I have traveled extensively outside of the United States. For many of my trips, I have opted to purchase travel insurance. Travel insurance products, however, are as diverse as any other type of insurance. So I’ve found it challenging at times to buy exactly what I need and avoid overpaying. These tips can help make sure you buy the right product and also help you save.
5 Types of travel insurance
There are several different types of travel insurance—each with its own specific purpose and focus. As well, you can purchase travel insurance by the trip (single-trip), for multiple trips of 30 days or less (multiple-trip), or for any length of trips during a 12-month period (annual).
Here are the basic travel insurance categories:
- Trip cancellation coverage: In case your trip gets delayed, interrupted, or cancelled.
- Travel medical or major medical: In case you need medical attention while traveling.
- Emergency medical evacuation: In case you need to be evacuated for medical reasons.
- Flight accident/accidental death: In case you are seriously injured or die en route.
- Specialized coverage: For special circumstances, such as extreme sports trips, expatriate travel, or business travel.
Here’s what you need to know to save money on buying travel insurance.
1. Do not buy an add-on travel insurance package from a travel booking website.
If you use travel websites like Orbitz or Travelocity, you have likely noticed the options that pop up near the end to insure your trip against cancellation, lost luggage, etc. Experts recommend to not purchase these add-ons, which tend to be very generic, inflexible policies with lots of fine print exclusions.
- What to do instead: Do your own comparison research online and buy a standalone plan.
2. Be sure you read what’s insured in detail—and avoid insuring costs that are refundable.
Travel insurance sounds great on paper—but the truth is, it only covers specific costs in specific situations.
Example: If the airline policy is to issue a voucher for free travel if your trip is cancelled, this is a recoverable cost via other means, so you don't need travel insurance to recoup flight costs.
- What to do instead: Your goal should be to buy just enough travel insurance to cover your prepaid costs that are not refundable/recoupable via other means.
3. Refuse upgrades unless you have special circumstances that warrant paying more.
Buying an upgrade that covers you for any cancellations "no matter what" may sound like a perfectly justifiable cost, but the truth is, it only covers you if you yourself cancel the trip without explanation, and you may not get 100% of your costs back (be sure to read the fine print here!).
- What to do instead: Read through all the circumstances in which you are covered for trip cancellation and, if these sound sufficient, stick with the basic plan.
4. Check your medical policy before purchasing medical or emergency evacuation insurance.
Unless you are traveling to specific excluded locations or you have a very limited health insurance policy, chances are good your existing policy will cover you during travel as well.
The most common cost that isn't covered is emergency medical evacuation. If this is the case and you decide to buy a separate policy to cover this, steer clear of million dollar policy riders.
- What to do instead: The average cost of a medical evacuation is around $250,000 (and can go as high as $500,000) so keep your coverage in this range unless your destination or the distance to get you back home warrants additional coverage.
5. Don't buy rental car insurance unless you have no other option available.
Before buying rental car insurance for travel, check to see if your at-home auto insurer and/or your credit card companies will cover you for driving a rental vehicle while traveling. Often, they will!
Note: Since most regular auto insurance policies will not cover you for "loss of use," which is the lost revenue to the rental car company from a rental car undergoing repairs, you may want to buy a policy to cover this.
6. Only buy travel insurance if you really do need it.
In today's insurance-happy marketplace, it can be tempting to insure, insure, insure. But often your travels may not actually warrant the purchase of a travel insurance and/or travel medical policy!
- Will you be traveling out of the country or as an expatriate? If yes, you may need travel insurance.
- Are you planning any "extreme" activities that may have medical consequences? If yes, you may need travel insurance.
- Do you have the cash or credit to cover an unplanned trip back home if need be? If no, you may need travel insurance.
- Do you have the cash or credit to cover your costs out of pocket if you need emergency medical care (or if someone in your party needs care)? If no, you may need travel insurance.