This is one of the questions that I am asked occasionally. Rarely do I hear someone ask “Do I really need an auto insurance policy for my car?” Most of us cover our cars simply because they are a huge investment and failing to cover them can cost a lot more in the long run (granted some states require auto insurance but few people take just the required minimums). Trip insurance is the same way.
Let’s face it. If you travel enough, stuff will happen. Thunderstorms in the wrong place, the wind in New York coming from the wrong angle, volcanoes in Iceland, just about anything can ruin the best laid plans.
Much like auto insurance protects you and your vehicle, trip insurance protects your vacation and the financial investment you have made in it from “stuff” happening.
Your first question when considering trip insurance is what do you want to cover? The more you cover the better you are protected but the more expensive the policy will be (sounds like auto insurance right?).
What you cover is a personal choice. For me, there are certain things I always want covered.
- Trip Cancellation. This covers you if you have to cancel the trip. What is covered depends on the company and the policy. I look for some basics though. I always get a policy that covers a cancellation due to a medical reason or death of anyone that I consider family (this is a definition that you need to read in the policy. Every company has a slightly different definition). I also want to see coverage for terrorism, inclement weather, airline delays or strike.
- Trip Interruption. This covers expenses due to an interruption in the trip (again definitions vary by each company). This could be additional expenses to catch up with your tour or cruise. This is also the section of the policy that would cover additional expenses and non-refundable expenses for having to return home early.
- Medical Coverage. My health insurance only covers me inside the U.S. so I always make sure that I am covered when I travel to Europe. Some policies also cover emergency evacuation which becomes important if you are going to be outside the U.S.
In addition to these three, occasionally I look for additional coverage.
- Pre-existing conditions. If I am doing anything physical, like skiing or golfing, I want a pre-existing conditions waiver to make sure I am covered for either cancellation or interruption due to an injury (spraining an ankle before I leave or on the slopes would ruin a ski vacation quickly). This makes sure you are covered regardless of your medical history.
- Added baggage coverage. If I’m traveling with sports equipment like golf clubs or skis, I want to make sure that I am covered if the airlines send them somewhere other than where I’m at or they are stolen while I’m there.
- Concierge Service or a help line. Some insurance companies offer 24 hour help lines for lost baggage or missed connections. If you didn’t use a travel agent or high service tour operator, these lines can help you get to your destination with all of your baggage.
Another thing to remember is that some companies provide added coverage or options if you purchase your policy when you pay your deposit or shortly thereafter. Also, most companies only cover “unforeseen events.” So most policies purchased now would not cover you for the Iceland volcano unless its stops erupting completely and then restarts before you travel.
Next choice is choosing your provider. An insurance policy from a company isn’t worth the paper it’s written on (just look at Chris Elliott’s ongoing series of articles on Prime Travel Protection) if they never pay claims. All providers are going to charge you a slightly different amount for similar basic coverage. Much like with auto insurance, the added services a company offers and their claims process affect the cost of the policy. Seek out referrals when choosing a company and look on the internet.
Travelers will find that the trip insurance market has multiple companies with a range of prices and each company has a portfolio of policies that also range from expensive to inexpensive. Simply buying on price can lead you to purchasing a policy that doesn’t cover what you want from a company that never pays on claims. Likewise, simply buying the most expensive policy can lead you to paying for coverage that you will never use. Make sure that you purchase a policy that covers your needs from a reputable company.
Remember that a good travel agent can steer travelers in the right direction when choosing a company and a policy but you need to make sure that the policy meets your needs. Trip insurance is a profit center for most travel agencies and they want to make sure clients are happy with no chance that something won’t be covered. This may lead them to recommend a policy that has more coverage than many want or need. Make sure to read the fine print, called the description of coverage, before purchasing a policy.
So “Do you really need trip insurance?” My answer is almost always yes. Do I buy trip insurance every time I travel? Almost.
The only time I don’t purchase it is when I’m staying inside the U.S. on a short trip like a weekend trip to Las Vegas with a fully refundable hotel room and an airline ticket I purchased with miles.
Happy travels!
Editors note: Plus, be aware that there are plenty of travel insurance and travel “protection” scams out there. The National Association of Insurance Commissioners (NAIC) reminds consumers to “Stop. Call. Confirm. STOP before signing any paperwork or writing a check. CALL your state insurance department, which is easily reached by phone. CONFIRM the company or agent offering insurance is legitimate and licensed in the state.”
If it appears that your policy isn’t worth the paper it is printed on, of if you have any complaints, the NAIC also has established the Online Fraud Reporting System (OFRS) through which consumers can report suspected fraud or file complaints. The OFRS Web link is located on the NAIC Home Page at https://eapps.naic.org/ofrs/. Through OFRS, consumers can pursue a proactive role in identifying and reporting insurance fraud and poor business practices.
