The Pros and Cons of Travel Insurance

We see terrorist attacks at airports, record airline delays and bankruptcies among travel providers. No wonder people are buying so much travel insurance.

But is all that spending – US$1.3 billion in 2006, at least twice the annual figures before September 11, 2001 – worth it?

Not necessarily.

You may already have coverage for some of your travel concerns. And considering that the typical policy runs 4 percent to 8 percent of the cost of your trip, that can be a sizable sum to buy what you already have.

“We’re not huge fans of travel insurance,” says Greg Daugherty, executive editor of Consumer Reports.

Travel insurance reimburses nonrefundable travel expenses if you, say, cancel your trip because of an illness or your flight is delayed or canceled. It can cover medical bills, lost luggage or meals when flights are hours late. Many policies, too, will reimburse the cost of a canceled trip if a terrorist act occurs in the city of your destination.

While travel insurance might duplicate coverage you already have, that’s not to say you should never buy it.

The best argument for a policy is the medical care benefit, particularly if you’re not in the best of health and traveling abroad.

And if you have to be airlifted out of the Australian outback or some other far away place because of a medical emergency, it could cost you well into the tens of thousands of dollars if you don’t have insurance.

Some travel experts also suggest insurance is worthwhile if you’ve been saving up for an expensive trip for years and you don’t want to lose money if you suddenly can’t go or your cruise line goes out of business.

Indeed, there’s another reason to buy the insurance: Peace of mind.

So before shelling out what could be several hundred dollars, consider what you’re worried about. Lost luggage? A medical emergency? Having to cancel because of the flu? Then see if you already covered for these events.

Most travelers buy insurance to protect themselves in case they must cancel the trip because of a family illness or loss of a job, or if a trip is canceled on them because their tour operator went belly up.

Travel policies often provide a death benefit if you die on the trip. But if you already have life insurance – and you should if you have people depending on your income – then you don’t need to spend money on buying more insurance for vacation.

If you still want travel insurance, read the details of policies before buying. Some insurers might not cover medical expenses related to a preexisting condition. Others will if you buy insurance within a couple of weeks of booking your trip.

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