Do you need travel insurance? The answer is, it depends. If you are taking a weekend road trip in your home country and have reservations that can be canceled with no penalties, then you probably don’t need travel insurance. If you are traveling overseas and have reservations like airfare and cruise tickets that aren’t fully refundable, you definitely should consider travel insurance.

There are two basic types of coverage — trip interruption and trip cancellation. Trip interruption covers issues that arise once your travel begins. If your flight is delayed and you miss your connection, the insurance will reimburse you for costs like airline booking fees, extra hotel expenses, replacements if your luggage is lost and other costs you incur because of the unexpected event.  

Trip cancellation covers events that might occur to prevent you from taking your trip in the first place. You need to check your policy carefully to see what is included but typically things like sickness, death in the family, or your work leave cancellation are covered. You can get back the money you have pre-paid for your trip (again subject to the limits of the policy).

Most importantly, trip insurance can provide health insurance and medical transportation if you need to be flown home or to a treatment facility.  That alone is worth the cost of the insurance. Most commercial insurance, including Medicare, does not cover medical expenses in a foreign country. Again you need to check the policy to see what is covered and the coverage limits.

What does it cost?  Rates are based primarily on your age, your residence and the cost of the trip.  

There are a variety of different companies that provide insurance. Sites like allow you to compare various insurance plans to find one that’s right for you. We have used Allianz and CSA in the past.

On a cruise to Australia, weather in Chicago caused us to miss our flight to Australia. We missed the ship in Sydney. We had to fly to Melbourne instead, pay for hotels and meals and finally board the ship in Melbourne the next day. CSA covered the airline fees, the hotel, transportation from the hotel to the airport and meals.

Most insurance will require you to pay these costs up front. You need to keep all of your receipts and submit your claim when you return from your trip.

One thing you need to know is that the trip interruption coverage only starts when your trip starts. If the airlines make changes to your travel schedule before your trip that cause you to incur extra costs like hotel stays, they are not covered by the insurance.

Travel is unpredictable, but with trip insurance, you can at least have the peace of mind that many of your financial costs will be covered should things go wrong.

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