Travel insurance policies were designed to cover the risks associated with travel ranging from lost baggage, cancelled tours and missed flights to natural disasters, health emergencies and evacuations. Policies are available for quick trips to neighboring states as well as once-in-a-lifetime adventures on the other side of the world.
Annually, Americans spend around $2.2 billion on travel insurance, according to the U.S. Travel Insurance Association. Trip cancellation insurance is the most popular coverage, accounting for 85 percent of policies sold; just 7 percent of policies purchased covered travel and medical evacuation.
Different policies cover different travel issues. You can choose coverage for trip cancellation and interruption, baggage, flight insurance, medical or evacuation. Although each policy can be purchased on its own, packages are also available to provide broader protection.
With billions of dollars being spent, and so many different options, you may find yourself asking if travel insurance is worth it. Before opening your wallet, consider these six factors:
1. Explore existing coverage
Several credit card companies offer some form of protection against issues like lost luggage and travel cancellation, according to WalletHub. Determine what coverage you already have before purchasing additional protection.
2. Consider the cost
Comprehensive travel insurance coverage averages 5 to 7 percent of the total cost of the trip. On a $5,000 cruise, travel insurance could cost between $250 and $350.
For last-minute domestic travel with few pre-paid costs and inexpensive trips (where insurance coverage might exceed the cost of the trip), travel insurance might not be worth the investment. When traveling abroad, emergency medical and evacuation coverage is essential.
3. Shop around
You compared prices and coverage for other insurance policies, right? Travel insurance is no different. Check with travel agents, insurance agents and online booking sites and compare policies and prices before making a purchase.
4. Read the fine print
Understand the terms and conditions. Make sure the policy covers the full cost of nonrefundable trip arrangements and understand the exclusions. Some policies don’t cover medical emergencies related to pre-existing conditions or injuries related to participating in certain adventure sports or travel to certain parts of the world.
5. Consider “frequent flier” policies
If you travel often, consider annual coverage. Several companies offer annual travel insurance that provides worldwide coverage for 12 months.
The plans are more economical than stand-alone policies — and more convenient than purchasing new policies for each trip — but there are some limitations. For example, most annual plans offer limited coverage for trip cancellation and interruption.
Annual plans are best suited to travelers taking multiple global trips; prices are based on estimated number of trips, average length of travel and coverage options.
6. Keep the policy handy
You’ll need a copy of the policy in case of emergency. Keep written confirmation of the policy (including the receipt) accessible in your email and print a copy to take with you.
Travel insurance can provide essential protection in case of accidents and emergencies, but it’s not a requirement for all travel. Knowing when you need a policy — and what to look for — can provide important peace of mind on your next trip.