Sally and Tim live in Omaha and are planning a winter getaway to the sunny beaches on the west coast of Florida. Their trip costs include airfare, hotel, rental car, and two all-day passes to Disney World.
A close friend of theirs recommended they buy travel insurance for their trip. Sally thinks it’s a good idea to protect their investment in the trip. Tim disagrees and say’s it’s a waste of money they could be spending while in Florida. Who’s right?
In this article, we’ll give you some tips that will help you decide if you should buy travel insurance the next time you take a trip. But first, let’s look at the two types of travel insurance and what they cover.
When you buy health, life, or disability income insurance, you have all kinds of decisions to make as you build your policy. However, with travel insurance, you really have just one decision to make: should you choose a basic or comprehensive policy? Here’s what these two types of travel insurance cover.
Basic trip cancellation protection
Basic trip cancellation protection covers lost bags, reimbursements if you miss a connection, and a refund if you can’t travel because you’re sick or hurt.
Comprehensive travel insurance
On the other hand, comprehensive travel insurance covers everything the basic coverage does, plus any medical or dental emergencies, disaster evacuations, and costs associated with accidental death. Essentially, it’s a combination of travel and medical insurance.
Like every other type of insurance policy, travel insurance does have exclusions. For example, pre-existing medical conditions are generally excluded from coverage on basic policies. However, some more comprehensive policies will cover pre-existing conditions if you purchased the policy within 14 days of paying for your trip and were well enough to travel when you booked it.
Hazardous activities are also usually excluded by travel insurance policies. If you’re planning on mountain climbing or skydiving during your trip, don’t plan on being covered if something goes wrong.
Other exclusions may involve acts of terrorism, acts of war, and injuries caused by the use of drugs or alcohol.
As you can tell, you need to read an outline of the travel insurance policy before you buy it and find out what is and isn’t covered. If you decide to purchase travel insurance, you don’t want to be surprised if you need to use it.
[ Related: How exclusions in insurance affect your coverage ]
1. Skip it for U.S travel
Domestic travel is typically much less expensive than international travel, so you can probably skip it unless you absolutely need it for peace of mind.
According to Value Penguin, the average domestic trip is about four days long and costs about $600 per person for flights and lodging. This money would be unpleasant to lose if you couldn’t make the trip and had non-refundable reservations, but is something you can recover from financially.
And, if you have health insurance, you’re usually covered for any medical emergencies that may arise. Again, read the fine print if you’re considering buying travel insurance. Travel experts generally recommend opting out of it for a short trip within the U.S.
2. Skip it for flights
Basic travel insurance policies are usually not worth buying if you know your rights as a passenger.
For example, if your flight is canceled, your airline must reserve the next available seat on the next available flight headed towards your destination. Travel insurance is not going to get you re-booked any quicker.
If your flight is canceled, you may be entitled to compensation from the airline — no insurance is needed. Depending on the airline and ticketing agent, you may also be provided free lodging until the next flight leaves.
3. Skip it if you’re buying it for flexibility
Travel insurance is not cancellation insurance. If you decide to cancel your trip, you have automatic protection if you’ve bought a refundable airline ticket and opted for a hotel with a free cancellation policy up to 24 hours before your check-in date. Don’t use travel insurance to keep your options open.
4. Buy it for international trips
Because of the higher cost, travel insurance is recommended for international trips. Value Penguin estimates the average international trip lasts 12 days and costs about $3,200 per person.
International travelers also tend to book their trips much further in advance than when traveling domestically to get the best deal on flights and hotels. Because of having to put down a considerable amount of money upfront months before the trip for airfare and possibly hotel costs, experts recommend buying a comprehensive travel insurance policy rather than a standard one.
5. Buy it for medical reasons
While sipping wine in Tuscany or sunbathing in Monte Carlo can be once-in-a-lifetime experiences, a medical emergency in a faraway place can be catastrophic beyond just ruining your vacation.
Most medical insurance, except Medicare, will pay “customary and reasonable” hospital costs abroad, especially if you’re in a major city like Paris or London. But more serious issues can add up quickly. For example, a medical evacuation can cost more than $50,000, depending on your condition and location.
6. Buy it for cruises
Cruises hit the trifecta where comprehensive travel insurance is recommended: international travel, a hefty upfront payment, and a higher risk of problems. Experts recommend buying a comprehensive policy, and they say buying it directly from the cruise line won’t cost more than buying it from an outside insurance company, like AIG, Allianz, or Travel Insured.
Travel insurance for cruises covers a wide range of situations, including hurricanes. For example, the 2017 hurricane season was very active and impacted 450,000 cruisers. However, while cruising during hurricane season can get you some great deals, you’re out of luck buying travel insurance if a storm has already been spotted and named.
Based on what you’ve just read, you’d probably agree with Tim that he and Sally don’t need travel insurance for their winter trip to Florida. But, if they decide to take a trip abroad in the future, they should go ahead and purchase the coverage.
If in doubt, consider the well-worn maxim, “Better to have it and not need it than to need it and not have it.”
The information and content provided herein is for educational purposes only, and should not be considered legal, tax, investment, or financial advice, recommendation, or endorsement. Breeze does not guarantee the accuracy, completeness, reliability or usefulness of any testimonials, opinions, advice, product or service offers, or other information provided here by third parties. Individuals are encouraged to seek advice from their own tax or legal counsel.