You’ve just spent thousands of dollars booking a big trip. You’re excited but also a bit worried about your wallet. Then that question pops up on your computer screen: Do you wish to protect your trip?
What, spend more money?
From terrorism to the Zika virus, more and more Americans are finding reasons to say yes to travel insurance. According to the US Travel Insurance Association, the industry has grown from under $600 million in 2001 to $1.6 billion today.
“People are getting more protective of their money, and large businesses like airlines and cruise lines are getting less and less lenient when it comes to making exceptions for people,” says Georjeane L. Blumling, PhD, Vice President of Public Affairs for AAA Tidewater Virginia. Global instability also drives the travel insurance industry, she says.
Types of Travel Insurance
Trip cancellation, interruption or delay is the most common type of travel insurance. For an additional fee, some policies offer a “cancel for any reason” option. “Say you get cold feet due to the political climate,” says Sharon Gundrum, co-founder and chief creative officer of Williamsburg-based travel agency Tripbound.
Another type of travel insurance covers your medical costs. “Anytime you are outside of the United States you are pretty safe to assume your medical coverage does not cover you in case of health issues while traveling,” says Blumling. This can be especially important for people going on high-risk trips in less developed countries. Being airlifted out of the Himalayas could cost you a year’s salary.
Many policies also come with travel assistance. For example, Allianz Global’s 24-hour travel assistance hotline helps arrange emergency overseas medical care and replace clients’ lost prescriptions.
Expect to pay an extra 4 to 8 percent of your trip cost for travel insurance, depending on coverage type and insurer, your age and health.
Who should buy travel insurance?
Before you buy a travel insurance plan, check your existing coverage. Ask your health insurer about coverage while traveling. Many American Express cards carry travel accident insurance and baggage insurance. Visa cards typically include an auto rental collision damage waiver. AAA premier members automatically receive $300,000 in travel accident insurance coverage when purchasing airline, cruise or train tickets through AAA Travel. Determine what benefits you’re already entitled to, then note any gaps.
Your personality type also influences whether travel insurance is a worthwhile investment. “Are you a worrier?” asks Gundrum. “If so, you may want to buy travel insurance. It just might give you the peace of mind you need to alleviate your travel anxiety. What is the point of traveling if you can’t enjoy your trip?”
Claims Denied
Read policies carefully before you buy. If you have a pre-existing condition that may cause you to cancel, you must buy insurance within 14 days of booking the trip. “If you book after that window and something comes up in relation to that preexisting condition, there’s a good chance the claim would be denied,” Blumling says. You may also be denied if you were clearly too ill to travel when you booked your trip, even if you bought the insurance.
A sudden work obligation won’t be enough to justify a refund from your insurer. People who are married to their jobs should consider a cancel-for-any-reason policy.
If recklessness and/or alcohol directly led to your claim, don’t be surprised to find your claim denied.
Shopping Around
Consumer Reports recommends comparing policies online with InsureMyTrip, which sells plans from nearly 30 different carriers. Purchasing from a carrier is safer than getting a policy from a tour operator or cruise line that might go bankrupt.
Young, healthy people taking a low-risk vacation may not need travel insurance, especially if they haven’t prepaid thousands of dollars on tours and accommodations. But the unexpected often happens. “Things can and do go awry sometimes. So being prepared, or feeling more in control, can be a big motivator to buying travel insurance,” Gundrum says.
