Travel Insurance: Worth the Cost or Just Another Expense?

Like many insurance policies out there, travel insurance offers an immense peace of mind. But, it also offers a shield against unforeseen travel misfortunes, that we really don’t have any control over: cancelled flights, lost or stolen luggage, delayed itineraries. The list could go on.

Often times, travel or trip insurance costs about 5 percent of your trip. Meaning you could be spending somewhere between $200 and $400 to insure a $5,000 trip. Moreover, travel insurance can also tend to duplicate already existing coverage such as auto insurance, life insurance, home insurance, health insurance, or even benefits from your credit card used to purchase the trip. Though the travel insurance industry has been growing lately, it can still be hard to decide if adding that extra couple hundred bucks is worth it. Sure, if that wonderful Japan tour is cancelled it will be a bummer but most expenses will be refunded. And even if you have to pay $200 to change your flight that’s annoying but not the end of the world.

If, however, there’s an accident in a foreign country and you are life-flighted to a hospital, when looking at that $45,00 bill you’ll be grateful you purchased that extra $200 insurance. But you may be wondering just how often that really happens. Probably not that often, but disasters and accidents happen and not just always close to home.

As a general rule of thumb, if you’re traveling abroad or if a large part of an expensive domestic trip isn’t refundable, then experts say to definitely consider getting travel insurance. If you’re still on the fence, here are the four types of coverage that comes in travel insurance.

Trip cancellation and trip interruption insurance: This coverage will reimburse you any non-refundable costs if your trip is seriously delayed or cancelled due to illness, a natural disaster or if the carrier goes out of business. This kind of coverage is often around $1,500 per person for cancellation or $300 to $500 a day for trip interruption.

Baggage and personal items coverage: If you’ve ever gone abroad and came home with a bag full of souvenirs you’ll like this one. This coverage covers you if your luggage is lost, delayed or if someone steals something from your bag. Travel insurance will cover up to $500 per bag and $100 to $300 per baggage delay.

Emergency medical insurance: Most often your health insurance should cover you when traveling. However, things can get tricky if you’re going abroad. This kind of coverage is the second most popular reason why people pay for travel or trip insurance. It will cover around $10,000 to $50,000 for emergency medical care.

Accidental death or dismemberment insurance: Though this one may seem a bit out landish, things happen. If a loved one or you die on a trip or suffers a life-impairing accident (e.g. losing your eyesight), this part of the insurance will pay up to $500,000 depending on the situation.

Buying travel insurance or not buying it can be a big gamble. Though you may not want to regret buying it when something does happen, you may also be upset at the end of the trip for shelling out that extra dough when nothing did happen. Many already existing policies may cover you for the above listed (like life insurance for death or dismemberment), travel insurance can still be very much worth it when traveling abroad or if your health insurance won’t cover emergencies outside of your country. It can also be worth it if a huge chunk of your trip is non-refundable especially if you’re buying a vacation package.