April 14--Airlines, tour operators, cruise lines and travel agencies almost always offer to sell you insurance somewhere along the line when you're arranging a trip. And as to the associated question, "Is travel insurance a good deal?" my answer is an unequivocal "maybe." The main uncertainty is about what risks you need the insurance to cover. Typically, you may face either or both of two big-dollar risks:
Trip Cancellation/Interruption (TCI). Any time you have a big prepayment that entails a substantial cancellation or change penalty you need to consider TCI.
-- If you have to cancel a cruise within a few days of scheduled departure, for example, you may lose all or most of your prepayment, which could amount to thousands of dollars.
-- Ditto a luxury vacation rental, where you generally prepay in full and may not get anything back if you have to cancel.
-- And you can also have hundreds to thousands of dollars at risk with a prepaid resort or hotel package or car rental, and you stand to lose up to $200 to $300 in exchange fees if you have to cancel nonrefundable air tickets.
On the other hand, you have little or no risk with conventional pay-on-the-spot hotel and rental car bookings.
TCI can help by covering whatever prepayments and deposits you can't recover from the supplier in the event you have to cancel before departure. It can also cover the costs of switching to a single-occupancy basis if a travel companion has to cancel. And it can cover costs of early return if you or a companion gets sick or has an accident during the trip.
But most TCI is "named peril" insurance, which means it covers you only for reasons specified in the policy. TCI policies are good about sickness and accident, covering even close family members who aren't traveling, but they're not very good for work-related cancellation, and they're often limited about strikes, civil unrest, and other destination issues.
Medical and Emergency Evacuation (Medevac). You probably don't need this for domestic travel: Typically, whatever health insurance you have at home will work anywhere in the U.S. But extra medical coverage might be a good idea when you travel overseas -- especially for seniors who rely on Medicare. The typical minimum travel policy covers $10,000 in medical charges and $100,000 in medevac, which is probably enough coverage for most of you. Prices, as you might expect, are based on age, trip duration, and destination.
Buying Travel Insurance. As with any kind of insurance, don't buy before you check out the options. Also know the gotchas -- and how to avoid them:
-- Because sickness is such an important risk, make sure you avoid an exclusion due to "pre-existing conditions." Many policies waive that exclusion if you buy the insurance within a short time -- a week to a month, depending on the policy -- of the time you make your first payment. Even then, however, policies won't cover contingencies that are "foreseeable" at the time you buy.
-- Unless the cost is prohibitive, buy a policy that includes a "cancel for any reason" option. Then you get to make the go/no-go decision, not an insurance company bean-counter.
-- TCI is usually sold in a bundled policy with medical and other minor coverages. If you don't need the TCI, buy just medical -- and buy primary medical so you don't have to pay doctor or hospital bills up front.
-- Buy just what you need to cover the big-dollar risks; ignore the small, low-risk coverage, such as delayed baggage. If some bundled policies include minor stuff, fine, but don't pay extra for a gold-plated policy.
-- Some suppliers sell "waivers" rather than insurance. Avoid them: They leave you more exposed to risk than true insurance.
-- Check out third-party options on an insurance comparison website before you buy the supplier's offering. Among them: g1g.com, insuremytrip.com, quotewright.com, squaremouth.com, totaltravelinsurance.com, travelinsurancecenter.com and tripinsurancestore.com.
(Send e-mail to Ed Perkins at eperkins(at)mind.net. Perkins' new book for small business and independent professionals, "Business Travel When It's Your Money," is now available through http://www.mybusinesstravel.com or http://www.amazon.com)
(c) 2015 TRIBUNE CONTENT AGENCY, LLC.
