The Truth about Travel Insurance

You've seen it before. The little "click here" box to purchase travel insurance when you buy a plane ticket.  Do you really need to spend that extra $33.95 to insure your trip?  Wandering Betty is here to give you the pros and cons of travel insurance.

There are four types of travel insurance that you can purchase:

• Trip interruption/cancellation insurance
• Flight insurance
• Medical insurance
• Bad weather or  infectious diseases insurance.

Let's break it down.

Trip interruption/cancellation insurance provides coverage if the event that your trip does not operate, say if your flight gets cancelled, or if your cruise ship doesn't sail.  It can also cover trip interruption due to illness, injury, deaths or involuntary job loss.  More comprehensive policies (often with more expensive rates) can also provide coverage if you cancel your trip for any reason, such as an important business conflict, a family obligation or even if you simply change your mind.   Trip interruption/cancellation insurance rates are generally based on your trip cost. 

Deciding when or if to buy trip interruption or cancellation insurance will depend on how much your trip costs.  If your flight is $200, then depending on your fiscal comfortability, you might decide to just forfeit the $200 if something happens.  If you just paid for a $6,500 custom tour of the Mediterranean then trip interruption/cancellation coverage could become very important. 

Check your credit card terms before you buy trip interruption/cancellation insurance from a third party: some credit cards offer trip interruption/cancellation coverage automatically if you purchase the trip on your credit card. 

Flight Insurance, also known as flight accident insurance or travel accident insurance, pays a lump sum in the case of accidental death or certain loss of limbs to your beneficiary or you in the event of a plane accident.  You can also get common carrier accident coverage, which covers accidents occuring on other forms of transportation such as trains, buses or subways.

If you already have life insurance or disability insurance then purchasing flight insurance policy can become redundant.  Make sure to read the fine print to see if you are covered for travel, but in most cases those policies will offer coverage for what you need.  Flight insurance, just like trip interruption or cancellation insurance, can also be offered through your credit card, so it is important to check there as well before purchasing flight insurance from a third party.  

Medical insurance for travel can be the most important insurance available to travelers.  Medical insurance offers coverage for emergency care which can include emergency prescriptions or emergency evacuation.  It is available for a single trip or on an annual basis.  If you have health insurance here in the U.S. it often does not cover medical needs abroad, so it is very important to check your current health insurance for limits in coverage.

Not all medical insurance policies are created alike.  There is a wide variety of coverage and prices as well as host of fine print regarding pre-existing conditions.  This is one policy that your credit card is not likely to cover.  Medical travel insurance is highly recommended for everyone, especially those who are traveling to areas where health care is not accessible or sub-standard.

Adventure travel such as mountain climbing or even snowboarding is often not covered in medical insurance policies, so it is important to check that your policy covers you for all your planned activities.  If not, there are often extra riders that are available.

Bad weather or infectious disease insurance is a policy that offers coverage in the event that inclement weather such as a hurricane, earthquake or fire, as well as trip cancellation due to travel warnings on infectious diseases (i.e. swine flu in Mexico or SARS in China) causes either delay getting to your location or a complete cancellation of your trip.  It only covers bad weather that is unforeseen, so if you purchase bad weather insurance right before you leave and the forecast calls for a hurricane, then your bad weather policy will not cover you.  Timing is everything for this type of insurance.

Make sure to read the fine print for this policy, as with the other forms of insurance.  If your resort is still operating during a hurricane, then you may not be covered if you decide to fly home early.

Deciding on whether or not to purchase bad weather or infectious disease insurance depends on when and where you are going.  If you are headed for your honeymoon in the Caribbean during hurricane season, then bad weather insurance becomes very important. 

Tips before you purchase:

Check your credit card for policies that are already available to you free of charge.  No need to purchase the same insurance if you are already covered.

Read the fine print!  Know what you are buying and make sure it covers what you need.

Do research on the travel insurance company you are about to purchase from.  Do they have good user reviews regarding claims?  Check their status at the better business bureau or through A.M. Best, an international insurance rating agency. 

Check to see if the insurance company has offices and doctors in the area you are traveling to.   Do they have English-speaking service providers available so you can communicate with them?

Shop around.  Not all policies are alike, and they all charge different rates.  Do yourself a favor and research for the best price and policy for your needs.