Travel insurance sure seems like a simple concept: By its nature, travel involves the unexpected, so it just makes sense to have a little extra insurance when you do it. So we at Credit.com started out with two very simple questions:
1. Should consumers get travel insurance?
2. Should they get it through their credit cards, many of which offer different forms of coverage?
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We quickly discovered that with travel insurance, simple questions often involve complicated answers. That’s partly because travel insurance can mean so many different things. One automatically thinks of insuring one’s luggage, and insuring against the entire trip getting cancelled due to weather or some unforeseen accident.
But there’s a lot more to it. Should you insure your rental car? That may depend on whether you stay in the United States or go abroad. If you have a medical emergency while overseas, does your insurance pay to fly you home? Or does their coverage involve simply a referral service, where they connect you to a medical evacuation company?
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It’s also because protection can come from so many different sources. Credit card companies offer travel insurance. So do auto insurers, life insurers and AAA. For the average person about to set off on a trip, each type of company offers its own set of strengths and weaknesses.
“It can get very complicated,” says John W. Cook, former executive in charge of traveler insurance for Travelers Insurance Company, and now president of QuoteWright.com.
An Organizing Principle: Figure Out Your Fears.
The first step in figuring out which type of travel insurance you need is to figure out what you’re actually worried about. If you have to rent a car in London and you’ve never driven on the left side of the road, your concerns will be a lot different than if you’re going on an African safari with plenty of professional drivers but no speedy access to hospital care.
If you’re spending $2,000 on airfare to Europe, it may not be worth the $75 to $165 you’d spend on trip cancellation insurance, Cook says. But if you’re booking a $50,000 trip on a luxury cruise liner, a little insurance might make sense, especially if you’re worried that your spouse’s health might decline before you set sail.
“My recommendation: Know what you need,” Cook says.
Image: happyrelm, via Flickr.com