Vacations: We dream of them, save for them, and plan their every detail months in advance. They’re our escapes from everyday doldrums, monotonous routines, and nagging responsibilities. Unfortunately, life’s unforeseeable twists and turns don’t take breaks just because we do. Accidents, illnesses, theft, lost luggage, and weather disasters can upend vacations before they even start. But when is it necessary to invest in travel insurance — and when is it best to skip unnecessary added expenses?
Travel insurance types
Travel insurance can ease financial blows of vacation-spoiling events. But not every type of travel insurance provides the same coverage, so it’s important to understand the various available types and what each covers. The most common types of travel insurance include:
Trip cancellation or interruption insurance — Trip cancellation insurance makes most sense for trips requiring large deposits like cruises or group tours. This insurance type can also be a good idea for pricey non-refundable elements like airfare or prepaid accommodations. With cancellation insurance, if you, a family member, or a travel companion were to fall ill, get injured, or even lose your job, the travel insurance you’d purchased in advance would reimburse you for the money you’d invested in the trip but couldn’t take. Cancellation insurance would also reimburse you if a natural disaster in your destination prevented you from traveling there or if your tour company or airline suddenly went out of business or couldn’t perform as promised. Cancellation insurance can cost 4-10% of a trip’s total cost, so insurance for a $2,000 family cruise could cost $80 to $200. Without it, however, you’d be out the full $2,000 if you needed to cancel.
While cancellation insurance would protect you for the “trip that never was,” interruption insurance would protect you if you had to end your travels earlier than expected. In this case, your policy would reimburse you for the portion of the trip you didn’t get to enjoy.
Emergency medical and medical evacuation insurance — Understanding what your everyday health insurance covers is key to knowing if and what level of medical insurance you should consider purchasing for your travels. Some health insurance plans don’t cover medical care administered overseas, so check your policy if you are headed abroad. If you’re not covered, you may want to put an emergency medical policy in place before traveling. If you were to purchase such a policy and opt for a primary coverage plan, the emergency medical policy would pay a claim first no matter what your regular health insurance policy covers. You would then submit claims to your regular coverage plan after you’d filed with your emergency health insurance provider.
Medical evacuation insurance could help immensely if you or a family member were to get sick or injured in a remote area with limited medical services. Imagine needing an appendectomy while on a remote jungle tour in South America. This type of policy would pay expenses related to emergency surgery and treatment transport — even if it were to require ultra-expensive means like a chartered jet.
One warning: If you were to become injured while on vacation participating in an activity your insurer deemed especially dangerous — like skydiving or mountain climbing, for example — your travel insurance may not cover you. If you know you’ll be seeking such thrills, you may also want to seek out a supplemental adventure-sports policy.
Theft insurance — Thieves love to prey on unsuspecting tourists who often travel with high-ticket items like personal electronics, cameras, jewelry, skis, or golf clubs. Most homeowners or renters insurance policies cover theft no matter where in the world it happens. However, deductibles would still apply in such cases. If, for example, your deductible is $1,500 and a thief were to steal your $800 camera, you’d be out of luck unless you’d added a specific rider policy to cover items you brought along.
Comprehensive insurance — If all these options sound confusing, you could get one single comprehensive travel insurance policy to cover it all, including lost or damaged luggage and even expenses you could incur if you were to miss your flight or experience other travel delays.
Travel insurance considerations
International and high-risk adventure travels are good candidates for at least some level of travel insurance. Domestic leisure travel may or may not be, depending on how much you plan to invest. Here are few tips to remember when deciding on or shopping for travel insurance:
- Know what your health and homeowners or renters insurance policies cover … and where. If you’re traveling internationally, you shouldn’t assume you’re covered. Consult with an experienced insurance agent who can help you discern what would and wouldn’t be covered based on your travel plans.
- If you’re planning to book your trip with a credit card, check with your credit card company to see whether it would provide any travel protection. Some cards cover lost luggage, flight cancellations, and additional prepaid expenses.
- Purchase travel insurance when you book your trip or very close to booking time. If the government in your destination were to declare an illness outbreak or weather or security threat and you’d purchased insurance after such an announcement, your travel insurance likely wouldn’t cover you under those circumstances.
- If you travel frequently, talk to your insurance agent about an annual travel insurance policy that could cover you year-round on every trip you take. The more you travel, the more likely you could encounter a travel hiccup or two, so extra protection could make sense for frequent jetsetters.
Lastly, if you’re considering any type of travel insurance for a future trip or even year-round travel, talk to an insurance expert, not a travel agent. Travel experts typically earn commissions on extra policies they sell, so they could sell you on coverage you don’t need. Plus, only a true insurance expert can help you better understand your policies and what gaps you could fill with a travel policy.