The vast majority of the thousands of travellers who were delayed by the security clampdown at UK airports to foil an alleged terrorist plot will not receive a penny in compensation because of terrorist exclusion clauses in their travel policies.

This underscores the importance of reading the fine print before you purchase a travel insurance policy.

“The majority [of insurers] don’t have adequate reinsurance to cover terrorism attacks,” explains Graeme Trudgill, technical services manager at the British Insurers’ Brokers association (BIBA), which has been lobbying insurers to amend restrictive policies that do not cover terrorism.

Some insurers, including Direct Line and Norwich Union, will pay out if passengers were left waiting at the airport for more than 12 hours in the recent travel turmoil. But, according to BIBA, the policies of many others including Axa and More Than, which all exclude terrorism cover, will not offer any payments.

Given the continued “severe” terror alert status in the UK, further travel disruptions are likely. So purchasing a policy with terrorism cover is a good idea.

Travel policies that include terrorism cover tend to cost much the same as those that exclude it. In most cases, if you are middle-aged, annual travel policies can be obtained for less than £100.

Insurance cover for delays is not particularly generous but is still worth having. The least generous policies may pay out just £10 for a 12-hour delay but some pay out £50 where delays are just six hours.

The importance of luggage cover has also been highlighted by the fact that many travellers are currently being encouraged or even forced to check in their hand luggage. Most insurance policies require you to keep valuable items such as electronics, jewellery and expensive coats with you at all times – which means taking them on to an aircraft as hand luggage. Valuable items which are checked-in are normally not covered by travel insurance policies.

Insurers are said to be considering how to respond to the possibility that the amount of hand luggage people can take on board will from now on be restricted.

If you are forced to cancel your holiday altogether, travel insurance can be crucial. Most insurers will pay the cost of a holiday cancellation for a set number of reasons, although a terrorist-related incident may not be one of them. If your flight is cancelled, your carrier should offer you an alternative. But if you choose not to take this, you may have insufficient grounds to make a cancellation claim.

Insurance claims for travel cancellations can normally only be in extreme circumstances, for example if a traveller or a relative or spouse of the traveller falls ill or dies. If you or your partner is made redundant or called for jury duty and have to scrap your travel plans as a result, the cost will also be covered. Likewise, if your home is damaged in a storm, fire or flood or if you are called to appear before the police, the cost of cancellation will normally be covered.

To make a claim, you must show proof that one of these events took place. Also, when it comes time for insurers to pay claims, the devil is in the detail and haggling may be involved.

“Don’t settle blindly for the first offer, but you will need evidence to justify the loss. You just can’t aimlessly haggle,” says Trudgill.

Beyond terrorist attacks, the range of mishaps covered is quite wide.

If you are mugged or lose your passport, insurers in most cases will foot the bill. Norwich Union will pay up to £350 if you are forced to replace a lost or stolen passport and up to £1,000 if you are mugged.

But brokers argue that the most important features of travel insurance policies are medical cover – particularly if you are travelling outside the European Union.

Insurers which offer superior cover may have agents on hand who are adept at dealing with medical claims outside the UK. These agents liaise directly with the hospital you visit. Local medical experts make a judgment as to whether you are well enough to travel and the insurer picks up either the cost of your stay in hospital if you cannot fly home or your trip back to the UK.

“For insurers, the main cost of these policies goes to paying out claims for medical care. If you have an accident or you’re injured in places like the US, medical bills can become very expensive very quickly,” says David Ross, a spokesman for Norwich Union.

The important thing to consider when looking for a policy is to find one tailored to your needs. Interested in parasailing or hang gliding? You are likely to have to pay an insurer a bit more to cover such hazardous sports.

Policies sold online or by agents as part of packaged holiday trips should be scrutinised. The number of complaints about the price and exclusions on travel insurance has risen in recent months and many of these relate to such policies, according to the Financial Ombudsman service.

It is also worth knowing that the way in which you purchase your policy will affect your rights. At the moment, policies sold through travel agents are not regulated by the Financial Services Authority. However, the Treasury is reconsidering this position.