A Guide To Travel Insurance Including When Not To Buy It
When you book flights online, you’re typically prompted to buy travel insurance. Same with cruises and tours.
Should you buy the insurance? What will it cover? Equally important, what won’t it cover, and when might it not be worth your while?
The AP Travel podcast “Get Outta Here!” got the answers to these and other questions from Beth Godlin, president of Aon Affinity Travel Practice. Aon, a global insurance broker that represents insurance companies, creates specialized travel products, including insurance policies sold by cruises, tour operators and certain online booking sites.
Excerpts from the podcast interview :
TRAVEL INSURANCE: WHAT IS IT GOOD FOR?
Typically travel insurance protects your financial investment in your trip, to “cover penalties and extra costs you would incur” if you couldn’t take your trip or if your trip was interrupted, Godlin said.
For example, say you need to cancel a trip or head home early because of a death in the family or because a hurricane is headed to your beach destination. This type of insurance reimburses prepaid expenses — flights, tours, hotel — as well as expenses incurred because the trip was interrupted, like rebooking fees for new flights. This type of insurance also covers additional costs incurred if your trip is delayed — for example, you miss a connection because of a storm and need to stay overnight in a hotel before catching the next flight out.
Another type of travel insurance offers health benefits, typically providing “gap coverage for emergency medical expenses and also medical evacuation.”
A third category protects “your stuff,” Godlin said, meaning whatever you bring with you or pack that’s not covered by existing insurance, in case of loss, damage or theft.
WHEN WOULDN’T YOU BUY INSURANCE?
Buying insurance should be based on potential losses and what you can afford to lose.
If you’re staying in a hotel that won’t charge you if you cancel, or you’re taking a trip booked with miles but you can get the miles back with no penalty if you cancel, you don’t need insurance because your losses would be zero.
But if you stand to lose your investment should you cancel, can you live with that risk?
Typically, insurance costs 6 percent of the cost of a trip. So for $60, you can insure a $1,000 trip. What’s your comfort level on the money? Would you rather spend the extra $60 and know that you’re covered? Or can you live with the possibility that if the trip falls through for some unforeseen reason, you could lose most of what you spent on flights and other nonrefundable components?