Travel insurance is an absolute must when you go overseas, and should always be booked as soon as you've planned your trip. This ensures you're protected if you have to cancel your holiday due to sickness or another unforeseen event.

However, many Brits simply pick the cheapest travel insurance, perhaps not looking into what the policy offers and whether it's good value for money. Recently, Defaqto, who rate financial products such as insurance, revealed there's one change many travel insurance providers are quietly making to their annual policies which some consumers might not even notice, and it could end up costing you hundreds if you need to make a claim.

When selecting a policy, you may assume that the excess you choose will be paid out of the total cost of your claim. However, Defaqto revealed that increasing numbers of annual travel policies are now charging an excess on a per person basis, meaning you could miss out on a large chunk of your claim.

As an example, if you selected a policy with a £250 excess and it was applied per person, you may end up actually paying a £500 excess for a couple or £1,000 for a family of four. According to Defaqto's data analysis, over a quarter of annual travel insurance policies now work this way.

While higher excesses can bring down the cost of taking out a travel insurance policy, often making them an attractive option for budget travel, it can soon become costly when making a claim.

Defaqto also said that nearly two-thirds of annual policies also apply a per person per section rule, which means you could end up paying multiple excesses for a single claim. 63% of annual travel policies have a per person, per section policy, meaning the excess is charged per person and also for each part of the claim.

As an example, a couple with a £50 excess on their policy who claim for stolen luggage and stolen money under this kind of policy could see the excess applied four times. So instead of paying £50, they'd be looking at a deduction of £200, which could end up being a substantial percentage of the claim.

In a rare bit of good news for consumers, the amount of zero excess policies is on the rise. However, this still represents less than one in 10 annual policies available. While policies with zero excess can be more expensive to take out initially, holidaymakers can save hundreds if they need to make a claim.

Defaqto also gave Brits some handy tips for choosing a travel insurance policy. It emphasised the need to take out travel insurance as soon as you book, meaning you're covered for unexpected changes in plans. Holidaymakers who'll be boarding a cruise, skiing, or taking on risky activities should make sure they have the right level of cover.

Finally, Defaqto suggests checking for any existing policies to avoid duplication and save yourself money. Some bank accounts and credit cards come with annual travel insurance, so check whether the policy is sufficient to cover your break.

Have a story you want to share? Email us at webtravel@reachplc.com