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.
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.
- 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).
- Financial Exposure – You need to ask yourself how damaging the financial loss would be without the insurance.
- Normal Insurance – Does your normal health insurance cover you for injuries sustained while out of the country?
- Credit Card Coverage – many credit cards cover purchases, rental cars, and more. Check your agreements carefully so you don’t duplicate coverage.