How much travel insurance do I really need?

Global Courant

There is a lot of confusion about whether travel insurance covers a natural disaster, such as the April 2010 volcanic eruption in Iceland that left tens of thousands of travelers stranded. If someone asks, “Does my travel insurance cover these types of events?” I reply, “Check the fine print.” If you click the insurance button when buying a ticket online, you will most likely not get very good coverage. These types of travel insurance policies offer very basic coverage, which can be fine if your trip doesn’t cost much. Or if your itinerary is not complicated and requires multiple stops over an extended period of time with expensive hotel reservations.

Here are five guidelines for knowing how much travel insurance you should get.

1. What is your journey worth to you? A young student sleeping in hostels all over Europe and carrying a backpack does not need a “Cadillac plan” travel protector. Compare that to a couple in their early sixties who have reservations in 5-star hotels in some of Europe’s most expensive cities and fly first class. Their trips will cost quite a bit, so they should consider paying premium coverage.

2. Compare the cost differences between a basic plan and a premium plan. I went to a well-known travel insurance website to see how much it would cost me for a two-week international trip. The basic plan sells for $127 for someone my age. When I added “cancel for any reason” coverage, enhanced medical coverage, and optional flight coverage, the total rose to $202. So now I have to ask myself: Is that extra $75 worth it?

3. Know what you’re buying. Travel insurance includes 4 types of travel protection: trip cancellation, trip interruption, trip delay and missed connection.

• Trip cancellation refund the full cost of your prepaid ticket in the event you need to cancel prior to your journey. One insurance company sells a “Cancel for any reason” policy for an additional charge, although most other companies have specific – but still comprehensive – conditions under which one can cancel. Find out what your trip cancellation covers and what exclusions aren’t covered. For example, some companies did not reimburse those affected by volcanic ash because they considered it a weather disturbance rather than a natural disaster.
• Trip interruption reimburses your travel expenses in the event of an unexpected calamity during the day your trip, causing it to be cancelled, interrupted or delayed. A global travel insurance company paid 100% of travel costs for travel interruption due to volcanic ash that hit Europe in April 2010.
• Travel delay will reimburse you for expenses you pay for trips delayed more than 5 hours due to covered reasons, but only up to a certain amount, some $1000, others $750. Trip delay usually includes hotel stays for stranded travelers, meals, taxi fares, and essential phone calls.
• Missed connection will reimburse you if bad weather or a common airline causes cancellation or delay of flights on a regularly scheduled airline of three or more hours to your departure time. One Gold Plan reimburses you $250 for a missed connection.

4. Does my airline not reimburse ticket costs, place me in hotels, and cover food costs in case of trip cancellation and interruption? Why do I need additional travel insurance? That is a good question. Years ago, my family and I were traveling from San Francisco to Singapore and our trip was delayed due to a mechanical failure. The airline bussed all passengers to a nearby hotel, paid for our rooms and gave us food stamps to use at the hotel’s restaurant.

Another time I had to cancel my flight due to illness. Because I bought a non-refundable ticket, I was able to apply that ticket to another travel date, minus a $100 fine, of course. I had a year to use the ticket.

Once, when thick fog grounded my plane for 8 hours, the airline gave anyone who asked for food stamps for an airport restaurant. Since it was a foreign country and I didn’t speak the language, I didn’t know food stamps were being handed out, so I missed coffee and croissants. The best advice here is to know your passenger rights.

Missed connections are another form of travel frustration. If your missed connection occurs while traveling on the same airline or airline alliance, you will be accommodated by the airline. However, if your missed connection happens when you’re flying on two different airlines or airline alliances, you’re out of luck with the airlines. If you have travel insurance that covers missed connections, you’re in luck.

5. Get travel insurance for medical coverage and other services. Certainly, airlines reimburse and in many cases are required by law to compensate for long travel delays, interruptions and cancellations. But they won’t pay medical bills if you get injured on your travels. And they don’t pay for global assistance services such as medical evacuation, physician referrals, translation services, prescription replacements, emergency money transfers and concierge services, and a host of other services that you can purchase travel insurance.

So the choice is yours. Most trip cancellations and interruptions are fairly straightforward and you can get compensation from the airlines. In those cases you do not need a premium Trip Cancellation Plan. But in the event of a volcanic eruption or other natural disaster that seriously disrupts travel for days, you could lose hundreds of dollars. That is why there is travel insurance. Like any insurance, we get it because we don’t know the future.

Travel insurance is worth it for the medical coverage alone. All travel insurance policies cover travel delays or cancellations for specified reasons (again, check what they DO NOT cover), and are easily upgraded for additional costs. However, their real value is medical, especially for medical evacuations that cost tens of thousands of dollars.

How much travel insurance do I really need?

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