“Any time you face a potential loss that’s more than you can comfortably walk away from, you probably need some combination of Trip-cancellation, Trip-interruption, and medical insurance.” That’s the basic rule of travel insurance, and it dictates how to decide whether you need insurance for any given trip, and if so, how much coverage of which different types.
That means assessing your financial exposure in the event some unforeseen circumstance disrupts your plans.
Trip Cancellation (TCI)
Start by deciding on the risk associated with each major component of your planned trip: transport, accommodations, and activities. The most important assessment is determining how much money you expect to lay out in advance in full payments or deposits and how much you’re likely to get back if you have to cancel. Specifically, you need to determine whether the air tickets you intend to buy are refundable or not.
If, as is often the case, it’s nominally nonrefundable but with the ability to retain credit toward a future trip, decide whether you’re willing to accept that credit if you cancel or want to buy insurance that gets you cash back. You face the same question with a tour package, cruise, or advance-payment hotel/resort reservation.
A related assessment is to review the typical list of “named peril” contingencies that trigger a refund. Keep in mind that most policies cover only contingencies that are unforeseen at the time you buy. If you need more flexibility, you need to include “cancel for any reason” provisions.
Trip-Interruption (TII)
As previously noted, TII and TCI are generally bundled together—an appropriate provision, given the fact that many of the same risks are involved. Two other risks are specific to TII:
- If you have to cancel and return early and you'd face a big additional bill for last-minute return tickets or transfers.
- If you’re traveling on “per-person double occupancy” pricing and want to cover whatever single supplements are needed in the event your companion has to return early.
Medical
Your need for medical travel insurance depends mainly on whether your year-round health program covers you when you’re away from home—and especially if it does in a foreign country. If you’re on Medicare, most Medicare supplements include foreign coverage or 80 percent with a $250 deductible—if you need more, you need travel medical.
Avoid duplication. You don’t ever need to buy extra insurance for contingencies you already have covered. Check all your relevant sources—including credit cards—to see what travel insurance they provide.
Check Alternatives
Often, a cruise line or tour operator offers a “waiver” of cancellation fees for less than the cost of separate travel insurance. But a waiver isn’t the same: Typically, waivers cover fewer covered reasons for cancellation, they don’t provide for interruption, and they don’t pay if the cruise line or operator goes broke. I don’t recommend them.
My alternative is to minimize risk. Over decades of travel, I’ve had to cancel lots of trips and travel arrangements, but never—not even once—for a “covered reason” specified in a typical travel policy. Instead, I avoid prepaid non-refundable land arrangements, and I buy airfares I know I can reuse if I have to cancel. But I do buy health insurance to supplement Medicare.
Timing. Most travelers will want to estimate risks and buy travel insurance no later than a week or two after making their first payment, even if it’s just a small one. When you buy early, many policies waive their usual exclusion for pre-existing medical conditions—a major reason companies deny claims.
Buying
Travel insurance can cost anywhere from 5 percent to 15 percent of a trip cost. And rates go up dramatically for folks age 70 or over—enough to make you think twice about travel insurance and maybe enough to make a waiver that isn’t age-rated look good.
Don’t blindly take whatever your airline, cruise line, or tour operator suggests; instead, check the big online travel insurance agencies that publish elaborate side-by-side comparisons of different policies, including InsureMyTrip.com, QuoteWright.com, SquareMouth.com, and others.
