Travel insurance is designed to protect travelers by giving them a way to get their money back in the event their plans are canceled or interrupted. It can provide a full or partial refund in the case of illness or death of a member of the traveling party or close relative, if a tour operator or airline defaults, or in several other cases. Money expert Clark Howard, who once owned his own travel agency, says that nearly everyone should consider buying travel insurance: “I never like for people to buy narrow insurance. That’s why I advise people not to buy appliance warranties. Trip insurance is an exception and the reason why is because trips can be incredibly expensive and fully non-refundable.”
1. Travel Insurance: When Do You Need It?
Clark says these policies should always be purchased when you are:
- Taking a cruise
- Booking special tours as part of your trip
- Traveling on an itinerary that requires prepayment of thousands of dollars
“If you book a tour or you book a cruise — those two in particular — if you’re going to lose all your money regardless of why you can’t come, then you need to get insurance,” Clark says. Cases when you may not need travel insurance include when your trip consists of flights and hotel stays that are fully refundable, or if the cost of making changes to your itinerary is less than it would cost to re-book your trip.
2. What Does Travel Insurance Cover?
Policies for travel insurance generally reimburse you if your trip is interrupted or canceled due to a variety of reasons that would typically be considered outside of your control. Travel Insurance Review lays out some of the most common things that would be covered by trip insurance:
- Injury or illness of insured, travel companion, family member, or business partner
- Hurricane or natural disaster strikes destination
- Bankruptcy or financial default of travel company
- Terrorism or mandatory evacuation at destination
- Death or hospitalization of the destination host
- Home or business damaged, vandalized, or burglarized
- Jury duty, a required court appearance, or military redeployment
- Required to work, terminated, or transferred
- Victim of felonious assault prior to trip
- Traffic accident prior to trip
- Theft of passport or visa prior to trip
- Legal separation or divorce
- Loss of accommodations abroad due to an illness or death of host family or friends
Of course, policies will vary, so be sure you check the fine print of any policy you are considering before you buy it.
3. How Much Does Travel Insurance Cost?
Once you are comfortable with what’s covered and not covered, you should know that travel insurance policies generally cost about 5% of the total amount of a trip.
Example: If you are booking an all-inclusive trip to Jamaica for you and a guest that costs a total of $2,000, you should expect to pay around $100 for travel insurance for both of you. But, this is important: Never purchase the travel protection plan from the trip organizer or online travel agent. They are designed to protect the company and not the consumer. This includes when you are booking on a site like Expedia or Travelocity.
4. Where Should You Get Travel Insurance?
So, if you’re not supposed to buy travel insurance from the place where you book the trip, where should you buy it? One popular option is to comparison shop for travel insurance that suits your needs at InsureMyTrip.com. “The reason why I like InsureMytrip is because it’s like an aggregation service, or comparison site, and you can see all the different choices available,” he says. When you visit InsureMyTrip, you’ll be asked for the following information:
- Destination country
- Dates of travel
- Traveler age and residence information
- Trip details (flights, hotels, accommodations, etc.)
- The site will then recommend travel insurance plans for you and show you the cost, plan details and consumer ratings.
You can compare the available plans and select the one that best suits your needs. In addition, Clark says, “There are a number of travel credit cards that include travel insurance with them if you use them to buy the travel.” It’s likely that coverage from these cards is less comprehensive than you will find in many of the plans from InsureMyTrip, so make sure you’re comfortable with that before you decide to rely solely on the card coverage.
5. Do You Also Need Travel Medical Insurance?
Now that we’ve gone over travel insurance, you might be wondering if you need any extra insurance like travel medical insurance or medical evacuation insurance.
Most travel insurance policies include various aspects of medical insurance and medical evacuation insurance, but again, it’s important to read the fine print to help you decide if that coverage alone will be enough should you have a medical emergency on your trip. The Center for Disease Control and Prevention puts the cost of medical evacuation in excess of $100,000. If you’re traveling to a developing country, you might consider this kind of policy as a hedge against the possibility of a huge medical bill should you need to be airlifted to a nearby nation with better medical facilities.
