Travel insurance covers you when your dream trip becomes a nightmare
Stephanie Taylor Christensen
You've bought your plane tickets, reserved a cabin for the cruise and scheduled your shore excursions. But what happens if you break a leg on the first day of your tip? Or if a loved one suddenly dies? Or if a hurricane prevents your cruise ship from leaving the dock?
Travel insurance is designed to protect the investment you've made in your vacation. With the right coverage, you can be reimbursed if unforeseeable events happen during the trip or prevent the trip from happening altogether.
Trip cancellation
The most common type of travel insurance is trip cancellation insurance, according to the National Association of Insurance Commissioners (NAIC). It protects against the loss of non-refundable travel costs like airfare, hotel or tour expenses if your trip needs to be canceled for reasons out of your control -- like if your tour operator goes bankrupt before your trip. According to the Insurance Information Institute, expect to pay about 5 percent to 7 percent of the price of the vacation for such coverage.
Trip interruption
Another major type of travel insurance offers protection against mishaps that occur during your trip, according to NAIC. Depending on your policy, you can be financially compensated for everything from medical emergencies, to damage to your personal property, to your death or the death of a traveling companion. Such policies generally go by names like trip interruption insurance, baggage insurance, personal effects coverage, accidental death coverage or emergency medical assistance.
This type of travel insurance can be particularly helpful to travelers journeying to foreign lands, as health insurance may not always cover medical emergencies abroad. It also can be beneficial for trips involving risky activities like skiing or rock climbing.
Is it worth it?
As with any insurance product, travel insurance contains restrictions. Only certain illnesses may be covered, for example, and some policies may not cover you if your trip is canceled because of a natural disaster or civil unrest in your destination. NAIC also recommends asking your travel insurance provider how far in advance you have to cancel your trip -- and if the policy covers your travel companions as well.
Many travelers already may have sufficient coverage through existing life, health, home or renter's insurance policies. For example, many renter's and home insurance policies provide coverage for lost or stolen belongings (after you've paid your deductible), according to the Insurance Information Institute.
If you used a credit card for trip reservations, some credit card companies offer complementary travel insurance and travel services. Moreover, many tour operators offer options to purchase cancellation waivers for a small fee, although these waivers are not technically insurance products and are not regulated by your state's insurance department.
