as Boots and Tesco entering the market. This week, HSBC launched cover for four days in Europe at £9.64. The policy will pay out up to £500 if you miss your flight because the train or bus to the airport runs late.

  If you leave the UK more than a few times a year, single-trip cover may not be as cost-effective as an annual policy, especially if you travel outside Europe. Insureandgo charges £78.54 for three single-trip worldwide policies. Its annual cover, which has winter sports insurance, is nearly £10 less.

• Elderly travellers face a battle to gain competitive travel insurance. Research for Help the Aged this year found that 91 per cent of annual policies impose an upper age limit.

  Single-trip insurance is similarly hard to come by. Saga, which specialises in insurance for the elderly, has no upper age limit, but premiums depend on your age and health.