Do You Need Travel Insurance?


The last thing you want to think about when making travel plans is the possibility of an accident. As a result, many people never think about travel insurance. But travel insurance covers much more than worst-case scenarios.

Costs vary by provider and coverage, but you can generally expect to pay in the area of 3-6% of the cost of your trip.

Typical Coverage

As with all forms of insurance, travel policies vary widely as far as what is covered and not all policies provide the same protection.

  • Emergency cancellation – If you cannot go on the trip due to an emergency (illness, injury, death in the family, etc.) the insurance covers all out of pocket costs for non-refundable deposits and tickets.
  • Default by Travel Provider – The insurance covers your losses if a hotel, airline, or tour operator goes bust before your trip.
  • Medical Expenses – The insurance should cover any costs associated with illness or injury suffered on the trip, including doctors, hospitals, and transportation (such as ambulances). The insurance may also cover a flight home.
  • Baggage – Some policies cover the cost of lost baggage and “essentials” purchased as replacements while traveling.
  • Car Insurance – Your policy may provide coverage for rental cars.

Do you Need the Insurance?

The answer to this question is based primarily on four different factors.

  1. Cancellation Policy – If your plane tickets are cancelable (perhaps for airline credit) and your hotel offers a 24 hours cancellation policy, then you may not need the travel insurance, though most policies do provide additional coverage (such as injury while on vacation).
  2. Financial Exposure – You need to ask yourself how damaging the financial loss would be without the insurance.
  3. Normal Insurance – Does your normal health insurance cover you for injuries sustained while out of the country?
  4. Credit Card Coverage – many credit cards cover purchases, rental cars, and more. Check your agreements carefully so you don’t duplicate coverage.