The exact coverage of a travel insurance policy varies from case to case. However, there are some general patterns which you should be aware of.
Holiday Cancellations
Most policies will cover you for any losses caused by you having to cancel a holiday. In many cases, though, only reasons specifically listed in a policy -- which could include illness or bereavement -- are eligible.
Delays
Most policies will pay out if you suffer a travel delay, particularly on an outward journey where the delay eats in to your holiday. Remember that any mandatory or discretionary payments you receive from an airline may be deducted from the payout you get from your insurer.
Medical Cover
Medical costs are usually the key part of any travel policy. As well as treatment, a policy may cover costs such as being repatriated to the UK which aren't covered by schemes such as the European Health Insurance Card (formerly the E111).
It's important to note the entire claim can be denied if you fail to tell the insurer about a pre-existing condition. Most conditions won't affect your ability to get coverage, and for those that do, specialist companies may offer a policy.
Actitivies
You will need to check very carefully to see what your policy says about sports and similar physical activities. Many activities will either be listed as an exclusion, or only covered in return for a higher premium. This can cover activities as seemingly mundane as riding a moped.
Documents
Most policies will cover some or all of the costs of replacing documents such as a passport or airline tickets that have been lost during a trip. Be wary about a policy without this coverage as these costs can mount up.
Alcohol and drugs
Many policies will exclude any damage or injury suffered while under the influence. Check this carefully as it could be disputable what counts as "under the influence", particularly in terms of light, social drinking.
Home contents
Home contents insurance may cover some of your possessions outside the home, particularly valuables, though you'll usually have had to pick this as an option with a policy. As long as you check carefully, you may be able to lower your coverage -- and your premiums -- on your travel insurance in line with this. You should check both policies carefully in case there is a clause saying that in the event of an item being covered by another policy, you may have to claim on the other policy first.
Terrorism
Generally policies will exclude any losses which are the result of action deemed as terrorism. However, some policies exist which explicitly cover such risks. In both cases, you may find your insurance is partly or wholly voided if you travel to a country which is covered by a Foreign and Commonwealth Office travel advisory.
Multi-trip Annual Cover
Depending on your plans, you may find it better value to get an annual or multi-trip policy. If you do, take care to check if there are any annual limits on particular elements of a claim as this could affect you if you are misfortunate enough to suffer problems on two different trips.
People going on gap years or other lengthy traveling should strongly consider specialist policies which are designed to cover multiple countries and risks. Remember that such a policy may not cover you for any problems encountered while working abroad, particularly if you don't have the necessary work visas.