Young people looking to spend some time abroad are being warned that their insurance may not give them as much cover as they need as research shows that it varies widely in terms of cover offered and the cost of making a claim.

Many young people will be planning to start a gap year in the coming weeks, and it is important that they arrange appropriate travel insurance to cover them while overseas.

However, analysis of the gap year travel insurance market by independent financial research company Defaqto has found that 87% of policies apply excesses on a ‘per section’ basis meaning travelers need to consider all excesses when comparing policies as they may be subject to multiple excesses when making a claim.

It also found there is significant variation in terms of the type and level of cover that different policies offer. As a result, travelers need to pay close attention to the features of different policies when comparing the options and, importantly, ensure they understand how much it would cost them to make a claim under a policy.

It examined 111 policies on the market. Some 25% offer £1,000 or less of cover where a trip has to be cancelled due to illness for example, while 33% of policies provide cover of £3,000 or over.

If someone needs to return home due to an emergency, 53% of policies would not cover the cost of this and 47% of policies provide no contribution towards the cost of someone having to stay in hospital, whereas 28% offer cover of £500 or more.

Some 27% of policies provide cover of less than £1,000 for lost or stolen baggage and 16% offer cover of £2,000 or over while for lost or stolen money 28% provide a maximum amount of cover of under £200, while 21% of policies offer at least £500 of protection for this.

The vast majority of gap year policies will apply a separate excess to each relevant section of the policy when a claim is made. Excesses can apply to up to 11 different sections within a gap year policy.

De facto data shows that the level of excess applied under each section varies widely between different policies. As a result, under a per section policy, if a traveler needed to claim on more than one section the cost of doing so could vary widely. For example, if someone were the victim of a mugging they might need to claim under the money, baggage and medical expense sections of their policy. In this situation, based on the excess ranges that exist, this could leave someone liable to excesses of between £70 and £350.

‘Many young people will be thinking of embarking on a gap year or extended period of travel over the coming weeks. Before leaving the UK, it is important that they arrange suitable insurance to cover their trip. However, given the variation that exists between policies, time needs to be taken in order to pinpoint the right option for them,’ said Mike Powell, Defaqto's Insight Analyst for General Insurance.

‘People should focus primarily on the features that different policies provide when shopping around, and ensure their particular needs are met, rather than how much a policy costs. Going for the cheapest option could be very expensive if it does not provide suitable cover,’ he explained.

‘In addition, people should pay close attention to the basis and level of excesses within a policy. Most gap year policies apply a separate excess to each section of the policy, although a limited number will also cap the level of excess in the event of a multiple section claim. Therefore, people really need to ensure they understand how much a claim would cost them and, as ever, if in doubt they should seek clarification from the insurer,’ he added.