Travel insurance adds a fair amount to the cost of a holiday, which makes it all the more galling that some policies don’t even cover the major pitfalls. As the recent XL débâcle demonstrated, holidaymakers certainly cannot rely on their travel insurance in the event of scheduled airline failure. Those unfortunate customers who had bought a flight-only fare and assumed they’d be covered by their travel insurance found themselves left high and dry. Not only did they face losing all the money they’d spent, but those who were abroad when the collapse occurred could expect no compensation for the additional money they spent getting themselves home.

The same thing could easily happen again; trawling through a selection of travel policies recently, I noticed that many, including those sold through Sainsbury’s, Direct Travel and Preferential, exclude cover for scheduled airline failure. Steve Nickerson of Preferential says this cover has been omitted from its policies because of lack of demand and out of concern that its inclusion could put the cost up for an item for which few people ever claim.

“But, due to the uncertainty surrounding some airlines, we have decided we will include scheduled airline failure cover within our travel insurance policies from January 2009,” he says.

Mark Shaw, managing director of Direct Travel Insurance, is also yielding to demand for scheduled airline failure cover and says it will be available “within days”, both as an “add-on” and as “stand-alone” cover. The price difference will be minimal – around 50p per person extra for a single cover and just over £1 per person for annual cover.

Policies issued by the Post Office and Age Concern Insurance Services, however, have long included cover for scheduled airline failure as standard, up to a maximum of £1,500. “Not only do we cover the non-refundable cost of the flight, but also other pre-booked elements such as accommodation and attractions,” says Joe Young of Age Concern.

But there’s a catch. Even when this cover is offered, you’re likely to find an exclusion for travel with airlines that are the most likely to go bust. As James Fremantle of the Air Transport Users Council rightly says: “This takes away the point of the insurance.” He advises passengers to check that the airline they are booking with is not on the insurer’s list of excluded carriers.

So it would seem that all we can do is keep on our toes and, as always, read the small print.

Below are the 10 of the most common exclusions:

Non-disclosed pre-existing conditions, including illnesses and injuries. High blood pressure and angina are the two conditions that are most commonly overlooked.

Non-disclosed pre-existing illnesses of anyone on whom your travel plans depend can make cover for holiday cancellation or curtailment void.

Compensation for valuables taken from a beach or hotel room unless locked in the room safe. The small print may also exclude valuables left in a car overnight or anything that is not securely locked in a car boot during the day.

Cover for luggage after it has been checked in by an airline. You will be covered for lost or damaged bags by the airline itself, but this compensation is capped at £800.

Activities considered hazardous, such as off-piste skiing, canoeing or jet skiing. Where these are covered, it could depend on wearing the correct gear or being accompanied by a qualified instructor.

Children over a certain age. The limits vary on family policies and cover may apply only to those in full-time education or under 18s.

UK holidays – your insurance may be valid only if you have a stay of at least three pre-booked nights away and are at least 25 miles from home.

Long stays of more than the maximum stated time limit (typically 31 days).

Some annual policies also impose a restriction on the total number of trips allowed within one year.

Cover for skis and other equipment stolen from mountain restaurants or car roof racks.

Pregnancy after a certain number of weeks – typically 24 weeks at the end of a journey outside Europe or 28 weeks at the end of a journey within Europe.