As with most questions of this nature, the best short answer I can give you is: it depends.
If you’re doing research into travel insurance, you’re going to have to do some digging to figure out whether travel insurance is worth it for you. What makes this so difficult is that there is a lot of money to be made by playing in the insurance space.
In fact, the travel insurance industry in the US alone generated $3 billion in revenue in 2014. I guarantee you that these companies wouldn’t be selling insurance if they couldn’t profit enormously from it.
As much as everyone loves travel bloggers, it’s hard to accept their travel insurance advice at face value. It’s more likely than not that the major travel bloggers are affiliates for these insurance sites. This means that when they tell you that travel insurance is 100% worth it, they’re going to make money when you buy the insurance.
This brought me to question whether travel insurance is actually worth it, or if people advise you to buy it so that they can get compensated.
It is for that reason that I decided to write a completely unbiased article on the subject because I too wanted to get to the bottom of this. You won’t find any affiliate links in this article and I’m not making money if you decide to purchase insurance from any of the sites I reference.
Now that we’ve got that out of the way, let’s dig in.
As you’re about to find out, you might already be covered for certain aspects of travel insurance. Companies will try to sell you the comprehensive travel insurance plans. They are the most expensive, and therefore, the most profitable. If your current insurance providers, or even your credit card, cover you for certain aspects of your trip, you might want to think twice before purchasing a comprehensive insurance plan.
We’ll go through each type of travel insurance, understand what it is, how you might already be covered, and whether it’s worth it for you.
Trip Cancellation or Trip Interruption Insurance
Trip cancellation insurance, as its name suggests, covers you if for some reason you must cancel your travel plans. Depending on which level of coverage you choose, the reasons you can cancel your trip differ.
Some insurance plans will only cover certain circumstances such as illness or a death in the family while others will allow you cancel your trip for any reason. Obviously the more lenient of the plans will cost you more money.
When you’re considering purchasing this type of insurance there are a few things you must consider.
If you’re the type of traveler that pays for everything ahead of time, you may want to purchase trip cancellation insurance. If you’ve already paid for your airfare, the cost of your hotel, tours, and excursions, it adds up. If you have to cancel the trip for an unexpected reason, you will be out a lot of money.
If all you’ve done is booked your flight and you have to cancel for some reason, it’s not as detrimental as having already paid for everything up front.
Remember that the insurance companies are using fear to sell you on insurance plans. Do serious life events at happen at bad times? Absolutely. Is it statistically likely for it to happen to you? No, or else the insurance companies wouldn’t insure it.
One way to think about insurance is determining how much of a financial burden a certain event will cause for you if it happens. In this case, if you have to cancel your trip, it’s not likely too much of a financial burden. I say this simply because if it was, you wouldn’t be taking the trip to begin with.
Sure, it would really suck to miss out on an awesome vacation, but it’s not going to cripple you financially.
Also, remember to read the fine print. It’s like to mention something about having a sickness whether you know about it or not within a certain time frame. If you already are sick, even if you don’t know it, and can’t make the trip, certain insurance plans won’t cover it.
You don’t want to buy trip insurance, cancel your trip thinking you’re covered, and then realize you’ve won’t be recovering your insurance money or the money you already spent on your travels.
Cancel for any reason travel insurance might be worth the expense if you’re not 100% sure about taking the trip and want an out. In this case, you need to research what percentage of the trip cost your insurance will cover.
You should also check whether trip cancellation insurance is a benefit of your credit card. Credit cards that you pay an annual fee for often include perks like this that the credit card holder may not know about.
It’s estimated that about 15% of credit cards offer trip cancellation insurance. There is no need to pay for duplicate insurance as long as the insurance coverage is at a level that is suitable to you.
As you can already see, deciding whether trip insurance is worth it is a very personal decision that only you can make. Do your research into your specific circumstances, weigh the pros and cons, and make an educated decision.
Travel Health Insurance
If there is any type of insurance that you pay special attention to, it’s health insurance for when you travel.
If you don’t buy trip cancellation insurance you won’t be out any more money than you were already planning on spending. However, with travel medical insurance, the bills can add up considerably if an unfortunate event occurs.
Although you may come down with a sickness before your trip or a family member passes away unexpectedly, you can still choose whether or not you go on the trip. When you’re already on your trip and a medical emergency occurs, you don’t get to choose that.
I like to break down the medical insurance coverage into three different categories: non-serious injuries and sickness, emergency evacuation, and accidental death and dismemberment.
You will want to research each of these categories when you’re deciding whether or not to get travel health insurance. Before you start comparing plans, check with your current insurance provider to see what you’re covered for.
The questions you want to be researching the answers to include the following:
- Does my health insurance include destinations outside of my home country?
- If it does, what exactly is covered?
- Are there hospitals near your destination that are within the network of your health insurance provider?
- What happens if you are brought to a hospital that is outside your health insurance network? (Hint: they’ll probably deny it)
- Does your insurance cover emergency evacuations in case you get injured on a mountain or other hard-to-get-to place?
- Does your life insurance cover accidental death and dismemberment while you’re traveling?
Once you know what your health insurance and life insurance covers while you’re traveling, you’ll be able to make an educated decision on whether you should get additional insurance. If the insurance you already pay for covers everything you need, then there is no need to buy travel insurance.
If your insurance covers only part of what you need, or doesn’t cover anything, it’s time to seriously consider your options.
Medical insurance for traveling is something to be taken seriously, whether you plan on going on extreme adventures or not. You never know what can happen.
Just to give you an idea, a helicopter evacuation helicopter in California costs over $16,000 just to leave the ground. After that, it’s $200+ per mile and tons of additional fees after that. It’s not likely to be any cheaper in other parts of the world either.
These are the types of unexpected costs that can be a financial burden for many years to come. Insurance to cover this type of expense can cost $100+, but that’s nothing compared to $16,000.
Baggage Protection Insurance
You can buy this insurance to cover you in case your bags are lost, stolen, or damaged while you’re traveling. Although airline companies are required by law to cover anything that happens to your bags, they pretty much rule out anything of value.
Besides the airlines, there are two other places to check to see if you’re already covered. First, check your credit card again. You might be covered under certain circumstances. If so, it might be enough coverage for you and you can ignore having to purchase baggage protection insurance.
The other place to check is your homeowners insurance. Your belongings might be covered, under certain circumstances, even outside of your home.
In both cases, you should read the fine print of your credit card and your homeowners insurance to see if you’re covered and what the coverage is.
Similarly to the trip cancellation insurance, this insurance really depends on your personal preferences. If you’re going to be toting around expensive clothes, electronics, or other valuable items, it could be a good idea to cover it. If you’re backpacking and only have a couple pairs of clothes, it’s probably not worth it.
Personally, health insurance is the only one I wouldn’t risk not having.
Say you don’t have trip cancellation insurance. You have to cancel your trip and you lose out on an amazing vacation and your hard earned cash. This sucks, yes. But, it won’t leave you with huge bills that risk your financial well-being.
Say you don’t buy baggage protection insurance. First, you’re probably already covered. And second, if you’re not, you lose some of your belongings. Whether you have insurance or not, special personal belongings won’t magically reappear after they’re gone. If they’re valuable items, you will lose money. Once again, you won’t be left paying huge bills.
With medical issues, it’s a different story. If you get sick and have to see a doctor without insurance, you might be out a few hundred dollars. If you get injured, you might be out a few thousand dollars. But what happens when things get more serious than that?
What if you turn extremely ill and have to spend multiple days in a hospital? What if a freak accident happens and you need immediate evacuation and an expensive surgery? Although none of this stuff is likely to happen to you, these are the kinds of scenarios that can financially ruin you if you don’t have proper coverage.
You’ll find that most travel bloggers recommend World Nomads. They seem like a great company, have a nice looking website, and a lot of happy customers. But, you probably don’t need everything they have to offer. If you found that your credit card, health insurance, life insurance, or homeowners insurance already covers you for certain things, there is no need for duplicate coverage.
Companies like World Nomads offer insurance packages that bundle all of these coverage types into one price. However, if you already are paying for coverage with one company, why would you pay for it to be included in a bundle? You’d be better off searching for an a la carte option that allows you to pick what you need.
Websites like InsureMyTrip allow you to find exactly which type of insurance you need while comparing plans from many different providers.
Depending on which type of insurance you get, you can expect travel insurance to cost you about 4-8% of your total trip cost. If it doesn’t fall within that range, you might be getting ripped off. Either you’re paying too much and another insurance provider could give you a better deal. Or, you’re paying too little and if something happens the insurance provider likely won’t cover the expenses.
All of these decisions come down to your personal preferences and your ability to research what you’re already covered for. If you’re the type of person that values peace of mind, signing up for a comprehensive plan isn’t a bad idea. It will cost you more money, but at least you’ll know you’re covered in case anything happens.
Do you buy travel insurance when you travel?