When it comes to vacationing, one of the last things people want to think about before they leave is whether or not they should purchase travel insurance to protect themselves in case of an accident or emergency. Although it may be a temporary nuisance, it might be something worth considering, depending on the details of your getaway.
Here are some things you should know about travel insurance to help you make the most informed decision about whether or not you’ll need it for your upcoming trip:
1. There are two types of travel insurance.
- Named Peril Policy – This type of policy allows you to cancel or interrupt your trip if you experience one of the listed “covered reasons”, which will be provided to you in your policy. This policy will pay you 100% of your non-refundable trip costs when you cancel for one of those reasons. This is the most common type of travel insurance offered.
- Cancel For Any Reason Insurance – This type of insurance gives you the opportunity to cancel travel plans for any reason—even one that isn’t listed as a “covered reason” on your policy—and still receive a percentage of your non-refundable trip costs, giving you greater flexibility and freedom while traveling. It is generally the more expensive option and less typical.
2. There are many situations in which purchasing travel insurance is the smartest option. Here are a few examples:
- If you’re making a “big ticket” purchase, which would include anything that’s cost you $5,000 or more
- If you’re going on a cruise
- If you’re participating in a package tour
- If your vacation includes a full or lengthy itinerary
- If you’re traveling outside of the country and you are on a medicare plan (because medicare doesn’t usually cover events that occur outside the U.S.)
- If it will give you peace of mind to have your items/health insured
3. But not everyone needs to purchase travel insurance. There are many instances that merit purchasing travel insurance, but there are some that aren’t as necessary to do so. Some situations in which travel insurance can probably be omitted are:
- If your vacation is going to be a short, one- or two-day domestic trip that doesn’t involve many expenses
- If you’re not planning to spend more than $5,000 and you don’t mind losing the value of your trip if an event occurs
- If there are elements of your trip that aren’t covered by insurance
- If you already have an insurance policy that would cover a medical emergency if necessary (see #5 below)
4. You should pay no less than 4% and no more than 10% of the cost of your vacation for your travel insurance. Most policies cost between 4 and 8 % of the trip’s prepaid cost, and if a company wants to charge more or less than that, you may want to consider going with another policy. However, if you purchase Cancel For Any Reason insurance, it will likely cost you about 10%. But no matter which policy you choose, be sure to read the terms carefully to understand what would and wouldn’t be covered.
5. There’s no need to over-insure. If, for instance, your credit card company would cover the same event that you would be purchasing this temporary insurance on, it’s not necessary to invest in travel insurance because one would cancel out the other. Similarly, if you already have insurance that would cover a medical emergency, travel insurance may not be necessary for you.
Use this information about travel insurance to help you decide for yourself what you’ll need for your upcoming trip.