Covering the gap

Taking a gap year is becoming increasingly popular and not restricted to the young, as many professionals are now taking time out of work to travel the world. However, things that go wrong far from home can quickly turn disastrous.

A good insurance policy should cover most eventualities and could save an adventure of a lifetime turning into a nightmare. Sarah Routledge explores what cover you need.

Aside from all the typical problems travellers encounter – theft, illness and accidents – the recent spate of airline bankruptcies mean your trip may not even get off the ground.

Which is why, according to Chris Rolland, head of insurance at American Express, you should take out travel insurance as soon as you have booked your flight.

"You should take out a policy as soon as you have booked your flight, to take advantage of cancellation cover," he advises.

When looking for a policy, the important features are "good medical cover as well as accidents and legal expenses cover – all sorts of things can happen on a gap year," he adds.

American Express offers a gap year policy with the unique feature of a 14-day 'break' built in, so if you need to return home for any reason, there is no need to buy another policy when you go back.

"We try and tailor the policy as close as possible to the trip, so you can call our centre to talk through what you need," Mr Rolland says.

It is also worth checking the small print, insurer Endsleigh advises.

"Check your policy to see how medical claims are handled. In some cases you may need to pay for treatment and claim the money back therefore you will need to take some method of payment (e.g. a credit card).

"Under Endsleigh policies if you are admitted to hospital or a clinic whilst abroad, contact Endsleigh's Emergency Assistance Service and they will arrange for medical expenses to be paid directly to the hospital or clinic. For simple out-patient treatment you are expected to pay for treatment yourself and claim the expenses back," a spokesperson says.

Check the excess on the policy too – "a policy may seem cheap because the insurer charges a high excess for claims," the insurer warns.

It also pays to be aware of situations where you will not be covered, Endsleigh says. For example, if you try to claim in a situation where drink or drugs were involved, you will be turned down.

Most policies also have a 'reasonable care clause' so if you leave your possessions lying around unsecured, you will not be able to claim if they are stolen.

Endsleigh has a variety of policies to suit travellers, including a comprehensive gap/career break package covering more adventurous activities, a simpler backpacker policy and a study abroad product.

Moneysupermarket.com advises shopping around for a policy, and making sure that you are not skimping on cover to save costs. Peter Gerrard, moneysupermarket.com's head of insurance, explains: "Make sure the policy you choose has sufficient cover for medical expenses. This will cover you if, for example, you have to be repatriated. If you are staying in Europe, have a European Health Insurance Card.

"You should ensure your cover limit takes account of your camera, iPod, phone and other expensive items, and that they are secured when possible and not left at unnecessary risk."

Moneysupermarket recommends at least £2 million for medical expenses, £1 million for personal liability and enough cancellation cover to get all your money back if something goes wrong.

Rebecca Oliver, director of gap year advice website gapwork.com, says: "A good insurance policy could save you and your family thousands of pounds in healthcare and travel costs should something go wrong while you are away. In the event that your rucksack goes off on its own travels thanks to hapless baggage handlers, you'll be thanking your travel insurance policy when a cheque arrives to help you buy replacement clothes and belongings.

"Look out for a policy that covers those activities that you will be doing on your travels – if you are planning on working, fruit picking, skiing or scuba diving, check that the policy covers those activities.

"If you love your rucksack and are taking your prized possessions with you (not advisable), check that you have baggage cover. Also, check that your insurance covers all the countries you will be visiting."

Once you are happy with your level of insurance, you should look at your other financial considerations.

It may not seem obvious when you are saying goodbye to your friends and family to make your farewells to your bank too but forgetting could cause problems. Most banks are very vigilant when it comes to spotting fraud and if they see someone has withdrawn money from Brazil they may assume it is not you and freeze your account.

In addition, if you leave with an overdraft and your bank withdraws it halfway through the year without your knowledge, you could be landed with an impaired credit record when you get back.

Another piece of advice is to have an electronic copy of all your documents somewhere, because it will be much easier to get a new passport while you are away if you have a copy of the photo page handy.