Taking a Vacation? Don't Forget Your Travel Insurance!

The very first time I ever bothered to buy travel insurance was in 1997. I was finishing a two year stint in the Peace Corps and had decided to travel around Europe for a month by train. In retrospect, I'm surprised I thought to buy the insurance, since I wasn't a seasoned traveler back in those days. Maybe I bought it because the Peace Corps had issued ominous warnings about what could happen on a trip. Once I finished my service, I no longer had any health coverage and if something disastrous happened in any of the eight European countries I visited, I would be on my own to pay for it. At any rate, I did purchase a one month policy from Traveler's Insurance that would cover me in case I got sick or injured during my trip. That policy, circa mid August through mid September 1997, cost me about $160. Back then, that was a lot of money to me, but it did give me some peace of mind. I went on my trip and enjoyed a fabulously untraumatic month in Europe. Was my $160 wasted?

The next time I purchased travel insurance was in 2009, when my husband Bill and I took our very first cruise. We purchased our fares through USAA's Explore Cruise and Travel service, a travel agency especially for USAA members. I remember Bill getting upset when the cost of travel insurance was automatically added to our cruise fares. Like me, he wasn't in the habit of buying travel insurance, although travel insurance is especially recommended when you're vacationing at sea. We took an uneventful four night Baltic cruise. Did we throw away our money on travel insurance?

In 2010, Bill and I took a five night cruise on the SeaDream I, an ultra luxurious mega yacht. I booked directly with the cruise line and got a low fare. SeaDream's travel insurance cost $199 per person or 8.5% of the total fare, whichever was more. When you're paying four figures per person to take a cruise and you're not especially wealthy, that extra little bit of cash for insurance can hurt. We paid $199 per person and had a lovely, trouble-free vacation. Was that $400 as good as cash down the drain?

Even though our first SeaDream cruise was blissful, I went ahead and purchased another policy through a different insurance company for our upcoming cruise this November. Why? Because even though things don't historically go awry when I travel, I've been reading the news and following the message boards on Cruise Critic. I've read horror stories of people losing a lot of money when their vacation doesn't happen as planned. And while paying several hundred dollars to insure a trip that already costs a few thousand is somewhat painful, it would be much more painful to pay thousands of non-refundable dollars for a trip that gets ruined or canceled.

What is travel insurance?

Travel insurance is a policy consumers can purchase to protect the financial investment they make when they travel. A travel insurance policy can cover a wide range of unfortunate situations that can pop up before or during your trip, everything from sickness and injury to flight cancellations to losing your luggage. But beyond financially reimbursing travelers when things go south on a trip, travel insurance also gives travelers someone to call when there's an emergency. If you get hurt or sick in a foreign country, your travel insurance company can point you in the right direction to get competent and legitimate help. It's a safety net for when things go wrong-- protection against Murphy's Law.

What kinds of situations does travel insurance typically cover?

Most basic travel insurance policies cover medical or dental expenses, financial default of travel suppliers such as cruise lines and airlines, certain situations that cause trip cancellation or interruption, lost or stolen baggage, legal expenses, and delayed or missed departures.

Consumers can also usually purchase riders that make travel insurance more comprehensive. For example, when I recently bought a policy through TravelInsured.com, I added an optional rider that allowed my husband and me to cancel the trip for work reasons. I could have also purchased a rider that would have allowed us to cancel for any reason. Other optional riders can include collision insurance for rental cars, coverage for sports related accidents, extra death or dismemberment coverage, or extra medical coverage.

Most travel insurance companies offer a range of comprehensive policies designed to fit their customers' needs. TravelInsured.com, for instance, offers four different polices that vary in price and covered services. The cheapest policy is called Trip Protector Lite. It's the least expensive policy, but it's also the least comprehensive and most restrictive plan. By contrast, TravelInsured.com's most expensive and comprehensive plan is World Protector Gold, which offers the highest primary emergency medical expenses and other benefits.

Some of the situations covered under travel insurance can surprise you...

I was surprised to find out that should something happen on our upcoming trip that delayed us, our travel insurance would reimburse us up to $300 ($50 per day) for pet care. That's good to know, since we have two dogs that will have to be boarded during our trip.

Say you're traveling on a cruise ship and you get sick with a stomach virus. You go to the ship's doctor for some medication and the doctor decides that your illness is contagious. You get confined to your cabin and can't visit the ports. Well, according to a thread on Cruise Critic's messageboard, many plans will offer reimbursement when you have to be quarantined due to illness. I checked my policy and found that a situation like that would be covered.

My husband is in the Army, which means that he could be called to deploy at any time. Thankfully, because I purchased our policy through USAA's preferred travel insurer, we would be reimbursed for the cost of our trip if he suddenly has to jet off to the Middle East. We would also be covered if either my husband or I got called for jury duty or if the trip got canceled due to an act of terrorism.

In fact, reading the situations that are covered by travel insurance can be a lot of fun. It seems like the people who write the policies must sit around all day dreaming up disastrous scenarios!

A little advice

While it may be more convenient to purchase travel insurance when you buy your cruise fare, the policies offered through a cruise line or an airline might be more expensive and less comprehensive than policies you can purchase straight from an insurance company. I recommend shopping around before you commit to buying travel insurance through a travel supplier. Had I bought SeaDream's insurance, I would have had to pay 8.5% of our invoice for the cruise. Our cruise fares are priced at about $3400 per person. Adding in another $800 for port fees and taxes, our total cost for travel insurance would have been $646 for about $8500 in coverage, which would have covered just the cost of the cruise fare. That's not counting what we will spend on airline tickets and pre and post cruise hotel stays, which would have required more coverage.

Purchasing a policy through USAA's relationship with TravelInsured.com, I was able to get $12000 of coverage for Bill and me at less than $500, including the optional coverage for trip cancellation due to work reasons. That's enough to cover the cruise, the plane tickets, and a couple of nights in a hotel. It really pays to comparison shop. If you think you might qualify for discounted coverage through your credit union or insurance company, by all means look into it.

Also, when you determine how much coverage you want to purchase, be sure to consider all of your trip related expenses. Sure, your cruise tickets may be your biggest expense, but you'll also want to cover the cost of your airfare and hotel. Anything trip related that might be affected should something happen to cancel or interrupt your trip should be considered and added to the total amount of coverage you buy. And for heaven's sake, read the fine print before you make your purchase!

Bon voyage!

Bill and I don't buy travel insurance for all our trips, just the ones that cost us four figures or more. Obviously, some people are more comfortable with risk than other people are. In any case, even though trip insurance is an extra expense for that trip you've scrimped and saved for, I highly recommend buying insurance to protect your investment. You never know when disaster may strike!

Sources

www.cruisecritic.com

http://boards.cruisecritic.com/showthread.php?t=1350467

www.seadream.com

www.travelers.com

www.travelinsured.com

www.wikipedia.org

www.usaa.com

Personal experience