When you go abroad, you may not want to think of the things that could go wrong, but losing your luggage or having an accident could be a financial disaster without cover.

Some countries have reciprocal health agreements with the UK, but by no means all. Even if an agreement is in place, you run the risk of still being charged for, say, the ambulance that takes you to hospital. That will get expensive if you have to be evacuated by helicopter from a ski slope, for example.

The USA has no agreement at all, so you would face paying for any medical care you needed there, enough to bankrupt all but the very wealthiest of people.

But losing your baggage, money, passports or having your flights delayed or cancelled, or your airline or holiday company going bust can all be insured against with a comprehensive travel insurance policy.

How much does travel insurance cost?

This will largely depend on where you are going, and where you buy the cover from. You also have to consider whether you need extra cover for winter sports, backpacking, adventure sports or to cover your entire family for a trip. It will also depend on whether you take a one-off policy for a single trip, or go for an annual policy which will cover you no matter how many times a year you are away.

The trouble is, rather than using an online comparison service for travel insurance many people will opt to take the insurance offered by their travel agent. Not only is this more expensive in general, it is often not as good a policy either.

You need to compare policies carefully to make sure you have the right amount of cover, and the Foreign and Commonwealth office recommends that medical cover for Europe on your travel insurance should be at least £1m, rising to £2m for the rest of the world.

You may be able to reduce your premiums by taking an extra excess - the amount you pay of any claim - but some excesses are set as standard by the insurer. Always worth asking though.