Travel insurance is worth considering if you have high non-refundable booking costs or plan to travel internationally, where your health insurance won’t cover you. However, travel insurance may not be necessary if trip costs are low or reimbursable, or if you don’t need additional coverage on top of your existing health insurance or credit card travel protections.
More information: Travel insurance: what it covers, costs and how to choose the right policy
The more expensive non-refundable travel costs are, the greater the risk you run if you have to cancel or interrupt your trip for unforeseen reasons. With full coverage travel insurance policies, you are typically covered for various trip cancellation reasons that are out of your control, such as you or a travel companion becoming seriously ill or injured.
Your standard health insurance plan may not cover you if you travel abroad, so it may make sense to look for travel insurance policies with sufficient medical coverage. Additionally, a travel insurance policy with emergency evacuation and repatriation coverage could cover hundreds of thousands of dollars in expenses if you plan to travel to a remote destination or one with limited infrastructure.
More information: What does travel insurance cover?, and do I need it?
If you take several trips a year, it is worth considering an annual travel insurance policy. The more you travel, the greater the chances of a flight being delayed or cancelled, your luggage lost, or any other set of unforeseen circumstances.
Annual plans are typically more cost-effective for frequent travelers than paying for individual plans per trip, but you may receive less coverage overall, depending on the policy.
Planning your trips well in advance is not a bad thing, but it does leave more time for an unexpected event to occur that could force you to change your plans. Keep in mind that you can often make travel reservations and purchase travel insurance later, as long as you haven’t left on a trip yet. However, keep in mind that locking in your travel insurance policy early may open up the possibility of obtaining additional coverage, such as insurance for pre-existing medical conditions.
Making travel plans with tour groups or travel agencies can simplify the process, but it can also force you to incur non-refundable expenses. Plus, planning your own complex itinerary, with multiple flights and hotel stays, could get complicated if you have to cancel your trip.
With the right travel insurance policy, you wouldn’t have to worry as much about the cost of rescheduling or canceling part or all of your trip for covered reasons.
More information: How much does travel insurance cost?
If your trips are typically short, like a quick weekend getaway, you may not need travel insurance because you’ll likely spend less money when you’ll only be away for a few days.
If you always ensure that your travel reservations are refundable or can be modified without additional charges, there is probably no need to purchase an insurance policy with trip cancellation coverage.
Many of the best travel credit cards offer various types of travel insurance coverage as part of their built-in benefits. For example, you may already have trip cancellation or interruption insurance (up to a certain limit) if you pay for your flights and hotel reservations with an applicable credit card.
Common types of travel insurance coverage:
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Car Rental Coverage
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Luggage insurance
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Emergency transportation and evacuation coverage
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Emergency medical and dental coverage.
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Travel accident insurance
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Travel delay coverage
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Trip cancellation insurance
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Trip interruption insurance
Note: The names of these coverages may vary depending on the provider.
Common items that are not typically included in travel insurance plans include:
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Pre-existing medical conditions
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Known or foreseeable events
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Changing my mind.
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Being afraid of traveling
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High risk activities and adventure sports
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Epidemics and pandemics
In some cases, basic travel insurance coverage may not be worth purchasing because the coverage limits are too low or not all situations are covered.
For example, a basic annual plan from Allianz may cost less than a third of the price of the most expensive plan option, but you miss out on key protections like trip cancellation and interruption insurance. This means that if you have to cancel or interrupt your trip, the policy will not reimburse any applicable non-refundable expenses.
CFAR coverage is worth it primarily if you want the added peace of mind of canceling a trip and recovering at least some of your non-refundable expenses. This coverage allows you to cancel your trip if you change your mind or for basically any other reason. However, you typically only recover between 50% and 75% of your insured non-reimbursable expenses.
Medical evacuation and transportation coverage.
If you are considering purchasing a plan with emergency medical and dental coverage, it may already include transportation and medical evacuation. If not, it’s worth considering, as emergency medical transportation costs can easily exceed $100,000.
However, if you do not need additional health insurance or do not plan to travel internationally, this coverage may not be necessary.
Consider these questions to help you decide if travel insurance makes sense for you:
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Do you have non-refundable travel expenses? If so, it may be worth considering trip cancellation and interruption insurance.
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How far do you travel from home? Emergency medical coverage may make sense for international travel.
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Do you already have overlapping coverage? You may not need more coverage if you’re already covered through a rewards credit card.
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How long is your trip? While travel insurance may make sense for a long trip, you may not need it for a short weekend vacation.
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Are you thinking about renting a vehicle? A policy with coverage against damage and theft on the rental car could be useful.
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Will you be checking a bag? Baggage delay reimbursement or baggage loss and damage insurance can help protect your belongings.
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Could you afford to absorb unexpected losses? This may be the most important question of all. If you cannot afford to absorb unexpected losses, it may be advisable to consider purchasing a travel insurance policy.
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It may be worth considering travel insurance if you have large non-refundable expenses, plan to travel internationally, or take several trips each year.
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Travel insurance may be unnecessary if you have flexible travel reservations, are traveling for short periods at a time, or if you already have sufficient coverage through travel credit cards or other means.
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If you decide whether travel insurance makes sense for you, consider your own risk tolerance. If you cannot afford to absorb the cost of unexpected expenses, you may want to consider purchasing a travel insurance policy.
Tim Manni edited this article..