It depends on many factors: where you’re going, what you’re doing and how much you’ve paid for the trip.
When planning a trip, you’ve probably received offers for trip insurance from more than one purveyor. You may have heard horror stories: people visiting remote jungles or high mountains and needing medical assistance and evacuation. If you don’t have insurance, you’re warned, you could end up paying thousands of dollars for ambulance or helicopter transport to a distant hospital for an extended stay.
But for a trip to Europe or around the good ol’ U.S., do you really need travel insurance? European travel guru Rick Steves says he often skips it, with no ensuing problems. The New York Times Frugal Traveler Seth Kugel decided it wasn’t worth it, except to buy a yearlong medical evacuation plan (for $225) after deciding that if he had to be medically evacuated home from a distant land, he would be out about $30,000.
Factors to Consider
Travel insurance may duplicate insurance you already have. For one, many credit cards provide insurance when traveling, although they rarely cover medical issues. This is important for older adults on Medicare because the government health insurance does not cover you when you are out of the country (unless you have a supplement that specifically allows this). If you’re not on Medicare, your health insurance policy most likely covers you anywhere in this country and sometimes abroad. And your renters or homeowners insurance policy may cover the loss or theft of valuables while you’re traveling. Airlines generally cover the loss of a checked bag.
Reasons to get trip insurance include:
- Your trip is expensive—the rule of thumb is if it’s more than $5,000. The price of insurance is generally between 5 and 12 percent of the total trip.
- You’ve got a complicated trip, with many parts and different travel operators, and have prepaid for much of it. Check the refund policies of all the operators you’re dealing with.
- You’re doing cruise or package tours, which typically don’t offer refunds for cancellations.
- You’re traveling to a remote and/or possibly dangerous place, such as where crime is frequent, or you’re doing adventure traveling, involving riskier activities such as whitewater rafting or mountain climbing.
- Your health is precarious or you suffer from chronic illness, although many health insurance plans cap pre-existing conditions.
- You’re a nervous traveler, and would rather pay the $200 for comprehensive travel insurance than worry the whole time about what you would do if you had trouble.
Types of Insurance
Determining what kind of insurance you need and then finding the best plan can be an arduous task. That’s why it’s easiest (but often more expensive) to buy comprehensive travel insurance that covers seemingly every possible thing that could go wrong, including a terrorist attack.
Generally, travel insurance is sold in packages, combining various categories of coverage. However, you can customize most insurance plans so you get only what you need. Sometimes, however, it’s less expensive to buy the comprehensive package. For those over 70 years old, travel medical insurance can be expensive, so comprehensive may be a better deal.
Of the dozens of choices, these are the more common:
Trip cancellation or interruption. If your trip is cancelled or interrupted, the insurer will pay for your prepaid expenses (airplane, cruise, tour, etc.). The catch is that the cancellation or interruption has to be for reasons the insurance company covers. Approved reasons include having to return home because a family member became ill, your flight is cancelled or your tour company goes bankrupt. (See section below, “Buyer beware,” for more details.)
Emergency evacuation. If you’re traveling to distant lands, where medical care may not be easily available, evacuation insurance pays to get you to the nearest medical provider, usually a hospital. In some cases, the insurance may pay to get you back home, if your condition is deemed serious enough for the huge expense.
Medical. For those with policies that don’t extend beyond the U.S. (such as Medicare) or for those who want to add supplemental coverage, medical insurance might be necessary. This especially applies if your health is precarious or you have an ongoing medical condition. Be aware that some travel policies don’t cover pre-existing conditions (for example, you had pneumonia before you left on the trip). Some policies will reimburse you later for doctors’ visits, while others will pay upfront for hospital visits. Make sure you know what your policy includes and excludes.
Baggage. While airlines reimburse you (at a set limit) for luggage they lost, travel insurance will cover stolen or lost belongings in other situations, such as from your hotel room. This makes sense if you have a lot of expensive photography equipment, for example. Some policies will pay your expenses if your luggage is delayed. Note that some homeowners or renters insurance policies will reimburse you for items lost or stolen while you’re traveling.
Rental car. There are three ways to protect yourself if your rental car is damaged or stolen: through your travel credit card, the rental car company or travel insurance. It’s worth comparing prices and coverage.
Terrorism. Although this type of insurance is probably not needed by most travelers, if you’re visiting a country where there has been civil violence, terrorism insurance would reimburse you if you have to cancel the trip because of a terrorist attack.
Where and When to Buy
Experts recommend buying travel insurance as soon as possible, and insurance companies generally limit you to 7 to 21 days before you travel. This limitation provides more time to ensure that tour operators don’t go bankrupt or that you won’t suffer from a pre-existing condition.
The biggest travel insurers are Allianz, CSA Travel Protection and Travel Guard. In addition, Rick Steves recommends Betins, Travelex and Travel Insured International. The U.S. Travel Insurance Association’s lists other insurance companies on its website. And the independent Travel Insurance Review shows the pros and cons of each company, their plans, special coverages, contact information and links to get a quote. Policies may vary according to your state of residence.
Don’t forget to save all your documentation as well as note the names of staff you deal with at the insurance company.
Different plans have different limitations and definitions—of family member, for example. It’s necessary to read the fine print to make sure you’re getting the coverage you want and need. Otherwise, you might not get reimbursed for something you thought was covered. Allianz Global Assistance lists the five most common reasons that it denies trip cancellations.
1. You didn't see a doctor before canceling your trip because of illness.
The illness or injury—to you, your traveling companion or an immediate family member—must be disabling enough to make a reasonable person cancel a trip, and a doctor must examine you or your traveling companion. In addition, you'll need to submit a fully completed Physician Statement Form.
2. You didn't provide documentation for your trip cancellation reasons and expenses.
These are just a few of the documents that Allianz requires:
- Receipts and itemized bills for all expenses
- Original version of any refunds or expense allowances from your tour operator, travel agency, common carrier, resort, property management company or other entity
- Copy of resort invoice/vacation rental contract or confirmation
- Trip cancellation/interruption claims
- Any appropriate documentation that officially explains the cause of your trip cancellation or interruption
3. You purchased travel insurance when a big storm was already on the horizon.
Although severe weather is a covered reason for canceling a trip, travel insurance is meant to protect travelers against sudden and unforeseen events, not storms that have already started.
4. You gave up on your trip too soon.
One missed flight and ensuing delays might not be enough to get reimbursed for a cancelled trip. To make a trip cancellation claim, you must have lost more than 50 percent of your scheduled trip length due to a covered travel delay—and you must have made a good-faith effort to continue your travels.
5. You didn't read the terms, conditions and exclusions for your trip cancellation insurance policy.
Allianz has up to 26 covered reasons for cancelling a trip, but you can’t cancel for any reason. For instance, legal separation or divorce is a covered reason for trip cancellation with the Classic Plan, but a breakup is not. The death of a family member is a covered reason, but the death of a pet is not.
“Should You Buy Travel Insurance?,” Jan. 29, 2013, New York Times Frugal Traveler.
“Do I Need Travel Insurance?,” Rick Steves’ Europe.
“Should I buy travel insurance?,” June 20, 2015, USA Today.
“What You Should Know About Travel Insurance,” March 17, 2014, Huffington Post.
“What Is Travel Insurance, and Do I Really Need It?,” May 26, 2016, Hipmunk.
“Car-Rental Insurance and the Collision Damage Waiver (CDW),” Rick Steves’ Europe.
“5 Reasons Your Trip Cancellation Insurance Won't Cover You,” Allianz Travel Insurance.
“Filing a Travel Insurance Claim,” Travel Insurance Review.
Blog posting provided by Society of Certified Senior Advisors