Travel Insurance - Good Idea or Not?

Insurance is a means of protection against financial loss.  It is a form of risk management, primarily used to hedge against the risk of a potential or certain loss.  When you purchase insurance, you ‘transfer the risk’ because the insurer is taking the risk of the loss in exchange for a premium payment, which is typically a fraction of the loss amount.

Not always is insurance a necessity in travel.  The numbers show that stuff happens and you’ve got somewhere around a 20% chance of an event happening that could interrupt your travel plans or even cause you to cancel your trip.  Plans vary but typical covered events range from sickness, weather, death, accidents, flight delays and the like.  Additionally, insurance will provide other benefits like medical payments and emergency medical evacuations which can be very costly.

With only a 20% chance of something happening, that means 80% of the time you probably won’t require coverage.  But isn’t that the case with all insurance?  When you purchase homeowners insurance, you pray that your home won’t catch fire (odds are with you) or someone will get injured,  but it’s good to have the peace of mind knowing that if something happens, your insurance has you covered.

It’s no different with travel insurance.  If you are comfortable with the financial risk, then travel insurance may not be for you.  Your risk likely includes the out of pocket cost of lodging accommodations, flights and maybe some event reservations, all of which are typically non-refundable.  On the medical side, travel policies provide coverage up to $25,000 for medical expenses and up to $250,000 for emergency evacuation.

The cost for insurance is seven percent of the coverage amount.  So for $70, you can insure a $1,000 trip.  It's a relatively small price to pay as you don’t know when there will be an event that puts a crimp in your plans.  Often that event is something related to another family member who may not even be in your traveling party.

The bottom line is to assess your tolerance for risk and make a choice at the time of booking your travel.  Once something happens, it’s too late for travel insurance.

Protection Brands offers Travel Insurance in partnership with Rental Guardians InsureStays, underwritten by Nationwide Insurance Co.  Policies can be purchased on the web at www.travelprotection.insure.