Travel Insurance: When Do You Need It?

Is travel insurance worth it? It's always worth considering.

Whether you're planning an international business trip or heading to a family reunion, buying travel insurance can be tricky. Comprehensive travel insurance plans, which you can buy from an insurance company, cruise line, travel agent, car-rental company, airline or tour operator, can include coverage for cancelations, medical costs, lost luggage, emergency evacuations and your travel provider going out of business.

Whether you need travel insurance or not depends on where you are going, how long you’ll be traveling and how much you’re paying to travel. It also depends on how much, or how little, trip insurance—including medical—you may already be getting through credit cards or other means.

“While credit cards offer many benefits, travelers may have a false sense of security, believing they are protected from a variety of situations when they actually aren’t,’’ says Ed Walker, president of the U.S. Travel Insurance Association, a Washington, D.C.-based trade group.

A study commissioned by the association in 2007 reported that 85% of credit cards don’t include trip cancelation coverage, a standard feature of comprehensive travel insurance plans.

That coverage can be important, especially now.

What if your tour operator, cruise line or airline goes out of business? In the current economic heavy weather, it can happen. Remember, last year Aloha Airlines, ATA and Skybus all vanished in a five-day free fall, scrambling the travel plans of tens of thousands of people.

Putting a Price on Peace of Mind
Buying travel insurance can’t stop a business from liquidating—or canceling your flight or losing your luggage, for that matter—but it can increase your compensation if any of those things happens, and it can give you some peace of mind in turbulent times.

It may be worth your while to buy travel insurance for medical coverage, especially if you are traveling internationally. HMOs often don’t cover medical costs incurred outside the U.S. by American travelers; nor does Medicare.  Medical costs can escalate breathtakingly fast, especially if emergency evacuation becomes necessary. Comprehensive travel insurance plans include medical evacuation costs, co-pays and deductibles, as well as hotels and air fare if you need to return home early.

That’s not to say travel insurance is needed for every trip. It’s not.