travel insurance

If you are going backpacking on your gap year, you'll naturally want cheap holiday insurance, the cheapest that you can find. After all, you want to spend the money you've carefully saved up on your adventure abroad and the souvenirs to take back home, not on something dull like travel insurance that you'll probably never use. And if it doesn't cover everything, does it really matter?

Thinking like this could be an expensive mistake - being uninsured can lead to massive costs if something goes wrong. Cancellation costs and the loss of personal possessions can be expensive claims, but it is medical bills that can really hurt your wallet, especially if they involve helicopter rescue or emergency repatriation. Having the right level of travel insurance is essential, especially if you want to take part in extreme sports or activities during your gap year.

If you are going backpacking and you want to know what kind of travel insurance to get, here are the key questions you need to ask yourself:

Where are you going?

Round the world tickets are an increasingly common way of travelling during gap years - make sure that you have travel insurance for every part of journey. If you are only spending a week in America as part of a six month journey, it might be tempting to avoid upgrading your insurance - after all, America is one of the most expensive places to get insurance for. But your desire for cheap holiday insurance could come back to haunt you - medical bills in America and Canada are hugely expensive, and if you have an accident here it could cost anywhere between £20 - £50,000!

What activities do you want to take part in?

Dangerous sports and activities are where most people make the biggest cheap holiday insurance mistakes. Most backpackers buy the cheapest travel insurance they can find and still expect to be covered for activities like skydiving, motorcycling and bungee jumping. If you don't want to do anything too extreme on holiday and would rather lounge on the beach or explore the cities, that's fine - but if you are an adrenaline junkie, make a list of all the activities that you'd like to try while you are abroad and make sure your travel insurance covers them.

Be especially careful with the small print here - travel insurance often has limitations on particular activities. For example, it often only covers scuba diving down to a certain depth or motorcycles up to a particular engine size.

What are you taking with you?

If you are travelling with nothing more than a sleeping bag, some books, toiletries, a cheap camera and some spare sets of clothes, your cheap holiday insurance will probably cover the cost of all your possessions. If your essential travelling kit includes a digital camera, iPod, expensive watch or even a laptop, you had better make sure that your possession insurance is going to cover the cost of replacing everything. Add up the value of everything that you are taking, then read the small print of your travel insurance carefully, and see what the limit is for items that are lost or stolen.

There's nothing wrong with getting cheap holiday insurance - just make sure it covers what you take with you and what you want to do!