For a few years now we've had an annual policy which works out a bit cheaper if you have a few trips a year, also saves faffing about with declaring medical conditions every time although you do have to make sure you inform them of any changes. But, as suzyq says, you should take out a single trip policy from the date it's booked so that you are covered for any cancellation.
It's also true that they are a law unto themselves and will only pay out if pushed. Last year we were covered with an annual world wide policy as we were out in New Zealand early in the year and had cover for scheduled airline failure. In October we had four weeks booked in Calis, flying out with Monarch! When Monarch went bust and we had to find new flights we ended up losing a weeks holiday. Contacted insurers who didn't want to know about recovering money for flights, told me to contact credit card company as they would have to deal with it. Fortunately Nationwide did very quickly. Contacted insurers again about claiming back the week's accommodation we'd lost, and paid for, bearing in mind it was down to scheduled airline failure.
No, not interested and they pointed out it wasn't 'a direct consequence of the airline failure'!
So this unhappy bunny wrote back again telling them in no uncertain terms that it couldn't be anything other than a DIRECT consequence of airline failure and they should re-consider.
Took them about two weeks, but eventually got an email saying they'd passed my comments onto the underwriters and as 'a goodwill gesture' were going to pay what we'd lost. But if I hadn't pushed for it I'd have got nothing.
Highlander, I can completely understand why you didn't declare the problem you had and I would probably have done that same.
The irony of it is of course that, if you'd just rung up and told them it had just appeared and you wanted it covering they probably would have done!
I certainly think they are being picky in this case!