Pros and Cons of Buying Travel Insurance
The world is wide, and has many risks. For every risk, there is someone willing to underwrite it with an insurance policy. The more well-known risks, like fire, flooding, car accidents, and disease, have large insurance agencies shuffling hundreds of billions of dollars in their efforts to help people soften the financial blow of disaster. The more obscure risks have no specific agency, but Lloyd’s of London will write a policy to insure against them anyway, for the right price. And then there is Travel, a risk well known to be fraught with peril, and yet, few people have bothered to purchase travel insurance until recently.
What is travel insurance?
It is insurance meant to cover unexpected expenses occurred when traveling. Medical problems, cancellations, repatriation of remains, return of a child, overseas funeral expenses, lost or damaged baggage, legal assistance, delayed baggage, missed flight connections, and hijacking can all be covered. It is a growing insurance industry; the U.S. Travel Insurance Association says that Americans spent 1.9 billion dollars on insuring their trips in 2012, up 50% from 2011. Currently the industry has about 2.2 billion dollars in annual revenues. It is not a large industry by any means, compared to the hundreds of billions of dollars that the Health Insurance industry deal with. And it is only since 2001 that the industry has grown much at all; prior to 9/11/2001 only ten percent of Americans bothered to insure their trips. After the events of 9/11 the industry grew rapidly, and the U.S. Travel Insurance Association was formed in 2004.
Insurance is useful for travelers who cannot afford to accept the full cost of unexpected disasters when traveling, and need to be able to pay for such things as medical evacuation and flight delays. Many people may look at their health insurance policies and discover that they are not covered for overseas travel. Medicare and medicaid, for example, typically do not cover people for international travel.
Your specific health insurance plan may not have any provisions for medical evacuation, which is a problem when you are venturing into risky areas, such as steep mountain trails. In such a case, you will be glad that you spent some extra money for a Hiking Insurance policy beforehand.
Insuring your trip typically costs 5% to 8% of a trip’s expenses. For example, you your trip costs $10,000, and you insure the trip for an extra $800. If you never make use of the insurance, you are out $10,000 plus an extra high hundred that you could have used for something else.
It may also not cover everything you want covered. So if you do wind up needing to use your policy, but you forgot to read the conditions carefully, you would be out $10,800 with nothing to show for it. For example, many policies specifically exclude mountaineering from their coverage. You would have been better off purchasing Hiking Insurance, but you forgot to read the fine print.
What to think about before purchasing insurance
You should consider whether your health insurance policy already covers the cost of overseas travel. You should also consider how risky your trip is. If you are hiking up the Himalayas or trying to map underground caves, paying 5% extra for a Hiking Insurance policy will serve you well if and when you are injured. If you are walking the streets of Bruges in September you are less likely to be injured.
most importantly, you should ask yourself if you are able to afford the financial risk of losing your travel investment if something goes wrong. Can you afford the medical costs? If an emergency at home comes up, can you afford the cost of a plane ticket home? Can you afford the costs of extra lodging in case you suffer delays and missed connections? If the budget for your travel is tight, you will probably want to insure your trip instead of relying on good fortune. You will not want to wind up paying tens of thousands of dollars for out-of-pocket medical expenses.
Best policy for you
Travel booking agencies may give you the option to purchase an insurance policy with them. This many be more convenient for you than shopping around, but if you shop around you may find a policy that better suits your needs. You may be looking for a more comprehensive policy than what the booking agency offers, or you may be looking for something simpler and cheaper. Websites such as Travel Guard , Insure My Trip , and Travel Insurance.com offer free quotes if you are looking for a good policy.
The best policy for you will be based on the specifics of your journey: how likely you are to incur great medical expenses, how much you can afford to replace missing luggage or items, and how easy it will be to find accommodation if have to stay in a place overnight due to missing a connection. Sometimes you are going on a great hike, and would prefer a Hiking Insurance policy more closely fitted to hazards terrain; sometimes you are just walking the streets of Bruges.