You haven't packed your diamond necklace and you don't mind the odd flight delay, so you probably don't need travel insurance do you? Wrong. According to research by Defaqto, one in seven Brits go on holiday without travel insurance, but they're taking a massive risk, because getting ill or having an accident on holiday can get very expensive.

Competition in the travel insurance market has brought prices down, so there is no excuse for not signing up, but if you don't these are the sort of medical costs you could be facing: reparations in Greece are about £11,500 and in Spain they're about £8,000, while the cost of an Air Ambulance from the west coast of the US to the UK is about £38,000. Not the stress you want when you're ill.

Many people rely on the EHIC card which gives you free or discounted healthcare in European countries, which is fine if you get ill in an area with a good state-funded health system such as Scandinavia or France, but not as easy if you're in a country such as Italy or Spain where the state-funded health system is patchy.

So what sort of insurance do you need? When you're shopping around don't just go for the cheapest rate, because it might not cover everything you need. According to the Association of British Insurers (ABI), the two most common exclusions on travel insurance policies are pre-existing medical conditions and participation in adventure activities such as horse riding, skiing, scuba diving or even cycling. If these apply to you ensure they're in your policy so you don't get a nasty surprise when you try to make a claim.