Do I Need Travel Insurance?

We all have the best intentions and highest hopes when it comes to making travel plans.

Of course we'll make it to the airport on time. The plane won't be late so we won't miss our connection or the cruise. Our bags will arrive promptly and intact. No one will get sick and everything will go smoothly.

Unfortunately, as in every other aspect of life, travel doesn't always turn out as we plan, and that's why many people opt for travel insurance.

According to the U.S. Travel Insurance Association, Americans spent nearly $2.8 billion on all types of travel protection in 2016, an increase of 19.1 percent from 2014. More than 87 percent of travel protection products purchased were trip cancellation/interruption packages. Medical and medical evacuation travel protection accounted for 8.7 percent of the money spent, the U.S. Travel Insurance Association found.

Who needs travel insurance?

Travel insurance typically protects against losing a huge investment in a trip or incurring unforeseen costs that could be too much to absorb on your own. However, if nothing goes wrong, it can feel like a waste. Here are some things to consider:

• Money. Is it important to you to know you won't be out the full price of the trip if you have to cancel? What if your trip is interrupted because of an emergency at home – could you afford the extra costs of returning home early?
  
• Health and safety. If you're traveling outside the U.S. and you or your travel mate becomes ill or has an accident, the immediate medical costs could be quite expensive if your medical insurance doesn't cover you anywhere in the world. Do you want the confidence of knowing you have medical evacuation coverage and that any out-of-pocket costs will be reimbursed?
  
• Destination and investment. If you're taking a short domestic flight, it's probably not necessary. But if you're planning an expensive, international trip several months in advance, buying travel insurance is probably a wise move.

Types of travel insurance

Travel insurance is typically packaged into a comprehensive plan that groups a variety of coverage including trip cancellations or interruptions; baggage and belongings; and emergency medical services including evacuation.

Of course not all coverage is equal, and you often can customize a policy by adding more extensive coverage. It's wise to check for:

• Exclusions. Read the exclusions carefully and understand any exceptions to coverage. For instance, even though your policy will reimburse you for lost or stolen bags, it likely won't cover your loss if the baggage was unattended or in an insecure location,
  
• Cancel for any reason coverage. This benefit is different from a cancellation policy, which is standard in most coverage packages. Cancel for any reason coverage will allow you to cancel for reasons beyond those listed in your policy, but coverage may depend on when the policy was purchased, coverage amounts, and when you file a claim.
•  Reimbursements. Check the listed reimbursement limit on your policy and ensure it matches your needs and expectations. Are you traveling with expensive sports or photography equipment? Would you be OK with a $200 reimbursement limit if that equipment was lost or stolen?
•  Out of pocket expenses. Check the deductibles, coinsurance, and co-payment amounts.
•  24-hour assistance. This coverage could be important if you need help booking a flight after missing your plane or if you need help finding specialized services such as a lawyer or doctor.

A comprehensive travel insurance plan will typically cost about 4 to 8 percent of the cost of the trip, according to the U.S. Travel Insurance Association. Factors that could affect pricing include the length of the trip, the destination, amount of coverage you want, and your age.

Be a savvy shopper

You probably spent some time deciding where you're traveling, what hotels to book, and what attractions to visit. It just makes sense to dedicate some time to researching your best options for travel insurance. Several sites, including InsureMyTrip.com, have travel-insurance comparison tools.

Keep in mind fraudsters are constantly improving their craft and have become quite adept at tricking consumers into purchasing useless products and services, including travel insurance policies. The warning signs of a potential scam include:

• Advertising on faxes, spammy emails, internet pop-up ads, or posters on telephone poles.
• Unrealistic savings. If it's too good to be true, it probably is.
• High-pressure tactics. Watch out for phrases with unusual urgency, such as “must act now" and “this is a one-time offer."

Travel insurance can provide peace of mind before a big trip. Deciding on whether to invest in coverage depends on your risk tolerance for the unexpected. For many, the added sense of security is worth the price.

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