It's that time of year again when money-saving moguls disrupt holidaymakers' dreams of sipping cocktails by the pool and bring them back down to earth with a thundering crash, in the form of travel insurance.

As boring as taking out holiday cover may be in comparison to booking the trip itself, travel insurance is a vital piece of protection against theft, loss and medical mishaps, experts say.

Travel insurance will cover holidaymakers for the cancellation of their trip, so long as this occurs for a valid reason, i.e. family death or personal illness, and expenses that are incurred due to a delay.

Furthermore, those travelling to countries with a high rate of crime may be particularly keen to take out such a policy as it will cover them against theft of money, personal possessions and even their passport.

Medical expenses will also be mopped up by a travel insurance policy. When holidaying in somewhere like the US this could prove to be a massive benefit, as a broken leg alone could run up a huge bill.

However, holidaymakers should be aware that all policies can differ and the small print should be checked at all times.

Although this may seem obvious, the Guardian reports that a study conducted by Age Insurance Services revealed that 75 per cent of Brits are travelling without having read the terms and conditions of their policies.

"Travellers who assume they are covered for cancellation or curtailment of their holiday, travel delay, loss of personal luggage, medical expenses and medical liability can find themselves in traumatic situations abroad", Antony Obsorne of Age Concern told the paper.

He added that many holidaymakers use travel insurance which they have been given for free with other financial products, such as credit cards or health insurance, without being fully aware what protection this holiday cover will give.

Things to watch out for include high excess thresholds, the paper said. For example, if the policy covers for theft but has an excess of £500 that will not be much use to some travellers, who would find themselves better off opting for a more expensive policy that will give them more comprehensive cover.

Other loopholes could include not covering holidaymakers for participating in certain types of activities. Those heading off for the ski slopes must ensure that they have made their insurance broker aware of this. Furthermore, some policies will not cover skiers for accidents that happen on the slopes when they are off-piste.

The Guardian reports that ten per cent of Brits wrongly believe that policies cover all types of adventurous activities as standard.

Mike Pickard of insurance broker Esure told the paper that this "is not the case".

He explained: "If you plan to scuba dive, some insurers may only offer cover down to a certain depth, while hikers may need to stay below a certain altitude.

"If in doubt, check the policy detail."