When Itís Time to Consider Travel Insurance

There may be a line item in your travel budget you haven’t thought about—travel insurance. It may feel like an unnecessary expenditure, but if you’ve saved up for a dream vacation, the risk of not having the right travel insurance could run to the thousands of dollars if something goes wrong before or during your trip. But that doesn’t mean you should always purchase travel insurance. Here’s what you need to know to decide when and how much travel insurance to buy.

Like other insurance policies, travel insurance is a safety net for your wallet. Depending on the policy, it will reimburse you for various losses and/or offer services when something goes amiss. The two major considerations for purchasing travel insurance are financial risk—if your pre-paid and non-refundable expenses are more than you’re willing to lose should your plans change—and medical concerns—if your health insurance wouldn’t cover a health emergency abroad.

Plans

Most travel insurance is sold as a comprehensive plan with a variety of coverage, although some companies will allow you to customize a policy. Just like other insurance policies, most if not all parts will have a coverage limit—a maximum amount of money the company will pay out—and possibly a deductible you must first pay before coverage kicks in.

Below are common coverages within a comprehensive plan.

Trip cancellation, interruption, and delay

  • Reimburses you for prepaid, nonrefundable expenses if you have to cancel the trip, but only for the reasons outlined in the policy, so be sure to read the fine print! Usually this includes unforeseen illness of you or other member of your traveling party (but not pre-existing conditions, that coverage is extra), illness or death of a family member, loss of job, or natural disasters.
  • Interruption coverage reimburses the nonrefundable costs of the unused portion of the vacation if you have to interrupt your trip because of a reason outlined in the policy.
  • Trip delay coverage reimburses you for extra expenses, such as hotel accommodations and meals, if you’re delayed during a trip because your flight is canceled, bad weather stalls a cruise, etc.
  • Some plans cover one, two, or all three scenarios of cancellation, interruption, and/or delay
  • Note: This part of a policy is more inclusive and a better value than the waivers most cruise, tour operators, and airlines offer.

Loss of baggage and personal belongings

  • Reimburses you for lost, stolen, or damaged baggage and/or personal belongings and sometimes reimburses you for any incurred extra expenses if your baggage is delayed for more than a certain length of time.
  • Note: Check your renters or homeowners insurance as these policies usually cover lost or damaged property while traveling. If your policy offers this coverage, then travel insurance would kick in to pay for any expenses not covered by your renters/homeowners insurance.

Emergency medical assistance, evacuation, and repatriation

  • Pays for medical expenses if you’re sick or injured on a trip. Medical evacuation pays for transporting you to the nearest hospital. Medical repatriation pays for flying you home.
  • Injury from extreme and adventure sports and competition in organized sporting events are not usually included.
  • Note: Your health insurance plan probably offers some coverage while you’re away from home. Call your plan’s customer service number to get the details so you don’t double-pay for coverage. Medicare does not provide coverage outside the United States.

24-hour Assistance

  • Provides a 24-hour hotline to call when you need help while traveling, like booking a flight after a cancelation or missed connection; finding lost luggage; locating a lawyer, doctor, or the U.S. Embassy; changing reservations; and more.

Cost

According to the U.S. Travel Insurance Association, a comprehensive travel insurance plan will cost you 4% to 8% of the total cost of a trip. Factors affecting this price include trip length, overall trip cost, destination, pre-existing medical conditions, amount of coverage, and your age.

Where to get travel insurance

In addition to coverage from your existing car, health, and renters/homeowners insurance, you may also already have some travel insurance from the credit card you used to make your bookings and reservations. If the card doesn’t offer primary insurance for trip cancellation or car rental insurance, it probably offers secondary insurance—it’ll kick in and pay for damage or loss not covered by the primary insurance plan, i.e. car, health, renters/homeowners. And this coverage is free!

You can purchase travel insurance from your travel agent or through a travel booking site that you’ve used for tours—however, this source of insurance tends to be expensive, have thin coverage, and not allow you to customize the plan.

Or, you can go straight to a travel insurance company. You can buy directly from them or go through a travel insurance comparison website. This route gives you the most options for customization and policy prices, but it will require a little more time and effort to do the research.