Is Trip Insurance Worth It?
Purchasing trip insurance may give you some peace of mind that you’ll be protected in case something goes wrong when you’re travelling. But insurance experts and consumer groups say that for many people, travel insurance might not be worth the money, because it often duplicates coverage they already have.
Bob Hunter, insurance director for the Consumer Federation of America, goes so far as to tell Consumer Reports, “Sophisticated travelers don’t buy travel insurance.”
Different travel insurance policies will include different types of coverage. But according to Consumer Reports and the Insurance Information Institute, there are four main coverage areas. Trip cancellation and interruption insurance compensates you if either you or a tour operator cancels your trip or ends it early.
Personal effects coverage pays for property that is lost, stolen or damaged during your trip, including items in your luggage. Emergency medical assistance coverage pays the cost of health care in other countries, often including medical evacuations.
And accidental death insurance compensates your family if you die during the trip.
Consumer Reports and the Better Business Bureau both point out that many elements of trip insurance may duplicate protections that you already have. If an airline or tour operator cancels your trip, you are usually entitled to a refund regardless of whether you have insurance.
Even when the reason for the cancellation is beyond the company’s control — such as a war or a natural disaster, known in the insurance industry as “force majeure” events — you are still likely to get a refund, they say.
As for personal effects, your homeowner’s or renter’s insurance policy may cover your things even while you’re on vacation, and many credit cards offer protection for items you purchase with them. Further, if an airline loses your luggage, federal law already requires that you be reimbursed up to $3,000.
Your health insurance may cover emergency health care abroad. And not only may you have life insurance already, but many credit cards also automatically provide accidental death insurance for travel booked with the cards.
Before paying for travel coverage, check with your homeowner’s (or renter’s) and health insurance carriers to see whether they will cover you during your trip. Also check with your credit card issuers to see what kinds of protection they offer.
If you do find one or more areas where your coverage is lacking, buy coverage only for those areas. A comprehensive travel insurance policy makes sense only for someone with no existing coverage.
If you choose to obtain travel insurance, buy it from an independent insurance firm licensed to operate in your state, not from a cruise line, airline or tour operator.
Insurance is there to protect you if something goes wrong; if that “something,” is the bankruptcy of the same tour operator that sold you the insurance, there may be no way to collect, and you could lose not only the cost of the trip, but also the money you paid for insurance.
Besides, by going with a state-licensed firm, you can call on your state’s insurance regulators if you encounter problems.
Trip cancellation insurance is not the same thing as the “cancellation waivers” offered by tour operators. These relatively inexpensive waivers purport to refund your money if you have to cancel your trip.
But according to the Insurance Information Institute, they have many restrictions — including blackout provisions that prohibit cancellations just before departure, which is the most common time to cancel.