If you’ve ever booked a trip, you’ve no doubt run into offers for travel insurance. Airlines, hotels, cruise lines, and other parties try to hook you as soon as you begin looking at places to visit, and this type of point-of-sale persuasion generates nearly $2 billion in travel insurance sales every year. But is it worth it? Or do travel insurance companies use the fear of a lost dream vacation to convince you to buy coverage you don’t really need? We’ll break down when you need travel insurance – and when you just don’t.
First, let’s take a look at what travel insurance actually covers.
What Travel Insurance Covers
The exact policy coverages vary by insurer, but you can usually count on these across providers:
- Medical Emergency Coverage: You suffer an illness or injury that makes you unable to travel so you get a refund. This coverage also applies to a medical emergency you experience while traveling that necessitates hospital care, whether locally or requiring evacuation to another site.
- Luggage/Property Coverage: Your baggage is missing for an extended period of time, forcing you to purchase clothes, toiletries, and other personal items. This type of travel insurance can also cover items lost or stolen while traveling. (Ahem, so does renters or homeowners insurance.)
- Trip Cancellation or Interruption Coverage: Your flight gets canceled or delayed due to weather or other events out of your control, so you need to pay for meals or lodging.
- Accidental Death or Dismemberment Coverage: We’re of course talking hypotheticals here, but this coverage kicks in in the event that you die or lose a body part on your trip – morbid but, well, it can happen. Similar to life insurance, your heirs or designated beneficiaries would receive compensation should the worst happen during your vacation.
“Travel insurance is very much a la carte,” says Neil Richardson, licensed insurance agent and adviser for The Zebra. “There are a handful of things that are standard, but most other coverages will be optional. If you’re purchasing travel insurance, you definitely want to ask as many questions as possible to understand when it would apply and when it wouldn’t – and if it’s worth it to you.”
5 Times You Don’t Need Travel Insurance
1. You Already Have Renters or Homeowners Insurance
Umm, isn’t that a totally different type of insurance? Indeed it is, but when it comes to travel, the beauty of renters and homeowners insurance policies are the coverages that extend outside of where you live.
“Not many people know you that if you lose your property or if it gets stolen while you’re traveling, your home or renters insurance company should cover it – no matter where you are,” Richardson said.
Homeowners insurance breaks out coverage for the structure of your house, and for all your possessions in it. Renters insurance, in fact, pretty much only covers your possessions (and not the rented apartment or house itself, which the property owner insures). And both policy types cover those possessions wherever you take them in the world.
One key thing to keep in mind, however, is your deductible. If you have a $500 deductible on your renters insurance, for example, you’ll have to pay that amount before your insurer reimburses you for anything. You should also consider listing certain items and their dollar values (this is called scheduling) on your policy. You’ll have to pay slightly more on your premium to cover these items, but this way you make sure you’ll be fully reimbursed if you lose them.
2. You Have a Credit Card
Many credit cards offer travel insurance for things like medical evacuation or lost luggage – particularly if you paid for the services with the credit card. However, they may not cover other aspects of your travel like trip cancellation. Additionally, credit card insurance may cover the primary cardholder, but not other people traveling with them. Check your credit card to see what’s covered, and then decide if you need you need additional insurance on top of that.
3. You Have Health Insurance
If you have a health insurance plan, call your provider to find out if/how that coverage extends when you’re out of state or out of the country. Most policies will offer at least some coverage internationally, particularly emergency care, though you may have to pay out of pocket and submit receipts for reimbursement.
4. You’re Taking a Last-Minute Domestic Trip
If you book an inexpensive flight that’s leaving within the next week, you probably haven’t purchased any non-refundable items, like a hotel, rental car, or vacation package. It’s likely okay to skip travel insurance in these instances.
5. You Already Have Travel Insurance (but Don’t Know It)
“Why would I be asking if I needed travel insurance if I already had it?”
Many employers offer travel insurance as part of their compensation packages, but it’s often one of those benefits that gets overlooked when you’re more focused on healthcare benefits, time off, etc. (And, let’s be honest, those are likely worth quite a bit more.) Still, it’s worth asking your manager or HR team if you have any sort of travel insurance coverage in your benefits.
And 4 Times Travel Insurance Might Come in Handy
1. You’re Just Not Willing to Lose the Money of Your Prepaid Expenses
Travel insurance is typically a good idea when your prepaid, non-refundable expenses cost more than you’re willing to lose. A two-week trip to a foreign country where you’ve booked non-refundable excursions every day? Save yourself the worry and get travel insurance.
2. You’re Playing Daredevil on Your Trip
Consider what you’re planning to do when you travel. Are you mostly lounging on the beach? Or skydiving onto a trampoline that then catapults you into an axe-throwing contest? If the latter, it would be wise to pony up extra to cover any potential medical emergencies.
Though most people with health insurance get some level of coverage abroad, that often doesn’t include emergency medical evacuations (which you may need if you’re bungee jumping in a remote canyon and break your leg). You can even purchase specific extreme adventure policies, like diving accident coverage.
3. You Anticipate a Change in Plans
If you think your plans might change before a trip, you might consider spending extra on travel insurance to CYA. For example, if you’re unsure about a medical situation and think you might have to schedule surgery or procedure before your European river cruise, buying insurance could save you big bucks.
4. You’re Checking Bags with Valuable Items and DON’T Have Home or Renters Insurance
As mentioned above, home or renters insurance will cover your property abroad – if you have an active policy.
If not, think about what you’re checking in your luggage. A few t-shirts and some flip-flops are probably not terribly valuable. But fine jewelry or a rare collection of comic books are worth insuring.
The U.S. Department of Transportation is liable for up to $3,500 worth of items (based on their depreciated value), so if you’re packing many expensive things, it may be worth investing in travel insurance to protect that property.
…If You ARE Buying Travel Insurance
For people who prefer spontaneous travel, listen up: most travel insurance will only cover what you book before you travel. If you’re taking two months off to travel but have only booked a flight to Italy and a hotel for one week before “winging it” the rest of the way, make sure you’re either getting travel insurance for the length of your trip, not just what you’ve already booked.
…If You Are NOT Buying Travel Insurance
Even if you don’t invest in travel insurance but need to cancel a trip, you’re not totally out of luck. Most airlines and hotels will offer some leniency if you have a medical or other emergency reason that you’re missing your trip. Call and calmly explain your situation (and clarify if you are a health risk to other travelers), and ask them to waive any cancellation fees or see what they can do for you.
It’s your choice whether to invest in travel insurance or not. Just make sure you’re doing a thorough assessment of your trip, what you’re bringing, and what your credit card or other types of insurance already cover. Most importantly, enjoy your vacation. You’ve earned it.