No insurance policy can prevent the unexpected from ruining your vacation. But if you’ve spent a lot on a trip, insurance can, at least, allow you to recover a good chunk of the money you might otherwise have lost. Here are the main questions to ask yourself when deciding whether to buy.
1. How likely is it that you, your traveling companion or a loved one will get sick?
If your answer is “very likely,” a trip cancellation policy may well make sense. Some insurers will include coverage for preexisting medical conditions if you purchase the policy within a certain time frame.
2. How likely is it that you or your traveling companion will get laid off before the start of your trip?
Many policies consider this a valid reason for cancellation, although terms vary. Allianz’s basic plan, for example, will cover cancellation if you lose your job “through no fault of your own” and have been with your employer for at least three years. A basic plan from Travelex lets you cancel if you’ve been with an employer for at least one year and the termination was “not under your control.”
3. Are you bringing along expensive clothing, jewelry or equipment?
If you’ll be carrying items you feel you should insure, first check to see if they’re already covered through your existing policies. Your credit card company may offer some coverage for checked bags or even carry-on luggage. Your homeowner’s or renter’s policy also may cover some of your valuables (and if they don’t, consider adding a floater to the policy). If you go with a separate travel insurance policy, know that most will reimburse you for the cash value of items in lost or stolen baggage, only up to a stated limit (often $500). Some may also cover the “reasonable” purchase price of replacement items, such as clothing, that you may need while waiting for delayed bags.
4. How vulnerable will you be to extreme weather?
If your trip is a package and a major weather event forces a complete cancellation, you’ll get a refund (not counting extra airfare and other expenditures). But consider other possibilities. Does your itinerary include any stops where snow and ice might cause delays or a missed connection? Will you be flying near an ocean in summer or fall? If so, keep hurricane season in mind — June 1 to Nov. 30 in the Atlantic, and May 15 to Nov. 30 in the eastern Pacific. If hurricanes might be an issue, make sure your policy allows for “natural disasters,” and buy well in advance. Coverage usually applies only if you purchase it before a hurricane is officially named.
5. How much money can you stand to spend if the unexpected — or wildly unexpected — happens?
Many trip insurance policies cover disasters on the home front, as well. For instance, policies that include “primary residence uninhabitable” in the terms will let you cancel your trip to deal with last-minute misfortunes ranging from break-ins to floods.
And then, of course, there’s the truly random event. Remember that volcanic eruption in Iceland in April 2010? The resulting ash cloud closed down much of Europe’s airspace for six days, inconveniencing some 10 million passengers. In such situations, trip insurance policies offer reimbursement for such expenses as a hotel or rental car, up to a stated limit.
If you decide to buy travel insurance, here are some guidelines to follow.
1. Don’t buy insurance from tour operators, cruise line reps or travel agents, who collect commissions on policies they sell. Instead, go to an online broker, such as InsureMyTrip.com or Squaremouth.com, which sell coverage from many providers. You can pick and choose depending on your needs. Your age, trip length and destination all affect prices, but policies should generally cost you between 4 percent and 8 percent of the total trip cost.
2. Don’t wait too long to buy. Although you can purchase trip insurance up until the day before you travel, insurers will often include more benefits — for example, waiving exclusions for preexisting medical conditions and including protections against terrorism or financial default on the part of the trip provider — if you purchase the policy within a week or two of your initial trip purchase. Many companies offer a review period: If you purchase the insurance at the same time you pay for the trip, you can still cancel the policy and get a refund within a set time period (often 10 days), if you change your mind before the trip starts.
3. Read a copy of the policy, including the small print, and speak to an agent before you buy. If your needs include trip cancellation coverage, make sure the policy covers most or all of your worst-case scenarios. Trip cancellation policies contain a laundry list of “covered reasons” or “named perils.” But if your reason isn’t on that list, your claim will be denied. The pricier policies offer an option that allows you to cancel for any reason, which may turn out to be your best option, after you’ve evaluated all your possible needs.