The Basics of Buying Travel Insurance

by Ember Hood

What happens if you book your dream cruise departing six months from now, but fall ill just before you're set to leave? What if you or a close family member is hospitalized? What if your airline goes on strike or declares bankruptcy? Thankfully, these things usually don't happen. Most of the time your vacation goes off without a hitch and you have a fabulous time exploring and relaxing in exotic locales. But if an unforeseen emergency occurs and you do have to cancel all or a portion of your trip, what happens to your non-refundable airline tickets or your cruise? Well, if you have Trip Cancellation and Interruption Insurance, you should be able to get your money back.

When should you buy travel insurance?
Trip Cancellation and Interruption Insurance is good for travelers who have invested in any kind of cruise, tour or vacation. It protects that investment in the event that something comes up. Many trip cancellation insurance policies have restrictions on coverage that depend on your reason for canceling your trip. Medical emergencies that prevent departure are almost always covered in trip cancellation policies - meaning you will qualify to get your money back if you, a family member, or traveling companion suffer sickness, injury or death. Also usually covered are extreme weather conditions, travel industry strikes, being called to jury duty or testify in court, losing your job or home or getting into a traffic accident on the way to the airport. Each policy is different, so make sure to read the fine print.

Trip Interruption is usually covered in the same policy as trip cancellation, and covers most of the same things if they occur during your trip rather than before. In addition, most policies cover return airfare, as well as accommodations and transportation if someone is sick or hospitalized while traveling.

Medical coverage is sometimes included with cancellation insurance, and can also be purchased separately. Travel Medical Insurance usually covers medical expenses incurred on your vacation as well as emergency evacuation for medical reasons. Be sure to check medical policies to make sure you can be sent to a hospital of your choice once back in the states, otherwise they may send you to a hospital they choose. Most policies also include clauses that cover repatriation of remains in the event of death.

What should you look out for when buying?
If you decide to purchase insurance for your next trip, be very careful when buying. There are a lot of insurance scams out there. So before purchasing a travel insurance policy, make sure the company is legitimate and licensed to sell insurance. One easy way to make sure you're buying from a licensed company is to visit the US Travel Insurance Association's website and look at their list of members.

Always shop around before purchasing travel insurance and read the policies carefully to see what is and isn't covered. Some policies contain tricky clauses that could invalidate your claims and leave you with no recourse.

Travel insurance generally costs from 4% to 8% of the total trip. Cost is based on the length of trip, destination, and age of policy holder.

What if the airline/cruiseline goes bankrupt?
If you have paid for your trip with a credit card and your flight, cruise, accommodations or tour is cancelled because the company goes bankrupt, your credit card company will often cover those losses. Check with your credit card company to see what exactly they cover.

When should I just skip buying Travel Insurance?
If you're traveling domestically, your current health insurance should cover medical issues no matter where you are in the country. As for trip cancellation/interruption insurance, the question really is, "Is it worth it?" If you've spent a couple of hundred dollars to fly across the country, the answer is probably no. But if you've booked a week-long stay in a resort or a tour around the country, perhaps it is. It really depends on how much money you stand to lose should you be unable to travel.