On average, American consumers spend 10% of their income on travel. Almost three quarters of us even go into debt to fund our vacations. Considering how much money, time and passion we put into travel, purchasing travel insurance can be a wise investment.
Your primary criteria for selecting a travel insurance policy should be coverage and price. As a percentage of your investment, travel insurance policies are not terribly expensive, but savvy shoppers will compare rates across a range of insurers.
While coverage options can vary widely, they fall into a few basic categories.
Cancellation coverage covers non-refundable expenses when you or your travel provider have to cancel for reasons including natural disasters, health emergencies and illness. Some policies even offer specific event coverage—so if you’re traveling to Dublin to hear your favorite Irish punk band and the concert is canceled, you can cancel your whole trip with impunity.
Interruption coverage kicks in when your trip is already in progress and you have to cut it short due to an emergency. It allows you to return home and continue your trip once the emergency has been resolved.
CFAR, or Cancel For Any Reason, is the fullest coverage you can buy and makes sense for people whose schedules are very unpredictable.
Medical coverage is one of the best reasons to buy travel insurance. Check your health insurance. Most policies offer limited coverage abroad and some, like Medicare, don’t cover you at all. Typically, medical evaluation, treatment and transport, and dental emergencies are covered expenses under travel insurance. A single emergency room visit — What? You stepped on a pop-top in Margaritaville?—can cost ten times the price of a policy. Bear in mind that if you’re into “extreme” sports, you may need to purchase non-standard coverage to insure you while you’re pursuing your personal thrill. Not to bring up a sore subject, but accidental death and dismemberment insurance is typically bundled with medical coverage.
Auto insurance covers what you’d expect it to cover when you rent a car abroad.
Lost, stolen, damaged and delayed luggage is a common vacation mishap. Pay attention to coverage limits and increase yours as necessary. Some policies don’t cover electronics like laptops or cell phones, or cap the amount you’re being reimbursed to the point of being meaningless.
Specialized coverage options make sense for some travelers. Cruises, which often require first traveling to an origination point and multiple ports of call, present unique insurance issues. You may want to look into specific cruise coverage if that’s your chosen travel mode. Group coverage can be a smart choice if you are traveling with friends and family. You can cut costs versus choosing individual insurance plans. Age is not a factor with group insurance, which can be can be more costly for older travelers individually.