READ THE SMALL PRINT! Just thought we'd get that message clear right at the start. travel insurance is not compulsory, but you'd be daft to leave home without it - very daft. It can cover everything from a lost bag or broken camera to a long hospital stay and an accompanied flight home, as well as other practical help and advice. But don't forget, there are things you need to watch out for.

WHERE TO BUY

Insurance is a complicated and specialised business so it's always struck us as odd that it can be tagged on as virtually an afterthought when you're buying a holiday. Most of us tend to buy it from the same person who's sold us our holiday and certainly, that's the easiest way to do it, but it's rarely the cheapest. It's also a bit of a one-size-fits-all operation. But you don't have to buy your travel insurance from your travel agent. When you're buying direct from an insurance company you can also get the exact cover you want.

Remember, if a travel agent pressurises you into buying insurance cover when you book your holiday, you have 14 days to change your mind. So you can always book it, then cancel it when you've found a better deal.

ONE-OFF OR ANNUAL

If you're taking a summer trip to Spain, then maybe a day trip to Paris or a weekend to the Christmas markets, then it makes sense to buy an annual policy. That will certainly work out cheaper than buying the travel company's policy each time.

Things to note: 'Annual' can mean different things - some can mean a maximum number of days' holiday altogether. Most have a maximum number of days for each trip, ranging from 21 to 120 days.

Some included a set number of days of winter sports and some don't. Make sure you get the right one.

WHEN TO BUY

As soon as you've booked, in case you have to cancel. Just make sure there is a cancellation clause and read it carefully.

DANGEROUS SPORTS

If you're going to spend your holidays sliding down mountain sides, diving to the bottom of the sea or plunging from planes, then you're going to have to pay a lot more than someone just lying on the beach working on their tan. Make sure you're covered for what you're going to do.

MEDICAL EXPENSES

Well, yes your E111 will get you emergency cover in the EC. It won't pay for anyone to stay on to be with you, for any extra expenses or for the special flight home. It's still worth getting as, if you use your E111, some insurers will knock the excess off your policy.

Elsewhere in the world, you'll need full medical cover. Most insurers recommend £2m worth of cover, especially if you're going to the US. Well, just think of the cost of a prolonged hospital stay, hotel bills and a special flight home.

PERSONAL LIABILITY

If you, for instance, ski into someone else and put them in hospital, you could be liable for their costs and that's not cheap.

BAGGAGE

This might be covered by your household insurance and that's why some travel policies don't include it. Check that yours does.

MEDICAL HISTORY

Tell the truth because it saves an awful lot of hassle. If you've been in hospital recently, or even to the doctor, your claim might be invalidated if you subsequently fall ill with that particular illness. Doctors won't tell lies for you to insurers. On the other hand, most insurers will cover you for most illnesses, they might just charge you extra.

WHAT ABOUT GRANNY

It's not just your own health you need worry about. If anyone in your immediate family is ill and you fear you would have to cancel the holiday or return early if they took a turn for the worse, then insurers need to know.

LOOK ALL GIFT HORSES IN THE MOUTH

We're back to reading the small print again. Free travel insurance - whether offered by travel agents or credit card companies - is rarely as comprehensive as you think. Many, for instance, exclude the over 65s and others might not have such a high level of cover.

Just because the girl in the travel agent hasn't asked you about your medical history, then don't think you've got away with it. Somewhere in the small print will be a note telling you that it's UP TO YOU to ring their medical line and check what's covered. As well as things you'd expect - heart disease, high blood pressure, and so on - many insurers expect you to tell them if anyone is suffering from asthma which is an awful lot of people.

MATERIAL LIABILITY

Oh, this is a cunning one. This is the insurance companies' wonderful way of catching you out on something they forgot to ask you. If there's anything that might affect your holiday, then you must tell them, or they might not pay up if it then causes problems. This could include such things as possible redundancy or the fact that you might have to step in and run a business if your boss or business partner was suddenly ill.

SO YOU THINK YOU CAN DO WITHOUT INSURANCE

One in ten skiers suffers an accident on the slopes and just getting off the mountain can cost £150. An air ambulance costs £15 a minute and you don't even want to think about American hospital bills.

AWKWARD CUSTOMERS

Well, not awkward, but not the easiest - that's anyone over 70, disabled, or with a pre-existing medical condition, or even back packers disappearing into the wide blue yonder for months on end. Most can get covered, at a price but it's probably easiest to go through a broker who will know the specialised companies.

A SMALL PRICE TO PAY

Imagine a worst case scenario - your child run over by a car in Spain, your wallet stolen in Goa, your husband having a heart attack in America. Without insurance, how would you manage?

Depending on what you might get out of it, most travel policies are good value for money but some are better than others.

And if you're thinking of booking through a travel agent, then maybe you should compare these prices first.

COST OF FULL COVER FOR TWO WEEKS IN SPAIN FOR A FAMILY OF FOUR

* Boots: £35

* Flexicover:£37

* Churchill: £38

* Direct Travel: £40.50

* Norwich Union Direct: £49.60

* ASDA: £49.95

* Post Office: £57.70

* Lloyds TSB: £64.79

* Automobile Association: £70

COST OF ANNUAL COVER FOR ONE PERSON ANYWHERE IN THE WORLD

* Direct Travel: £45 (standard)

* ASDA: £55.95

* Flexicover: £63

* Norwich Union: £63.45

* Boots: £80

* Lloyds TSB : £85

* Churchill: £85.50

* Automobile Association: £85

* Direct Travel: £95 (Premium Plus)

* Post Office: £95

PENSIONERS

Most standard insurance cover goes up to age 65. It is possible to get insurance older than that, but most companies will quote specifically, and expect to answer rigorous questions about your state of health.

Churchill provides an annual European policy for 61-70 year olds for £104.50. People aged 71 plus will pay £156.75.

Lloyds TSB annual European cover for 65-74 year olds is £163, the AA does a 65 plus annual European cover for £85 and Boots offers 65 plus annual European cover for £98.

ASDA offers annual European cover for over 65s at £111.90, the Post Office's annual European cover for ages 65-69 is £108 and Flexicover's annual European cover for over 70s is £78.

PLEASE NOTE

All our quotes were obtained by telephone or internet and assumed perfect health.

Published: Friday, March 1, 2002