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A lot can happen while you’re traveling. Airline or hotel workers can strike or their employers can suffer technology outages, leaving their customers high and dry. Cruise ships can have engine problems or get stranded offshore in fog when they’re supposed to be docking and disembarking passengers. The up-front outlay for a prepaid vacation can fly out the window with an unexpected job loss or illness.
Travel insurance used to be a much more common purchase some decades ago than it is today. Airports across the country had application forms for travel insurance that could be enclosed in an envelope with a check to bind coverage, and dropped in a lock box before a buyer embarked on their journey. The primary coverage was for accidental death or dismemberment at a time when air travel was much riskier.
Today, travel insurance is less popular, and many Americans expect, perhaps unfairly, that it’s simply a matter of good customer service on the part of a travel provider to make accommodations when their plans change. In fact, many will, but it may not be worth risking disappointment should you need to cancel or are affected by delays and their supplier won’t pony up, whether it’s a hotel that won’t waive cancellation penalties until the hurricane actually affects the property, or a cruise line that only provides partial refunds for cancellations according to a set advance notice schedule.
A spokesperson for Allianz, one of the larger travel insurance providers, explains why travel insurance may be less popular with American travelers, “Travelers from countries that provide publicly funded health care programs understand that their coverage does not extend beyond their country’s borders and would not consider traveling abroad without travel insurance as emergency medical treatment and repatriation can lead to financial disaster.” Americans, he goes on to explain, typically have private employer-sponsored health care plans that may provide more coverage outside the United States, although he notes that government-funded plans such as Medicare and Medicaid do not.
It’s also worth noting that travel insurance covers expenses during delays that airlines typically do not cover, such as circumstances beyond their control like weather, although travelers beginning their journeys in the European Union are protected by wide-reaching consumer protection laws.
In my years as a travel agent, I found that interest in travel insurance varied based on each traveler’s individual needs, but I’ve always been quick to recommend travel insurance for the following situations.
Even if it’s a weekend in Canada, I personally don’t leave the country without travel insurance. Even a twisted ankle can be expensive to see to outside the country without the right coverage, and any emergency medical situation that requires transportation can be financially daunting. Explains our Allianz spokesperson, “Our most loyal customers are the ones who have been saved thousands of dollars when they’ve had to cancel a trip or have been brought home in an air ambulance after a serious accident or illness. To those customers, travel insurance is worth every penny they’ve paid for it.”
Any sort of investment merits protection, and travel is no exception. There’s risk in expecting a travel supplier to foot the bill if you have to cancel due to unforeseen circumstances, and that risk can be completely mitigated with insurance. Most policies will reimburse cancellations for “covered reasons” such as illness or injury, but some insurers will sell coverage for “any reason” cancellations.
As a rule, I always purchase cruise line waivers (cruises also fall under prepaid travel), which typically also offer a certain degree of coverage for emergency medical needs. This is especially important because although many of the cruise lines may be U.S. based companies, the ships (with few exceptions) are foreign-flagged, meaning U.S. medical insurance may not apply. Coverage amounts can be pretty basic, and a third-party supplier can cover things not covered by cruise line policies, such as financial insolvency on the part of the cruise line.
The Takeaway: The decision to purchase travel insurance is ultimately personal, but make sure you’ve checked your existing coverage and considered the risks in traveling without coverage. Although some expenses can be recovered without travel insurance, the extra layer of protection is often well worth the cost.