Travel light by all means, but don't forget insurance

With some countries refusing to honour EU health agreements, cover is now more important than ever, say Chiara Cavaglieri and Julian Knight

Full insurance will protect you against flight cancellations as well as illness or injury

Holidaymakers in Spain relying on their European Health Insurance Cards (EHIC) risk hefty medical bills if they don't take out appropriate travel cover.

The EHIC usually entitles you to free basic treatment from state-run hospitals, but insurers say cartels working across the Spanish resorts are directing tourists to clinics which refuse to accept them in a bid to make money. Spain isn't the only potential trap either; the problem is escalating amid the economic woes in Italy, Greece and Cyprus, leaving travellers potentially vulnerable across Europe if they don't have insurance.

"We know that hospitals in the Costa del Sol and Costa Brava are now refusing to accept the EHIC. Under EU legislation, they are supposed to accept the card but many are starting to cite local by-laws that state hospitals will only treat local people for free," says Amber Howard from Holidaysafe.co.uk.

"We have heard of cases where hospital staff in state-run facilities have said that all foreigners must pay. The problem is many of these state-run hospitals are teetering on the edge of bankruptcy."

Around 24 million people in the UK hold an EHIC, introduced so that tourists can enjoy the same free or subsidised medical care as locals in all EU countries as well as Iceland, Liechtenstein, Norway and Switzerland. Although never touted in the industry as an alternative to travel insurance, many travellers risk travelling with an EHIC alone.

This has always been a risky move because an EHIC does not cover repatriation or emergency recovery, but if some hospitals are trying to refuse the cards altogether, decent travel insurance is now absolutely essential.

"Hospitals in Spain are legally allowed to make rules stating that unless the EHIC is presented up front immediately then it can be legitimately refused so this is what they have done. Where before public hospitals co-operated and we were able to retrospectively obtain an EHIC card for them now this is not often possible as a card produced retrospectively will be declined," says Fiona Macrae from Insurancewith.com.

The cost of getting ill, or having an accident abroad can be eye-watering. For example, a heart attack leading to four days in intensive care and up to five days in a ward could set you back as much as £12,000 in Spain, with an additional £6,000 for a doctor escort home.

With household budgets stretched, an increasing number of travellers are scrimping on cover – a recent Association of British Travel Agents (ABTA) study found that nearly one in four holidayed abroad without travel insurance last year, and even those with insurance may not have been fully protected because one in 10 travellers are guilty of "buying blind" and not making sure they knew what their policy covered.

The good news is that travel insurance is fairly cheap and if you pick carefully, you do get a lot of bang for your buck. You should still take an EHIC with you, but don't rely on them to cover every eventuality – at the very least you will need insurance to cover lost or damaged property and delayed or cancelled flights.

Comparison sites are a big help initially, but you still need to put some effort in to be sure you're getting quality cover. Cheaper policies often have high excess levels, for example, so this is the first thing to check. There's not much point in a policy offering £500 worth of baggage cover if you would have to pay the first £250 worth of any claim. Find out how the insurer defines "valuables" and cover in transit as you may not be covered for items checked into the hold.

Don't forget about cancellation cover which protects you in the time leading up to your holiday and if you're booking your own trip instead of going on an ATOL-protected package, you will need cover for "end supplier failure".

"Travel insurance is one area where the cheapest deal is not necessarily the best. All sorts of different policies are available – make sure you get the right one, even if it costs a couple of pounds more," says Jane Symonds from the Money Advice Service.

Annual policies should save you money if you go abroad at least twice a year. The average cost of an annual, multi-trip policy in the UK is £101, according to new research from Sainsbury's Bank, just 1.5 times the cost of the average single-trip policy at £68. Make sure you don't pay for cover you already have in place. You may be able to secure a discount on your travel policy if your home insurance policy covers personal property away from home. Call up the travel insurer and explain you don't need baggage cover included to see if they offer a reduced premium.

If you have a packaged current account you may already have travel insurance, so it's well worth going through the list of benefits, but you still need to read the small print. Many policies will only offer basic cover so you may be better off buying a separate policy for comprehensive protection. Winter sports and other activities such as cycling and hiking often catch people out, so if you plan to get active on holiday, find out whether you will be covered and upgrade if necessary. If you want to take on more extreme winter sports such as ski and snowboard racing, jumping, acrobatics and aerials this may be excluded from winter sports and you will need to arrange specialist cover instead.

Always declare any health issues, both past and present, to your travel insurer. If you don't disclose these "pre-existing conditions", the insurer is likely to refuse medical claims.

Care on the card

Never pay for an EHIC You can get one for free online (ehic.org.uk) or by telephoning 0300 330 1350. You will need your National Insurance number but it should only take a matter of minutes.

The EHIC entitles you to the same care as the nationals in state-run hospitals in any EU country, plus Iceland, Liechtenstein, Norway, and Switzerland. So, if they get free medical treatment you do too and if they pay, you pay at the same rate.

The card covers accidents, unexpected illness and some routine treatment for chronic conditions but not treatment that can wait until you get home. You are not covered if you're going abroad specifically to get treatment.