The Risky Business of Travel Insurance

By Amber McCracken, GHI Blog Contributor

iStock.com/nito100

To Buy or Not to Buy? That Is the Question

If you ask professional gamblers their secret to success, many will say “don’t bet more than you’re willing to lose.” That’s good advice! Travel insurance works the same way—the option of protecting your upcoming vacation with insurance is a bit like rolling the dice. Do you take the chance that the trip will be smooth sailing, or do you cover yourself for potentially rough waters ahead?

A survey released by the AAA found that more American travelers are protecting their investments by purchasing travel insurance, particularly as expensive and international vacations become more popular.

“More than 30 million family travelers will visit an international destination this year, 9 percent more than just two years ago,” said Bill Sutherland, senior vice president of AAA Travel and Publishing. “There are just too many unknowns, like family emergencies and natural disasters, which can throw an unexpected wrench into a planned vacation. Travelers are increasingly not taking chances and they’re choosing to invest in the value and peace of mind that travel insurance can provide, for international as well as domestic and cruise vacations.”

The AAA survey found nearly 4 in 10 Americans are likely to buy some kind of travel insurance for a future international trip, and almost 9 in 10 say getting their money back for a canceled trip is the top reason.

What is Travel Insurance?

Travel insurance is much like other types of coverage you might consider; it is there to protect you financially up to a predetermined amount. There are two main types of travel insurance—standard travel insurance and medical travel insurance. While policies will differ in scope, most standard travel insurance policies typically cover the following:

  • Trip delay, interruption or cancellations
  • Lost or delayed baggage
  • Car rental accident coverage
  • Theft and other crimes
  • Missed airline connections
  • Cancellation for any reason (may be at a premium)

As for medical travel insurance, it is extremely important to check your current healthcare coverage plan to see if you are covered while traveling, especially internationally.  If not, medical travel insurance might be a great option. Here’s what most policies will cover:

  • Medical and hospitalization expenses
  • Emergency dental coverage
  • Evacuation to a local hospital or back to your home country
  • Injury during participation in adventure sports
  • Prescriptions
  • Accidental death or dismemberment

Making the Right Choice

The basic rule of thumb is to purchase travel insurance when your prepaid and non-refundable expenses are more than what you are willing to lose. For instance, a $250 round-trip domestic flight to visit a family member probably wouldn’t warrant the need for coverage; but a non-refundable $5,000 Mediterranean cruise certainly might.

Travel Insurance Review recommends considering two factors to help decide if travel insurance is necessary:

 – Financial Risk: Are you worried about losing a large sum of money because of a canceled trip, interrupted trip, lost bags, delayed trip or medical emergency?

 – Medical Concerns: Are you traveling outside your home country, where your insurance from home won’t cover you for an accident or emergency?

If the answer is yes, travel insurance can be purchased from travel agents, travel suppliers (airlines, hotels, cruise lines, tour operators) a private insurance firm, insurance brokers or online. As with any purchase, it is important to shop around. Compare policies and always read the fine print.

Squaremouth.com is a great site to compare policies from 22 different insurers.

When to buy

When it comes to travel insurance, only unforeseen events are covered. Therefore, the best time to purchase travel insurance is immediately after you’ve made your initial payment on an upcoming trip. If you wait too long, the unforeseen circumstances may present themselves and preclude you from purchasing coverage. For example, if a hurricane starts to form in your travel destination, it’s simply too late to request coverage and recoup losses from the impending trip cancellation. 

As a point of reference, the US Travel Insurance Association estimates that travel insurance generally costs from 4% to 8% of the total trip. Cost is based on the length of trip, destination, and age of the policy holder.

Are you already covered?

Given that most health insurance plans don’t cover medical expenses while traveling overseas, it is important to check your current plan to see if you are covered before your trip. As for non-medical insurance coverage needs, check with your current credit card companies. Surprisingly, travel coverage is often among the many benefits credit card companies use to entice you to sign up—although few card holders are aware of this. If you used a credit card to pay for your flight or hotel accommodations, you may already be covered if you need to cancel.

In an article in USNews & World Report, Patti Geroulis, credit card rewards expert and writer at The Travel Sisters advice website, states “You should have received a guide to benefits when you first were approved for a credit card. You can also find this information online on the bank’s website. If you can’t find a summary of your benefits, call your credit card company and request a copy.”

For those who love to travel, planning an upcoming excursion can be as exciting as the trip itself. Thinking ahead to the sights, tastes and experiences is part of the fun. No one really wants to contemplate all the things that could go wrong like sickness, work conflicts, weather or a death in the family. But the reality is that travel insurance can bring some peace of mind in case these types of unforeseen circumstances happen. As you finalize your upcoming travel plans, consider doubling down on travel insurance. It just might pay off in the long run!


Amber McCracken is the executive director of Current Communications, a boutique consultancy that helps organizations with their marketing and public relations activities. Amber has worked with GHI since 2014, providing her expert advice to support Goodwin House at Home. She contributes regularly to The Good Life, both as a writer and editor. Amber lives in North Carolina with her husband and two children. She also serves as the caregiver to both of her parents.