Do you really need to buy travel insurance? Get the facts and find out.
Do you really need to buy travel insurance? Get the facts and find out.

Chances are great that you’ve been faced with the issue of whether or not to buy travel insurance before. If you’re like most people you probably didn’t buy it, and that may have been a wise choice. However, it’s important to understand what you need to know about travel insurance if you want to make a smart decision about whether or not to use it.

The Basics

There are four kinds of travel insurance generally, along with several add-ons and variations. The big four are: Trip Cancellation, Lost Personal Effects and Baggage, Emergency Medical, and Accidental Death. Variations and add-ons include 24 Hour Traveler Assistance, Dental, Emergency Evacuation, Rental Car Collision/Damage, and Travel Delay. How much travel insurance costs depends on your age, what kind of coverage you’re getting, and the total cost of the trip. According to the Insurance Information Institute, typical policies run about 5 to 7 percent of the cost of the trip. The majority of policies are sold by travel industry professionals who also earn commissions on sales.

Doing Double Duty?

Most people buy travel insurance to reassure themselves about the many “what ifs” inherent to travel. What if I have to cancel my trip? What if someone gets sick or injured? What if there’s a hurricane and we can’t go or get stuck? What if you’re robbed or hurt?

However, many travel insurance purchases are unnecessary for travelers with auto, health, homeowners, and/or life insurance. You may also be covered by your credit card company. So what kind of coverage do you need, and what’s just overkill?

According to Consumer Reports, it’s a good idea to avoid policies that just cover less serious, more manageable losses like those from luggage loss. You should also consider avoiding policies that cover only part of a given risk. And make sure you’re buying what you need. If you’re worried about death, what you really need is life insurance which will cover you not just on your flight, but in every situation.

Important Travel Insurance Issues

There are some good reasons to consider travel insurance. Check your existing health insurance policy for details; many don’t cover overseas medical treatment, and even more exclude costs from emergency evacuations to healthcare facilities, no matter how necessary. If this is an issue for you, be sure to have a conversation with your health insurance company to find out how likely you are to be covered, and travel with the contact information of preferred providers in the area you’re visiting. Most travel insurance policies will cover medical expenses regardless of which facility you end up in. Are you doing adventure travel with lots of physical activity? Are you older or in poor health? These kinds of questions influence the importance of travel insurance in your case.

Emergency Evacuation coverage is really important if you’re traveling in certain areas for more active, physical activities. Medical evacuations are expensive; in North America they can run $25,000, and in Europe, up to $50,000. If you’re trekking in remote parts of Asia, whitewater kayaking in South America, or climbing a mountain in Africa, you might run up an even higher bill. This is a benefit that makes a lot of sense, especially for adventure travelers.

Travel Protection is the insurance that covers, at least in part, the cost of prepaid reservations in case of canceled, delayed, or interrupted travel. This makes the most sense if you’ve bought everything in advance, or if your reservations are very expensive. Remember to make sure you’re not already covered; the credit card you used to purchase your reservations might cover this.

Baggage Protection is a mixed bag. Not only do most airlines reimburse you for lost luggage, but many credit cards do too. If you do feel you need coverage, make sure you’re getting what you’re hoping to. If you carry a lot of costly items with you that you can’t do without, a policy may benefit you—but make sure the limits of it will actually replace your things, and that the kinds of loss you’re worried about are covered.

Accidental Death and Dismemberment policies are fairly limited in the realm of travel insurance. Your best bet for accidental death is probably term life. And if you’re very worried about dismemberment, check to see what the actual benefits are (and maybe be careful when you go!).

Shop Wisely

A great way to save money is to buy travel insurance through an online broker rather than a travel booking site or travel agent who might be after a commission. There are some websites like that aggregate travel policy offerings from many companies, making comparison shopping easier. Some of these can also give you more of what you need to know about travel insurance in the form of solid, researched information. Avoid buying insurance directly from your cruise line or tour company; if they go bankrupt they won’t make good on your policy. And before you sign on the dotted line, get a sample copy of the policy and review it with an agent from the company to ensure that your specific worries are covered.

The Bottom Line

Knowing the ins and outs of your existing insurance coverage and the benefits from your bank and credit cards is essential to your travel insurance decision. Just as important? Not only knowing the factors that will affect your trip, and knowing what your end goals are. And if you’re the kind who always worries, what you need to know about travel insurance may just be that it’s the best way for you to actually enjoy your travel.