Travel Insurance, Do You Really Need It?

  If you travel by air a lot, you will notice a place in the check out line asking if you want to spend a certain amount of money to purchase travel insurance.

Travel insurance states it will help get money back if you have to cancel flights, hotels, cars, etc.  I admit, I've never used it and the only time I had to cancel flights due to major medical emergencies, I have not had any problems without it but that was before I left.

There are four things travel insurance can cover.  First is trip cancellation and trip interruption coverage which can cover the cost of the tickets.  Second covers baggage and personal items so if they are stolen or lost, you can get some sort of reimbursement.  Third is emergency medical so if something happens, you'll be taken care of and fourth is accidental death or dismemberment.

It turns out this is not a simple question to answer because there are a lot of factors involved such as:

 1. Is the reason you cancelled your flight due to medical?  If so, many of the airlines will allow you to cancel if you can send a doctor's note.  Some will accept your word for it.

2. Does your credit card cover this particular situation?  Many airline credit cards have travel insurance built in to the benefits so check before you book.

3. Does the insurance only cover what you booked before you leave?  I am one of those folks who often makes reservations after I get to where I'm going because I can find better deals or I figure out my itinerary when I get there.

4. Did you book your hotel through a company that allows for cancellation up to 24 hours in advance with full refund?

5. Do you have health insurance which is accepted where you are going?  If you travel in the country you live in, its usually not much of a problem but if you are going overseas?  Your medical may not work there.

6.  For accidental death or dismemberment, many people already have policies through work so you may not need this.

So how do you decide its worth buying?
1.  Ask yourself how much of a financial disaster it would be if things go amiss.  For instance, if you paid for an expensive travel package overseas, it would probably be good to get it but if its a cheap last minute ticket, probably not.

2. Check out your credit card travel coverage to see what it covers.

3. Find out the cost of travel insurance both through the airlines and through independent companies so as to compare both cost and coverage.

It is recommended to get travel insurance if you:
1. Spend over $5000 on a tour package including cruises.

2. If you have a long and complex itinerary.

3. If you leave the country.

4.  If you are on medicare and leave the country.

Skip it if you are staying with friends rather than hotels, have a pre-existing medical condition not covered by the policy or if you already have coverage.

If you buy travel insurance, it is recommended you get one that has a "cancel for any reason" clause because that allows you to cancel without penalty as long as you cancel within the state period, buy it before you buy your trip, and it covers what other available policies does not. 

Hope this helps you decide if you need travel insurance.  Let me know your thoughts.