Should You Buy Travel Insurance?

We have worked hard all of our lives. We pay our bills and save up to have these great vacations and amazing experiences. Bottom line – travel can be expensive. One question we all have asked ourselves; should I buy travel insurance?

We all know travel insurance protects your vacation investment if the unexpected occurs. But is it worth it? The answer is not a simple one. First off, if you can’t afford it, you can’t afford it – no reason to go any further. I certainly have been on many trips without buying travel insurance. 

Things to consider are whether your trip is refundable, where you’re going, whether you’ll have health coverage at your destination, and how much coverage you already get from your credit cards. I make it a point to always book my travel using American Express Gold Card. American Express Gold Card offers some travel insurance coverage. It includes trip delay insurance up to $300 per trip, baggage insurance up to $1,250 per person, and rental car insurance up to $50,000. Some other cards offer other types of coverage and are worth checking out. Points Guy has a good article explaining best credit cards for travel.   

While the average American spends about $2,400 on a vacation, according to Travelex, most of us will spend thousands on getaways. And now more of us are looking ahead to big vacations this year and next. I know I am. I also understand spending all of a years’ worth of savings on that dream trip to Paris or that family trip to Disney – totally worth every penny!

Is travel insurance expensive ?

Typically, a travel insurance policy costs 5% to 10% of the total cost of your trip. The money you pay for travel insurance could help make up for a financial loss if something unexpected impedes your path to a getaway. You can compare plans here.

The next question is if you can afford it, should you buy travel insurance? I know it’s an extra expense over costs such as airfare, hotel, and meals. Buying travel insurance makes sense if you want to protect your savings and have that peace of mind. Let’s face it – if you’re reading my blog, you have most likely been working hard all of your life to take care of your family and build that nest egg. I want you to have all of the info you need before going on your next adventure.

Here are five scenarios where buying travel insurance can pay off.

Trip Cancellation

Some unforeseen circumstance could force cancellation of your trip—for instance, if that resort you booked a year ago is hit by a hurricane, you become ill or a family member dies. Travel insurance that includes trip cancelation insurance will reimburse the prepaid, nonrefundable costs of your trip in these kinds of situations.

Additionally, if you, a family member, or a travel companion becomes ill or is injured while on vacation, the policy’s trip cancellation feature typically would reimburse you for the unused part of the trip. It can even cover a family member or a travel companion who dies while traveling. You do have to make sure you read the fine print and understand what’s covered as a reason to cancel your trip.

Keep in mind, for most companies, fear of getting infected with COVID-19 is not a valid reason for canceling a trip since the disease is now classified as a foreseeable event. Read my post Should You Cancel Your Upcoming Trip?

What’s CFAR ?

CFAR “Cancel for any reason coverage” lets you cancel a trip for any reason and receive partial reimbursement. For instance, maybe you’ve opted for a staycation instead of a two-week trip to Iceland in February. Maybe it seemed like a good idea when you purchased that trip in July, but now you feel it may be better to stay home or book a cruise to Cozumel. If you purchased CFAR, you can do that. The only hitch is adding CFAR coverage costs 40% more than a standard travel insurance policy. Reimbursement is generally 50% or 75% of the trip money you lose.

Medical Emergencies

Medical emergencies can certainly take a big bite out of your travel budget. First thing you want to do is check with your current Health Insurance Company. See how you are covered when traveling abroad. I know for us, BCBS covers overseas medical expenses, but only as a reimbursement which means we had to pay out of pocket and file a claim after the trip. Some U.S. health insurance plans include overseas coverage but may impose limits. Many U.S. health plans offer no coverage outside the country.

A policy which covers an array of medical crises, such as needing to be airlifted off a Swiss mountainside after a hiking mishap, spending a few weeks in a hospital recovering or requiring a flight back home may be just what you need.

When it comes to medical evacuation, travel medical insurance covers the expense of being taken to the closest health care facility overseas, and it also may pay for someone to be flown back to the U.S. for advanced medical attention. Along with medical evacuation, a policy can cover the repatriation, or transfer, of a traveler’s remains to the U.S.

Lost Luggage

If your luggage is lost, stolen or damaged during a trip, a travel insurance policy with luggage coverage will reimburse you. Homeowners or renters insurance policies can also cover luggage theft—such as luggage stolen from the hotel lobby while you’re checking in.

In addition, some travel insurance plans cover baggage delay. This coverage can pay for items you need to buy, such as clothing and toiletries, to tide you over while you’re waiting for your luggage to catch up with you.

Missed Connections

Missing a connection travel insurance can reimburse you if you miss a departure for a reason listed in the policy.

This would compensate for a travel delay of, say, three, six or 12 hours caused by something like a mechanical failure on a plane or a storm that prevents a cruise ship from docking on time. The compensation typically would cover the cost of catching up to a tour or cruise.

Travel Delays

Travel delays are a pain for sure.  A policy with travel delay coverage can reimburse restaurant and hotel expenses when a flight is delayed because of bad weather or a mechanical problem. The daily amount of coverage usually ranges from $150 to $200.

The travel delay benefit could also cover costs for you to catch up to a destination or go back home, or even may reimburse you for unused trip expenses that are prepaid and nonrefundable.

Conclusion 

If you’re still asking should I buy travel insurance, Money.com has done a great job researching the best travel insurance options. They go in-depth about what they offer and the particular scenarios they can cover. It is always a good idea to shop around before committing to any insurance. You want to make sure what you’re buying will cover you and your family and is within your budget.