Travel insurance is one of those things that feels like an added expense on a vacation on which you’ve already spent plenty of money — especially if you aren’t sure what it covers.
But it’s precisely because you’ve already spent that money on your vacation that travel insurance is worth it.
The key is to make sure you get the right coverage and cut costs by skipping coverage you don’t need or you already have through another source.
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Start by understanding what types of coverage travel insurance typically offers, when you need it and how to find out if you already have coverage elsewhere.
1. Trip-cancellation insurance
This is the most common type of travel insurance you’ll see offered. It basically ensures you’ll get your money back if your flight, hotel or activity is cancelled.
Typically, it covers a more generous range of cancellation reasons than a standard refund policy from an airline or hotel.
For example, if you need to cancel due to a medical emergency, but you’re past the airline’s refund deadline, trip-cancellation insurance would reimburse you.
While policies vary, most include specific covered reasons for canceling a trip:
- Medical emergencies, including illness or injury. This sometimes also covers canceling due to a death in the family.
- Work obligations or job loss. This includes unexpected work emergencies or having your previously approved vacation time revoked. It also includes a job loss, but not if you voluntarily resign.
- Jury duty
- Inclement weather or natural disasters. This includes severe weather that causes your flight to be canceled or weather at the destination that renders your hotel or vacation rental uninhabitable.
- Other covered reasons include terrorism, epidemics and other incidents that force you to cancel a trip.
It’s important to note that an insurance policy would only kick in here if the ticket or reservation was nonrefundable.
If you have the option to request a refund directly from the service provider, do that first. If you’re denied and your reason for cancellation is covered by your travel insurance, you can file a claim at that point.
Do you need trip-cancellation insurance?
Depending on how you booked your trip, you might already have some degree of trip-cancellation protection built in. Many travel rewards credit cards offer some trip-cancellation protection as a perk, for example. If it's a perk your card offers, read through the fine print to see exactly what it covers and how it works.
Next, check the refund policies of the airline, cruise, hotel or other service providers with which you book. Some are more generous than others, especially if you’re paying for upgraded fares or accommodations.
Between the standard refund policy and your credit card’s trip-cancellation insurance, you might already have enough coverage for your peace of mind. But for more expensive vacations or times of uncertainty when you think you might need to cancel, it’s worth looking into additional coverage.
2. Medical travel insurance
Travel medical insurance is like a basic health insurance policy to cover you when you travel abroad. It typically won’t cover a routine exam or preventative care — which you’re unlikely to be doing on vacation — but it does cover emergencies, unexpected illnesses or injuries while you’re traveling.
If you get food poisoning after eating questionable seafood or twist your ankle while hiking, travel medical insurance would cover you.
Do you need medical travel insurance?
If you’re traveling domestically, probably not. Your health insurance should be enough to protect you out of state. However, if you’re traveling abroad, it’s a good idea to get medical travel insurance.
Check your existing health insurance policy first. While it’s not common for health insurance to cover you abroad, some policies offer limited coverage for medical emergencies. If your policy has some international coverage, call your insurance company to explore the details and how the claims process works.
Some travel credit cards also offer medical travel insurance as a perk. Look through the full list of benefits to see if yours does; if so, call the company to find out how it works.
3. Cruise travel insurance
Cruise insurance is a special type of travel insurance that adds in the unique circumstances that come with going on a cruise.
Got lost at a port of call and the ship left without you? Need to leave your cruise early because of an emergency back home? Cruise insurance will cover you.
In many cases, cruise travel insurance also has medical coverage. That includes cruise-specific coverage such as paying for the helicopter that has to airlift you from the ship to the nearest hospital if you suffer a medical emergency that can’t be treated on board.
Do you need cruise travel insurance?
If you’re going on a cruise, yes. There are many unique situations that apply to a cruise that aren’t covered by a standard travel insurance policy.
The cruise operator you book with might offer insurance of its own. But it’s a good idea to shop around and compare policies from independent travel insurance companies before buying the cruise’s insurance. You’ll often find more coverage at a lower price by shopping around.
4. Cancel for any reason travel insurance
Cancel for any reason (CFAR) travel insurance is basically an enhanced version of trip-cancellation insurance. While trip-cancellation insurance will reimburse you for nonrefundable bookings, it only does so for a select range of covered reasons. CFAR travel insurance allows you to cancel for almost any reason.
Here are some of the additional reasons you’d be able to cancel your trip for with CFAR travel insurance that would normally be excluded from standard trip-cancellation insurance:
- Foreseeable events that you knew about when you booked the trip, such as a named storm or a planned airline strike.
- Pre-existing medical conditions (which might otherwise be denied by a standard policy because they're foreseeable).
- Pregnancy
- Fear of travel
- Changing your mind
Do you need “cancel for any reason” travel insurance?
This kind of unrestricted coverage is nice to have, but not strictly necessary unless there’s a high risk you might need to cancel a trip at the last minute. If that risk isn’t related to one of the covered reasons under a standard trip-cancellation insurance policy, it might be worth upgrading to a cancel for any reason policy.
Maybe you’ve booked your first cruise but are still feeling a little squeamish about the idea of being out at sea that long.
If you want the peace of mind knowing that you can get your money back if you get cold feet at the last minute, get CFAR travel insurance.
5. Annual travel insurance
Annual travel insurance — or multi-trip travel insurance — is a more cost-effective coverage option for frequent travelers, or even those who just have a lot of trips on the calendar this year.
In terms of coverage, it’s almost the same as any other travel insurance, though there may be some special limits and exclusions that apply to a multi-trip insurance policy.
The biggest difference is that it usually doesn’t come with trip cancellation coverage. It’s a good idea to get a travel rewards card that offers it as a perk to cover that gap if you get annual travel insurance.
By paying for a policy that remains active all year, you might end up paying less per trip than you would if you bought single-trip travel insurance for each separate trip. It also gives you the convenience of knowing you’re already covered for any last-minute trips you book throughout the year.
Shop for travel insurance once, and you’re protected for all your adventures throughout the year.
Do you need annual travel insurance?
How frequent of a frequent traveler do you need to be for annual travel insurance to make sense? Here are some scenarios where it might be worth shopping around for a multi-trip insurance policy:
- You’re planning to take three or more trips in the next 12 months. With three or more trips a year, an annual policy might be more cost-effective than buying separate single-trip policies for each vacation.
- You tend to book spontaneous, last-minute trips. Some types of coverage aren’t available if you buy travel insurance too close to the date of departure, usually within two or three weeks. An annual policy ensures you’ve got full coverage even if you book a trip last minute.
- You only need travel medical insurance. If you get trip-cancellation coverage through your credit card, you might only need a policy for medical coverage. In that case, compare the rates of a single-trip policy and annual travel medical insurance. Sometimes, it ends up being cheaper — especially for extended multi-week or months’ long trips (or if you know you’ll take at least one additional international trip within the next 12 months).
6. Car rental insurance
Car rental insurance is optional coverage that works as a kind of supplement to your own car insurance when driving a rental car. At a minimum, it usually provides collision coverage so you aren’t on the hook for damages to the rental car.
You might also have the option to add additional coverage, including:
- Supplemental liability insurance: This is additional liability coverage on top of the liability coverage already included in your own car insurance policy
- Personal accident insurance: This is sort of like Medical Payments (Med-Pay) insurance, covering any medical expenses related to injuries you suffer in an accident, regardless of who is at fault.
- Personal effects coverage: This insures your personal possessions inside the car, up to a certain dollar limit, if your belongings are lost, stolen or damaged while in the rental car.
Do you need car rental insurance?
In many cases, the answer is no. If you own a car, you have car insurance. If you have car insurance, your liability coverage and any collision coverage or medical coverage, like Med-Pay or Personal Injury Protection (PIP) coverage apply while you’re driving a rental car.
On top of your existing car insurance, many credit cards cover rental car insurance. While coverage amounts vary, you might be able to skip car rental insurance altogether between your own car insurance’s coverage and the added coverage from your credit card.
When should you buy rental car insurance? If you’re traveling internationally, your own car insurance might not cover you while you’re abroad. Call your insurance company to find out what kind of coverage you have while traveling internationally.
If your car insurance won’t cover you abroad and you don’t have a credit card that comes with car rental insurance as a perk (or only offers a minimum coverage amount), it’s worth buying a policy.
Still, make sure to avoid overlapping coverage so you don’t pay more than you must. If you’re already buying travel medical insurance, for example, you can probably skip the personal accident insurance coverage.
If your home insurance already provides personal property coverage, it might provide some coverage to your belongings even while you’re traveling. Call your insurance company to find out how much coverage you have before adding personal effects coverage to your rental car insurance policy.
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