Congrats! You've got a big trip coming up. When you buy a car or a house, you make sure it's insured. Should you do the same with your vacation? Here's what you need before adding another line item to your traveling expenses.
Should You Buy Travel Insurance?
"I don't know how people without insurance backgrounds figure out insurance," Steve Dasseos, president of TripInsuranceStore.com, told Frommers. So if you're confused, you're not alone.
Christopher Elliott, author of The World's Smartest Traveler, makes the whole business simple. You should buy insurance, Elliott advises:
- If you're spending more than $5,000
- If you're a nervous traveler
- If you're cruising
- If you have a complex or lengthy itinerary
- If you're leaving the country
- If you're on Medicare
Foreign Medical Travel Insurance
Of the two kinds of travel insurance, travel medical insurance is potentially the most critical. Some countries won't even let you in without it.
Your medical insurance may or may not cover you out of the country, and outside the United States, medical providers often ask for up-front payments for medical services that can cost thousands of dollars. Travel insurance can guarantee these payments if your health insurance at home will not.
Find out for sure what your health insurance will and will not cover by checking your explanation of benefits or giving them a call. If you're headed to the jungle, will they pay for a medical evacuation? What's the amount you're covered up to? Hospital stays in Western Europe can be super-expensive, and medical evacuations can cost $50,000 or more, so it's important to make sure you don't max out your own medical plan.
Get the Pre-existing Condition Waiver
This waiver protects you from your travel insurance denying a claim that relates to a health problem from your past — from common ailments like asthma to a serious condition like cancer. Without the waiver, the insurance company may look into your medical records to find any relevant information and deny your claim, which results in more than 20 percent of claims being denied, according to QuoteWright.com's John Cook.
Trip Cancellation Coverage
"Trip cancellation insurance is the thorniest to deal with because it has so many ins and outs," writes Sascha Segan at Frommer's. This coverage can include trip cancellation (not going at all), trip delay or interruption (being stuck in the airport or missing a connection to a cruise), and baggage coverage.
"The biggest news in the travel insurance industry in the past few years is the 'cancel for any reason,' policy," writes Segan, which allows you to get back 75-80 percent of your money without jumping through the usual hoops of "named perils" such as terrorist attacks or a conflict at work. You'll pay more for this type of policy, but you will be covered, come what may.
Check To See What Coverage You Already Have
If you booked your travel with a credit card that has an annual fee, chances are it carries some kind of travel insurance perk. For example, the Chase Sapphire Preferred card comes with cancellation insurance of up to $10,000 per covered trip for emergency scenarios, while the Citi Prestige Card will offers baggage delay coverage of up to $500 per traveler, per trip, if your bags don't get to you within three hours of your arrival.
If you have homeowners or renters insurance, coverage of your belongings may extend beyond home, meaning if your fancy camera is swiped from a cafe in Rome, for example, you're already covered.
When Should You Buy Travel Insurance?
If you decide to buy travel insurance, you should buy it the same day you book your trip. Why? The clock starts ticking on the pre-existing condition waiver as soon as you pay for your trip. Some travel insurers give you 14 days to get the waiver, but some offer only a 24-hour window.
How Much Will Travel Insurance Cost?
Depending on the coverage you're looking for, insurance should cost between 3-8% of your trip price. If your life involves a ton of travel, consider buying an annual or multi-trip policy, which run anywhere from $30 to $90 a year.
The Takeaway
Know thyself.
And what coverage you may already have through health insurance, homeowners or rental insurance, and credit cards.
"Every person has their own level of risk tolerance," said John Cook, president of QuoteWright.com, told Frommer's. If yours is high, you might be willing to roll the dice. But if you're a nervous nelly type, a policy can offer the peace of mind you need.