Travel Insurance: Good Idea or Waste of Money?

If you travel much, you have inevitably been given the chance to purchase travel insurance and without knowing much about it, you really don't know if it's a good deal or a ripoff. You could be at risk of financial or physical loss anytime you travel extensively. To help you make a more informed decision, there are several things you should know about travel insurance when considering your options.

Travel Insurance Basics

Traveling always involves risks — such as the risk of getting sick or having an accident, losing or having your valuables stolen, missed flights and even the loss of life in extreme cases. Travel insurance can give you some peace of mind by helping to reduce your chance of financial loss related to these risks. There are five main types of travel insurance offered, although you can buy supplemental policies to provide coverage for specific concerns such as identity theft. Most of these different types of travel insurance can be purchased in a combination travel insurance package:

• Flight Insurance: Flight insurance is basically a life insurance policy that covers you in case the plane crashes during your trip.
• Baggage Insurance: This covers your luggage that is either delayed, lost or damaged during your trip or flight. It is included in most package travel insurance policies. There may be exclusions or price caps on jewelry, electronics or other expensive items.
• Trip Interruption/Cancellation Insurance: This will cover your expenses if your trip is interrupted for some unforeseen reason, such as health issues or if an organized tour that you prepaid gets canceled. The insurance covers the non-refundable fees you have paid to take the trip. This type of insurance can also cover you in the event you have to miss a trip because of an accident or inclement weather.
• Medical Insurance: A medical travel policy provides additional coverage if you are traveling internationally and can help pay deductibles or “out-of-network” provider charges that your current health insurance does not pay. Generally, this type of medical insurance picks up and pays your health care expenses that your primary healthcare policy does not cover.
• Evacuation Insurance: If you purchase evacuation insurance, this will cover the cost of transporting you to a medical facility where you can receive appropriate treatment in the event of an emergency. This type of policy is subject to exclusions for dangerous activities such as skydiving, although additional supplemental insurance may be available to cover sports adventure activities.

Who Does and Does Not Need Travel Insurance

There are companies such as Travel Guard, Tin Leg, Travelex and other insurance companies that write only travel insurance. Travel insurance may also be offered to you as part of a car rental contract or as part of a vacation package bought from a travel company. For someone who travels extensively and wants the peace of mind to know that they are covered in the event that the worst happens during a trip, travel insurance may be a good idea. However, if you rarely travel or have coverage already through another type of insurance policy, buying travel insurance may be a waste of money.

What Coverage You May Already Have

In some cases, travel-related losses may be covered by your renters insurance, homeowners insurance, medical insurance or even coverage for loss provided by your credit card company. It pays to check into what travel coverage you may already have in place before deciding to purchase additional travel insurance that you may not need.

Purchasing Travel Insurance When You Buy Tickets

If you are interested in purchasing travel insurance, you may be given the option to do so when purchasing your airline tickets. If your airline has a partnership with a travel insurance provider, you will be given information on the available plan including coverage limits and costs when booking your flight. In some cases, you may be able to use your frequent flyer miles to pay for the coverage.

The Bottom Line

Only you can decide if the cost of travel insurance is worth the peace of mind of being protected against the financial risk associated with traveling. If you travel extensively and want to make sure you are protected, take some time to shop around and get the best value on an insurance policy.

Make sure you are not already covered against travel risks by an existing insurance policy before making the decision to purchase additional travel insurance. If you do purchase travel insurance, read the fine print to make sure you know what and who is covered on your travel insurance policy and the dollar amount of the per claim and policy term limits.