The travel industry makes travel insurance policies from companies like Allianz Global Assistance and Travel Guard out to be the only guardrail between you and financial disaster. Buy coverage or regret you ever planned to spend a week in Orlando. In many circumstances, they are right to recommend this specialty product; in fact, it’s not unusual for many suppliers to automatically include insurance in their quote, motivated by the “for your own good” philosophy.
But as a savvy consumer, that’s up to you decide, which means you must first crunch the numbers to assess your risk.
To start, look at your cancellation penalty charges. If you are taking a cruise, a package vacation like Walt Disney World or an escorted trip to Italy, there is a sliding scale on penalties — you may lose your deposit with any cancellation, and you usually risk 50% of the final payment if you cancel within 30 days. At some point before the trip begins, you cross the point of no return where the company is very sympathetic about your troubles, but does not refund the dollars.
Is the amount they might keep more than you want to lose? Go directly to a travel insurance policy.
However, if the trip consists of an airline ticket, rental car and hotel room, the penalties vary. Most rental car companies do not impose any fees. Some hotel cancellation policies give you until 6 p.m. on the day of check-in to back out without penalty. Others only charge one night’s stay if you cancel. And if you cancel with the airlines, they will apply a $150 to $200 change fee per ticket (this can be as much as $250 for international destinations), but hold the remainder in an account to use with them in the next 12 months. If you fly frequently and your ticket is with a domestic airline like United or Delta, you may not think the $150 potential loss is worth covering. Know, too, that many airlines will waive re-booking fees when Mother Nature is involved, like Hurricane Isaac.
If the total risk is tolerable, paying for travel insurance may be just another expense on your vacation budget. Skip it to buy entrance tickets to the zoo or to take a sunset dinner sail.
If you are traveling overseas, the medical coverage, Medvac payments and lost baggage reimbursement features may become more important to you than when you are vacationing stateside. And it’s not uncommon for the cost exposure overall to be higher, which makes the cancellation features more important to many Americans. Any time the numbers scare you, buy the travel insurance.
Peace of mind has a monetary value, too.
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