When booking your flight online or reserving a rental car for your holiday, one little question frequently pops up: “Would you like to add travel insurance?” In most cases, you just ignore it because, well, it is a bit annoying. It’s like the upselling attempt you get in all fast food joints. Do you want a croissant with your coffee or fries with your burger? You just decline.

Moreover, you have already gone over the budget for your holiday. The hotel cost a bit more than you had actually budgeted for. And you know that you have to be more generous with your spending money just in case you stumble upon some good discounts. Which explains why you’re not exactly in the mood to fork out the extra cash for travel insurance.

Travellers also tend to only buy insurance when they think that their destination is a bit more risky than usual. If you’re going to India, for instance, where you’re looking forward to indulge in street food and rent a car to drive around the city, you will definitely invest in an insurance policy. However, for a weekend in London, where you only plan to go to the theatre and do some shopping, you probably will not see the need for an insurance policy.

And yet, saying no to travel insurance carries various risks because anything can go wrong in most destinations. You might miss a flight, lose your luggage, be involved in an accident, or your tour company might go out of business.

Travel insurance comes in various packages depending on the cover that you need and the destination that you plan to visit. The most basic insurance would include trip cancellation, which can be very expensive, especially if you have already paid for most of it, including hotel and excursions. Reasons for trip cancellation can include instances when sickness will prevent you from travelling, or if your tour company or airline goes out of business or cannot perform as promised.

With travel insurance, and at a fraction of what the trip is costing you, you can limit the risk of financial loss if your trip is cancelled. This type of insurance can be used whether you are travelling on your own or as part of an organised tour. However, keep in mind that insurance companies will not cover certain airlines because of their negative safety or flight performance history.

You might also consider protecting your luggage. Airlines are legally bound to reimburse you, with limitations, in case your luggage gets lost or damaged in transit. Some credit cards provide travel coverage, including for your luggage. However, make sure that this coverage is not limited to flights only – if it is, then you can upgrade your travel insurance to also cover your luggage beyond your flight. Also, read the fine print as insurances usually place a cap on reimbursement for items such as electronics, photographic equipment, eyewearor jewellery.

You should also consider medical cover. If you are travelling within Europe, then your European Health Insurance Card confirms your right, as a citizen of a European Economic Area country, to emergency medical treatment under the health system of another member country. However, that treatment may not be entirely free. Moreover, in some countries, while emergency treatment is free, ambulances are not. Also, in some countries, you might be taken to a private hospital for treatment, which would not be covered by the EHIC.

This means that if your regular health insurance doesn’t cover you while abroad, it would be best to get medical cover. When choosing medical cover, make sure that the policy will reimburse expenses no matter what hospital you end up at, whether public or private. Also, check what kind of coverage your medical travel policy gives you. While emergency situations will be covered, a quick visit to the doctor or buying medication might require supplementary cover.

If you plan to engage in high-risk and adventure activities when abroad, check whether these are covered by your regular coverage. This is because activities such as, for instance, bungee jumping or mountain climbing carry a higher element of risk which you would need to cover. In such cases, you might need supplementary adventure sports coverage.

Of course, your trip abroad could be the best holiday you’ve ever had. However, keep in mind that part of what makes a trip abroad go well is knowing that, if something goes wrong, you’re covered.