Travel Insurance Basics
While travel insurance used to be considered a luxury, people concerned about whether their vacations can be ruined by incidents outside their control, or worried about shoddy medical care in foreign countries, now view travel insurance as a worthwhile investment. The rule of thumb is that a comprehensive travel insurance policy costs 5 to 7 percent of the price of your trip.
Before buying travel insurance, be sure you don't already have sufficient coverage through your home insurance, health insurance, or as a perk on your credit card if you charged your trip.
Expert advice on Cancellation insurance
What to buy
A travel insurance policy usually offers two coverages: trip cancellation/interruption and emergency medical evacuation. If you have absolutely no health insurance, or if your health plan won't cover you at all while you're abroad, then you should look into medical or hospital coverage.
Trip cancellation/interruption coverage will reimburse you for any losses you sustain if it turns out that you won't be able to go after all, or if you have to leave early. The catch? It will only pay out if you have to cancel or leave early because of a covered reason. That's why it's important to read the fine print. Some policies will cover only medical reasons and some will not cover pre-existing medical conditions like an old back injury flaring up.
Trip cancellation/interruption will pay the difference between what you can get refunded from the cruise line, tour company, or airline, and what you originally paid. That means that you must seek a refund first with the tour company before you file a claim on your trip cancellation/interruption insurance.
Trip cancellation/interruption policies may also cover "unforeseen emergencies," such as an accident on the way to the airport, a hijacking, a natural disaster, a fire or flood at your house, or a call to jury duty. However, they probably still won't cover you if you change your plans, if your job forces you to stay in town, or if you can't go because of personal finances.
If you have health insurance, find out what benefits apply when you're abroad. If you won't have any coverage while you're traveling, you might want to look for a travel insurance policy that includes medical coverage. You'll probably get the best buy if it's bundled with trip cancellation/interruption or emergency medical evacuation coverage, although there are companies who specialize in health care and "general assistance" for travelers abroad. You should know whether the policy will actually pay for the medical care up front, whether you have to get approval from the insurance company's doctor before you can get care, and if there is a referral line for you to call.
How much does it cost?
Most comprehensive travel insurance policies, which include travel medical coverage and trip-cancellation or interruption insurance, cost between 5 and 7 percent of the price of your trip. Prices are based on your age and the cost of your trip - where you're traveling generally doesn't factor into the price - as well as the amount of medical coverage and baggage-replacement insurance you buy.
So, if you're taking a weeklong tour of England or Ireland that costs you about $1,000 per person, you should expect to pay between $50 and $70 each for a travel insurance policy. If, on the other hand, you're planning a two-week cruise of the Caribbean - from $3,000 to $5,000 for a stateroom - it could cost as little as $150 to as much as $350 to insure your vacation.
Where to buy it
Many travel agencies, cruise lines, and tour companies sell travel insurance directly, but it's not really the best way to buy it. While prices are sometimes better, the coverage is likely to carry more exclusions. Buying insurance through a cruise line or tour company also means you probably won't be able to collect if they go under. In general, it's best to buy travel insurance directly from an insurance company.
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