First of all, what is travel insurance? While it varies by airline or provider, in short, travel insurance provides the security of a refund if something goes wrong when you travel and you have to change flights, accommodations, etc. It can potentially save you lots of money and hassle in the case of extenuating circumstances or emergencies, but it does come at a cost. So then, how worth it is travel insurance?
Who provides it and what does it cost?
Airlines, cruise companies, travel agents, and some credit card companies all provide travel insurance. On average, travel insurance costs roughly 5% of your total trip. So, for example, if your trip costs $2,500, then your travel insurance will cost somewhere in the ballpark of $125.
What does it cover?
While specific insurance coverage varies by provider, in general, there are four types of coverage:
- Trip cancellation
This type of insurance is the most commonly utilized and covers unforeseen expenses due to trip cancellations or delays. Trip interruptions can be due to natural disasters/bad weather, traveler illness/injury, or carrier liquidation. Carrier-provided insurance typically insures you up to the amount you have spent on your trip initially. While only a few credit card companies offer any type of trip insurance, the ones that due typically offer it as a built-in perk to the card at no additional cost. Visit creditcards.com for an overview of credit cards that offer travel insurance.
- Baggage and personal items
This type of coverage ensures reimbursement if your luggage is lost, stolen, or even delayed. Typically, coverage is about $500 per lost bag and $100-$300 per delayed bag. If you are a frequent traveler, you know that baggage woes are fairly common, so if your personal effects are of worth to you, this type of coverage is very helpful to have.
- Medical insurance
Many health insurance coverage plans stay intact while traveling domestically, but not internationally. If you are concerned about becoming ill or injured while traveling overseas, medical coverage is one of the best reasons to purchase trip insurance. Coverage ranges from $10,00-$50,000 per traveler, depending on the emergency medical care needed.
- Accidental death
If you or a loved one suffers a life-altering accident or passes away while traveling, this insurance can pay out up to half a million dollars, depending on the situation. While an extreme and rare scenario, if you are an adventure-seeker who engages in high-risk travel, insurance might be right for you.
Overall, the cost of insurance is relatively low in relation to coverage should something go wrong. Unless you are taking a brief, domestic trip with only carry-on luggage, it’s probably a good idea to get insured. If you are travelling abroad without medical insurance, absolutely shell out the extra money for insurance. Also consider how much of your trip is refundable through your airline, hotel, etc. If you’re buying an expensive, luxury vacation package for which most of the elements are nonrefundable, travel insurance is highly recommended. And of course, always check with your credit card companies first—you may have travel insurance built in and not even know it, in which case additional insurance is unnecessary.