Your bags are packed, you’re ready to go. You’ve thought of everything you could possibly need for your upcoming trip. Or have you? What about travel (or trip) insurance? Is it really necessary? Is it worth the extra cost?
Travel insurance exists for the same reasons other kinds of insurance do—from health to home to auto. As Travel Insurance Review puts it, it’s for peace of mind, protection against the unexpected and protecting an investment. But is it always necessary? Travel Insurance Review says “no.”
Under the following situations, the insurance authority says, “Having travel insurance simply means you are over-insured and no one likes to waste money that way.” They say it really comes down to two major factors: financial risk and medical concerns. “Are you concerned about losing money due to canceled trips, interrupted trips, lost bags, delayed trips, or medical expenses? Are you leaving your home country where your insurance from home won’t cover you for accidents?”
Travel Insurance Review lists three instances in which insurance (probably) isn’t necessary:
1. Last-minute domestic trips
- If you are taking a last-minute trip in the U.S., you probably don’t need travel insurance.
- If you have not pre-paid any non-refundable trip costs, you won’t need trip cancellation or interruption coverage.
- Since you are within the U.S., your health insurance plan will cover you for any emergency medical situations.
- Buying travel insurance would give you coverage for lost baggage and travel delays, but these coverages alone may not be worth the cost of a plan.
2. Cheap domestic trips
- If you get a super saver $129 round trip flight and you’re staying with family members, you don’t have much money at risk.
- Travel insurance is best used when your pre-paid and non-refundable expenses are more than you are willing to lose. In this case, you’re only at risk of losing $129, which might not be worth insuring.
- Again, you are missing out on coverage for baggage and delays, but these coverages alone might not be worth it.
3. If you can afford to lose your pre-paid trip expenses
- If you can afford to lose the money, skip the insurance.
- As stated above, travel insurance is best used when your pre-paid and non-refundable expenses are more than you are willing to lose. If you only have a few hundred dollars at risk, you can afford to ‘self-insure’ this risk.”
When should you buy travel insurance?
Fodor’s recommends it for long trips, complicated, or isolated trips or those booked far in advance. Travel expert, author, guide and TV host, Rick Steeves offers a long, scary-sounding list of potential financial risks involved with travelling that travelers should consider: “Accidents, illness, missed flights, canceled tours, lost baggage, theft, terrorism, travel-company bankruptcies, emergency evacuation, and getting your body home if you die,” to put it bluntly. He says that each traveler’s potential loss varies, depending on how much of the trip has been prepaid, the refundability of airline tickets, your health, the value of your luggage, the safety of where you are travelling and the stability of the party(ies) you are travelling with. It also depends on any coverage you might already have such as your own health insurance or coverage through your credit card and just what they will cover while you are travelling.
Steeves says that there are basically five types of travel insurance:
- Trip cancellation and interruption
- Flight insurance
But you can also purchase supplemental policies to cover specific concerns you may have such as political evacuation. Most insurance types are sold in combination packages so look at all of the offerings and choose the ones that apply to you or address your concerns.
In recent years, some companies have begun offering comprehensive insurance that functions as your primary insurance, so that they pay first so you don’t have to worry about out-of-pocket expenses, according to Steeves.
How much does it cost?
The industry average is between 5 and 12 percent of the total trip. Rates can go up depending on your age, especially once you hit age 50. But the good news is that it’s often inexpensive or even free for those under age 18. According to Steeves, travel agents will recommend you get travel insurance, partly because they get a commission on it but also because they can be held liable for your losses if they don’t explain insurance options to you. He adds that they can give you recommendations on providers but are not allowed to answer specific coverage questions. Further, Steeves recommends going with a big-name company, not no-name ones found online, for instance.
The decision is yours but these considerations should help you determine whether travel insurance is right for you. Either way, Magellan’s wishes you happy, safe travels.