The Travel Insurance Scam: Read this Post Before You Book Your Next Trip

Travel Insurance Worth it? No.

There are generally two elements to travel insurance – cancellation coverage (you get your money back for non-refundable deposits if you have to cancel for covered reasons) and interruption coverage (the cost to get home if you have to cut the trip short for covered reasons or extra costs due to airline issues along the way). Generally one policy covers both of these things.

And if you book a trip through an online travel agency, or even possibly through your airline’s website, you’ll probably be offered travel insurance.

If you’re booking a trip through a travel agent, they will probably recommend travel insurance. But is it a good idea?

Why Do Travel Agents Recommend Trip Insurance?

There are basically three reasons why travel agents recommend trip insurance:

  1. They make money selling the insurance. The average commission for selling travel insurance is over 40% and go up from there. There’s a financial benefit to the agent who sells you insurance through a third party insurer.
  2. It protects the agent from liability. Agents fear that something will go wrong along the way during your trip, and since they advised you and set it up you’ll go after them — that it will be deemed their fault — and they’ll be out of pocket (or have to make an insurance claim themselves). If you have travel insurance, the claim may be paid by the insurer — from coverage you’ve purchased. And Just as importantly, if they advised you to get insurance and you didn’t follow their advice, how can it be their fault when you’re out of pocket?
  3. They think it’s a good idea. Despite conflicts of interest in the first two reasons, some agents still believe it’s a good idea. And for some people, in certain circumstances, it may be. Read on.

What Is Insurance For?

Traditionally insurance helps you avoid risk of loss that would be substantial to your personal circumstance. A properly run insurer diversifies risks, rather than taking on all one sort of risk, so that they aren’t financially harmed in a material way when paying out claims. An insurance company gets paid to take on risk and by taking on different kinds of risk in different places they’re able to manage that risk. And you pay them to do so — you know that a small amount of money protects you from significant loss.

There are plenty of things that are often called insurance and sold as insurance that don’t really make sense as insurance. The typical dental insurance policy can really better be thought of as ‘prepaid dental services.’ You get a couple of cleanings a year. You get some benefit for major work but the policy usually pays out only half the cost on expensive procedures, and it’s common to see benefits capped at $1500. In other words, that’s the most you’ll ever get from your policy in a year. Rather than insuring against financial ruin, the company is paid to cover your dental procedures up to a specified amount but no higher. They make money on the people who never use it. The biggest benefit to dental coverage (besides that it represents tax-free compensation) is access to negotiated, in-network rates rather than protection against financial ruin.

Similarly buying a policy that will cover you for a hotel night if your flight is cancelled, or cover the cost of replacing your underwear and swimsuit if your baggage is delayed. People do get payouts on these things, but the maximum benefit is going to be pretty limited.

So You Think Something Bad Might Happen, Is Insurance Worth it?

Much travel insurance falls within the same category of coverage as a policy to protect your cell phone or the kinds of electronics you might pick up at Best Buy. There’s a reason the sales folks are so aggressive, the company makes big money on it and the commissions are good.

But that doesn’t mean you won’t ever come out ahead. Some people do drop their phones and get covered through the policies they’ve purchased. On average the insurer makes out, not the customer, but that doesn’t mean no one gets their money’s worth. Just that most people don’t.

Still, a simple calculation might suggest it’s worthwhile. If a typical claim would be for $500, and the policy costs you $100 (over the period of time you’re paying for it, perhaps $4 a month for 25 months and ignoring time value of money), you might that you’ll come out ahead f there’s a greater than 20% likelihood that you’ll make a claim.

And it feels good to be covered. No one likes fear of loss. Plus we notice the $500 loss, we may not feel the $4 a month.

Even so the calculation isn’t so simple. You pay out your $100, and then it turns out you have a claim. It isn’t all that seamless to get paid most of the time. I made a successful claim last year when my cell phone screen cracked (after I dropped it on the sidewalk). You can read about the hoops I had to jump through to get a pay out. There was plenty of paperwork, lots of reasons to deny the claim along the way, and persistence was necessary for the policy to pay off.

There’s a cost to the time, and some measure of likelihood that a policy won’t pay, that has to be factored into the equation. In other words, there’s a discount for reliability risk and customer service risk on the part of the insurer (they make more money when they don’t pay), and even for the insurer’s stability (will they be able to pay in the event of a claim).

Understand What Isn’t Covered

Travel insurance policies are rife with exclusions — often for “pre-existing conditions” (and you get to argue with an insurer later over what those might be, especially if you buy a policy some amount of time after booking a trip where it could look like you’re doing so because you know of a potential existing problem). They also may carry exclusions related to the very sorts of reasons you want to have coverage for, such as a family member’s medical emergency rather than your own, or for an unexpected work obligation that forces you to cancel a vacation.

Policies have different sorts of covered events. If something happens that isn’t listed in the policy, typically the policy won’t pay.

Travel insurance does not mean “protection against any unfortunate circumstance that may arrive” unless the policy explicitly says so and without exclusion. Those policies will, naturally, be more expensive.

What Kind of Coverage Do You Have Already Without Buying a Policy?

Before traveling internationally, it’s a good idea to find out what kind of coverage your health insurance provides. The policy I have through work covers me abroad in a substantially similar way to how it would at home. Not every policy necessarily does, and if yours doesn’t you may want coverage for health abroad.

I also mention that one should insure against catastrophic events. If medical evacuation isn’t covered by your policy, and the cost is something that would cause financial hardship, then “MedJet Assist” or similar offerings may be for you if you’re going to travel somewhere that you won’t have access to state of the art medical care. Medical evacuation from remote locations is certainly something to consider if your standard policy won’t provide for it.

And the advice that private insurance coverage often includes coverage for travel abroad specifically applies to US residents, but may not apply to residents of many other countries. It’s very common for non-US residents to have coverage – either privately or through government insurance – that won’t fully cover them abroad.

In addition to health insurance, may sorts of trip interruption and minor expense (hotel night due to irregular operations, lost luggage) coverage often comes from premium credit cards that you may have used to make your booking. Just as my Sapphire Preferred’s purchase protection paid the cost of a new screen for my phone when I dropped it.

Like many cards, Sapphire Preferred offers:

TRIP CANCELLATION INSURANCE*
Receive reimbursement for travel due to covered cancellations and emergencies when you purchase tickets with your Chase Sapphire Preferred® card.

AUTO RENTAL COLLISION DAMAGE WAIVER*
Receive coverage at no additional cost for covered damage due to collision or theft up to the actual cash value of most rental vehicles. Remember to charge your entire rental transaction to your Chase Sapphire Preferred® card and decline the rental company’s collision damage waiver coverage.

TRAVEL ACCIDENT INSURANCE*
Receive coverage while traveling for covered common carrier accidental death or dismemberment at no extra cost when you charge your travel fare on your Chase Sapphire Preferred® credit card.

TRAVEL AND EMERGENCY SERVICES*
Get help coordinating medical, legal and travel assistance services while you’re away from home.

LOST LUGGAGE REIMBURSEMENT*
Carry-on or checked luggage is covered if lost or stolen when you purchase your common carrier ticket using your Chase Sapphire Preferred® card.

TRIP DELAY*
When a covered trip is delayed more than 12 hours due to a covered event, expenses incurred as a result of the delay, such as meals and lodging, can be reimbursed.

Lots of conditions and exclusions of course, but that’s often the nature of the beast. (One such exclusion often found in credit card-provided coverage is that booking award tickets where you pay the taxes on the card may not generate coverage. Ask, and document the response, before assuming that it will.)

Who Should Buy Travel Insurance?

Cruises often involve substantial deposits or even full payment as much as a year in advance or more. So do safaris and other similar land packages. The fact that they can be both very expensive and also booked far off into the future means that there’s both significant risk of loss (big $) and substantial time during which to incur that loss (plenty of things can happen between time of booking and time of the trip).

So for folks where the loss is big enough, where they’ll really feel it, it makes sense to insure. If it’s a once in a lifetime trip, if it represents a substantial portion of one’s income, or heaven forbid if borrowing the money to take the trip (or if paying for the trip means not paying for something else if an important life event comes along) then by all means take the coverage.

On the other hand, if the amount of money are small, or risk of changing plans isn’t that great, or especially if you’re financially able to eat the loss if something bad comes to pass, then don’t “pass on the insurance” — instead think of yourself as “self-insuring.” You’re basically paying yourself for coverage (by not paying a premium to someone else), and if a cost or loss comes to pass so be it.

You’ll feel the loss. You’ll wish you bought the coverage. Because at the time you see the deposits flushed down the toilet or the extra money coming out of your pocket during a trip delay, but you don’t see the money you saved each time you didn’t buy coverage.

But most people who can afford to take the loss, especially for small losses and especially for trips that aren’t booked especially far out, likely come out better financially overall if they don’t buy that coverage.

Rather than the adverse selection problem identified by economists, that people who are most likely to need the coverage are the ones most likely to buy it, frequently the most risk adverse consumers are the ones most likely to buy coverage. And as much as buying insurance, they’re buying the comfort of knowing they won’t be out a lot of money when unforeseen circumstances arise. They’d rather be out a medium amount of money now instead.

Should YOU Buy Travel Insurance?

You know what? I don’t buy travel insurance. I don’t sell travel insurance. And I don’t actually proactively recommend travel insurance to my award booking clients. I probably should, in case something goes wrong with their flights I don’t want them to argue that I arranged the connections or recommended the airlines and routings (usually out of what’s available…) and thus should be as responsible as the airlines for any costs incurred during irregular operations.

So… if you’re booking an award ticket through me, I highly recommend you get travel insurance. Thank you!

Still, there are five reasons why travel insurance isn’t as good a deal as many people think.

  • What company is providing the service? How reputable are they? Very few people comparison shop.
  • How good a deal is the coverage – cost versus likely payout – there’s a reason the coverage is offered, which is because it’s profitable for the firm making the offer.
  • It doesn’t protect what you think it does. There’s fine print as to what circumstances are covered (not all events you might think trigger coverage in fact trigger coverage), how much coverage is provided (whatever your out of pocket costs are vs a fixed amount per incident), and in what form it takes (cash refund vs travel credit).
  • Followup to actually get a claim paid is costly — time submitting the claim, documenting everything correctly, following up to ensure payment. Sometimes more costly than the payout itself, but almost certainly when factoring collection costs into the risk-adjusted net present value calculation of whether to purchase insurance it tilts against the purchase.
  • Insurance is something you buy against low-risk catastrophic costs you can’t absorb if they were to occur, not relatively low cost events like travel disruption (lost luggage, the need for an extra hotel night).

But if you’re going to buy coverage, and these recommendations are entirely anecdotal as I’ve caveated that I don’t buy it myself, I’ve heard very good things about both TravelGuard and InsureMyTrip.com.

Read the details of the policies you’re buying, make sure they match your needs (that you are covered for the risks you think you are covered for, don’t just assume “you’re covered against bad stuff happening), and be prepared for a claims process — paperwork, delay, and potential hassle — if you do indeed need to make a claim.

And if it’s a trip of a lifetime, real money on the line, and you’ll sleep more soundly with coverage, then by all means! Your travel agent will thank you for helping to take them off of the liability hook, and they’ll appreciate the commission.

Do you buy travel insurance? How easily has it paid out for you?

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. I always buy travel insurance for high-dollar package travel with severe cancellation penalties, such as a cruise or safari. And some companies, such as TravelEx, provide primary (as opposed to secondary) medical insurance, which means they pay out before you make a claim against your regular policy. Many others are secondary insurers. For smaller, particularly domestic, trips, I agree that self-insuring is the way to go for most people, assuming they have the financial resources to do so.

  2. I don’t buy travel insurance, but I pay an annual fee to carry a credit card (RBC Infinite Avion) that offers a very comprehensive package of travel insurances, and make sure to buy all my revenue tickets through this card where possible.

    Historically, I have found RBC’s Travel Insurance to be incredibly simple and efficient to deal with when needing to make a claim. I’ve had to make 3 claims so far, two related to rental car damage and one to flight/baggage delay. In every case, RBC simply took the details from me via a phone call (I had to fax over some additional documents) and then handled the rest of the claim without bothering me further.

    In the case of an Enterprise car damage claim from Canada, they simply contacted Enterprise and handled it directly. In the case of an Avis damage claim from South Africa, they negotiated with Avis and although Avis charged the credit card, they sent me a cheque to cover the amount for the damage (ironically, the Avis charge also included a small refuelling fee that RBC’s cheque also covered!). Finally, with an Emirates delay and missed connection, they negotiated a settlement with Emirates for the cost of essential clothing purchased (about $120 or so) and had Emirates send me a cheque for that amount. They also sent me a cheque directly for the cost of some incidentals (internet access and meals) incurred during the 24 hours that Emirates put me up in a hotel in Dubai.

    Overall, I find that having this policy makes my traveling a lot easier, if only for the peace of mind. If I didn’t have it anyway as a part of the credit card, I would probably go out of my way to purchase a similar policy for cash on an annual basis. Of course, RBC Insurance is reputed and reliable and I’ve seen (and dealt with) far dodgier insurance companies in the past. However, like most things in the travel sector, a bit of research can ensure you get a really good deal.

  3. Gary- If I use my Chase Sapphire card to pay for my “free” award ticket fees do I have the travel coverage?

  4. I’ve bought travel insurance once. For the 4 united mile trip to Hong Kong last summer. United canceled the ticket before I got to fly so I thought my travel insurance would cover something. Nope. It was a named policy from Allianz, and canceling a ticket was not covered. 🙁

  5. I buy it for the high-dollar tours that I take but I don’t get it for the award flights taking me to those tours. And I don’t buy it for run-of-the-mill trips (basically if I stay in North American/Caribbean I don’t buy it). I’m one of the few that has come out ahead with insurance after my condo building went up in flames and I was displaced for 18 months. Not on the same scale as travel insurance but the same concept…better to have it and not use it than to not have it and need it!

  6. I don’t feel that the information in your posting is 100% accurate. For example pre-existing conditions are covered by the travel policies I have used as long as the first policy premium is paid within 10 or so days of paying a deposit or purchasing a non-refundable ticket. Also, medical conditions and pre-existing conditions of a family member not travelling can also be included in the coverage. I find using travel insurance to be very cost effective – usually about 2% of the non refundable cost of the travel. And gives me great peace of mind with elderly parents whose health situation can change. I have benefited several times from having insurance and have had no difficulty in filing claims or receiving 100% reimbursement.

  7. Gary,

    Big fan of yours, but not sure the article was all that useful.

    1. Your target audience is miles junkies. I would have loved it if you could have explored the nuances of insurance in the FFM world. For one, for the most part, miles are more or less self insurance — I can book a ticket 330 days out, and if I have to cancel, for $150 I get my miles back, no questions asked. That’s cheaper than any policy for a paid ticket. Hotel bookings on points are never prepaid either.

    But there are still some things that could go wrong, like travel interruption. I just have yet to figure out the insurance game for FFM tickets — not sure what to insure, and when they ask the total trip cost, I just don’t know.

    2. There’s a big difference between travel insurance and travel protection plans. If you’re buying the “insurance” through the travel vendor, you’re more likely to be buying travel protection. Travel protection typically sucks — it rarely gives a cash refund, and usually provides for a credit of some sort with the vendor. That’s generally considered inferior to a cash refund, more so if a true insurance policy would price out similarly.

  8. Thanks for the info, and I think you have captured my views on trip cancellation/interruption insurance.

    It may be worth covering travel health insurance in a separate post. My major medical does not cover any procedures out of the country (it takes some digging to find this information often). Not to mention, if you are traveling to the developing world (or to rural areas), then the evacuation costs can be extremely high. Unlike trip cancellation, where you are at most out the cost of the trip you have paid for, a medical catastrophe could cost tens of thousands of dollars, particularly if they have to evacuate you to a city with western-standard hospitals. Well worth piece of mind, IMO.

  9. Google “Haggler travel insurance” – if this was an awesome idea people wouldn’t be writing to the New York Times asking for help. Since that column only publishes stories where it’s 100% obvious no questions asked the company is wrong: that should tell you something about what this optional thing is worth (nothing you can do about actually traveling or buying a fridge; but this is a first world scam).

    I am curious about Gary’s opinion on credit card insurance, though – that sounds like it would be a lot more promising. I do know people who have dropped iphones or new laptops and had AMEX send them a check for a new one.

  10. I always buy insurance but NEVER from an agent. I buy it myself online. The main reason is medical but also for lost and delayed bags. I once had a bag delayed for over 12 hours but the airline only allowed me $50 vs. $300 with the insurance company. Sorry but $50 can hardly buy you a pair of underwear and socks in London!

  11. Gary, you are correct – “insurance” is for those random perils which the individual cannot absorb (notwithstanding the fact that the most common sort of insurance – health insurance – has beceome more of a third party payer mechanism).

    I never purchase travel insurance. Simply, the peril I really want to avoid is the hassle and inconvenience of screwed up plans. This peril is never covered. I’d sooner spend cash avoiding perils than purchasing insurance which may or may not make things better.

    Accordingly, if I’m taking a cruise, for example, I’ll get to the embarkation port a day early, paying good money for a hotel the night before to avoid the peril in the first instance. If weather prevents me from embarking, no insurance is going to “compensate” me for a ruined vacation.

  12. I have bought travel insurance once. It was for a cruise that was prepaid in full a year in advance. I got it mostly because of the risk that my wife or I would be injured before the trip and unable to go–my wife has a hobby that makes her more prone to major injury than couch-sitting. She was, in fact, injured before the trip and needed ACL reconstruction. Thankfully it was far enough out from the trip that we could still go, but if her injury occurred within a couple months of the cruise, we could not have, and the insurance policy would have been invoked.

    And more recently, a relative of mine fell going down the stairs and broke a leg the day before a scheduled trip to Europe. They had travel insurance and got back everything for their tour, but had not insured the award tickets or a prepaid hotel, so they’re still out that money.

  13. This post is incomplete … travel ins to reimburse costs is one thing, comprehensive ins (beyond the add on rip offs) deserve some sort of reference. The important aspect of that ins (imo) is the support to evacuate or be transported out should there be an emergency (political or medical). These types of transports require medical, staff and equipment, and often chartered flights, etc Its very expensive to pay on your own. Of course, this should really only be considered if going to places with poor medical services and transport options. Traveling to france its not needed, whereas a trip to Laos or a bike trip off the beaten path makes it something more relative that should be considered. Those policies often throw in the lost luggage, delayed trip, etc protections as well

  14. A related but different issue is an Air Rescue Card from http://www.travelassistantnetwork.com. They fly you home with medical transport in case of a medical emergency. Anyone ever bought this plan? Anyone ever had he used their service in an emergency?

    It troubles me because I am a lawyer and am not satisfied with the plan summary. I read and write contracts. I have asked for a sample contract twice now and they don’t want to send it to me. That tells me that the “fine print” (as nonlawyers call it) is filled with stuff that is likely to cause me not by their service. Of course I don’t know that, but I assume that because they have not sent it to me after 2 requests.

  15. For the first time we choose not to insure. This was for a trip to Australia where we were embarking on a 14 day cruise to Auckland and then flying to Singapore. I had hesitated initially getting the insurance and then I had a pre-existing condition. Chose to have surgery so that was taken out of the equation. Began doing some work myself. We are retired military and I found out that Tricare has coverage all over the world for us so medical was not a problem. I then thought of medical evacuation coverage particularly if I was at sea. The high majority of those evacuated are done through a Coast Guard equivalent and there is no charge. I felt that if something did happen, I did not need to be evacuated to the States since there is very good medical care where I was. It was a calculated risk as we then departed with no insurance. We saved quite a bit of money based on the cost of our trip and our ages.

    Do your research and know your risk comfort level.

  16. One other important thing to note about medical evacuation insurance: Most policies will provide emergency evacuation to the NEAREST appropriate medical facility – in their opinion – which may still leave you stuck for quite some time recovering in a hospital in a foreign country where you don’t speak the language and don’t have your family nearby. A few policies promise to evacuate you to the facility of YOUR CHOICE in the US. An important consideration in my opinion, especially if you are travelling in under-developed countries with minimal or poor medical care.

  17. Mike – you are absolutely correct about nearest appropriate facility. If you are in a 1st world country, it is likely that the nearest appropriate facility is in a nearby big city.

    These policies will not fly you home for a longer-term recovery. If you need medical transport home for your longer-term recovery, these policies will not cover that.

    My philosophy about insurance is that I like to insure what I can’t afford to lose. I can afford transport from a small Italian city to Rome or another large city. what I cannot afford is a medical jet transport from Rome to JFK. That’s the risk I want to insure and that appears hard to find. All ideas are welcome.

  18. I bought an inexpensive policy ($62 ) primarily for catastrophic medical coverage not covered by my medical insurance for an upcoming trip to Germany from insuremytrip.com -peace of mind. Thanks for the review of Chase Sapphire benefits abroad.

  19. I get medical evacuation insurance included as a member of Divers Alert Network for no diving emergencies as well as dive related ones. Back to the US. Great deal, thebership for me and my wife is $55/year.

    I don’t think you need to be a diver.

  20. I bought insurance before a mission trip to Sao Paulo. Due to weather, our Continental flight was cancelled and we were re-routed to United, then diverted through Panama with Copa Airlines. We lost all our luggage including medical supplies, arrived two days late, and had no clothes to wear. We kept all records but were never given any insurance money because none of the 3 airlines would not take responsibility, and so the travel insurance denied the claim.

  21. Shannon – which company denied the claim? We would all like to know who to avoid. What was stated basis for denying the claim? I would love to see a quote from the denial letter, but your paraphrase would be a good second-best.

    The more I look at travel insurance from a lawyer’s perspective the more I smell consumer scam. I feel leery about wasting my money.

  22. Currently I reside in the UK where the picture is totally different. In short you would be mad not to carry travel insurance, but the premia are very low. I pay $150 per year for the family, which covers unlimited trips up to 60 days duration each. It covers cancellation or delayed travel (thus allowing me to benefit from cheaper non-refundable travel), lost or delayed baggage (up to about $5000), complete medical in situ and medical evacuation and personal liability (up to $2m). Whilst I’ve only claimed once (without any difficulty and only for a small amount), there are some potentially huge numbers in there for, IMO, a small premium. I’d be far more inclined to save on household possessions insurance than travel insurance.

  23. Beachfan – I looked at the plan summary online and found nothing about fly you home. I am guessing that if it did they would be boasting about it. I am guessing that this is one of those fly you to the nearest appropriate facility plans. Then you are on your own.

    If anybody sees information to the contrary about this plan, please post it. Thank you.

  24. I am a travel advisor and I do make sure that my clients are aware of the availability of insurance.

    The idea that individuals need to weigh risks and benefits when it comes to travel is a good one, but that does not make travel insurance a “scam”. Nor does the fact that you may have coverage from a credit card company or another existing policy mean that it’s any more valid, helpful, or easy to use than travel insurance purchased independently.

    For example, did you know that US health insurance isn’t accepted in Mexico? To be treated you will need to be able to show proof that you can pay. As in how much money is in your checking account right now or how much available credit do you have on your card?

    How many people expected to be delayed due to a hurricane in NYC in October? How many people paid out of pocket for extra hotel nights in Europe, or missed their Mediterranean cruise, because they couldn’t fly due to a volcanic eruption in Iceland? Problems are not just from the risk that people can easily imagine – Grandma gets sick, Timmy gets an ear infection, etc.

    I want my clients to be informed about all aspects of their trip. I want them to travel with confidence and without worry. That’s why we discuss travel insurance. They are not required to purchase it, but it would be a disservice to not ensure that they had basic awareness of their options.

    Like @Dan I wish this post was more focused on points and miles. I also with it was more fact based, and less reliant on opinions.

  25. I’ve never bought travel insurance. My dad always says, “The definition of an optimist – someone with an insurance policy who thinks it covers something.”
    And I, Sir, am no optimist!

  26. I have only taken travel insurance once. When we went on our 3 month trip across SE Asia. It was primarily because while my Insurance Policy from the US would have covered health care costs, it was not as comprehensive and did not include evacuation.

    Given we were traveling to places with Sub Standard Health care (Cambodia / Laos) and doing Dangerous Things, like climbing mountains and riding zip lines, it seemed prudent to have a Medical Evacuation Policy. Also It was not to long after the Political Unrest in Bangkok and during the flooding, but we were thankfully able to avoid both of those.

    We used World Nomad because they seemed designed for what we were doing. Coverage for Adventure activities and the like, as well as good recommendations on the “Long Term Traveler Blogs”

  27. I think you make good and fair points. I travel more than my friends and I am asked by them whether they should buy trip insurance and is it a ripoff. I believe it is not a ripoff, because the one time I filed a claim I was paid off fairly and timely. (I have only purchased it for a major trip involving a tour, and another time related to an expensive cruise.) And if protecting the investment will let my friends to sleep soundly, they should go ahead and do it. When they are back I only hear about the wonderful trip, and not that they should not have bought insurance.

  28. I had travel insurance last year for a Med Cruise, our return flights on UA were canceled due to Sandy. I was able to rebook my self but our trip home was delayed by 1 day and the insurance co “Allianz” covered the $500 bill for the delay no problem. This bill could have been a lot higher if I had been like most of the people in the hotel lounge and just accepted the rebooking UA gave them, (as much as a 6 night delay).

    But the real reason to get it when you are on a cruise is that the med facilities on the ship DON’T take medical insurance. So you will have to pay any bill out of pocket. Most travel insurance polices will reimburse you after submit the paper work, since the operate as secondery insurance.

  29. What about unforeseen disasters like the ash cloud? You can’t really quantity the risk and most people don’t have the resources readily available to deal with such a situation. Not taking insurance means you take the risk upon yourself instead of passing to an insurance and you can’t accurately know the level of risk you are taking and therefore make an informed decision.

    As NB said, in the UK travel insurance is essential for the medical coverage (though remember your EHICs fellow Brits!)

    There are many scams with travel insurance but most can be avoided by shopping around and reading the small print.

  30. I agree that travel insurance plans can be tricky. My husband and I have travelled for years and we were always wary of what the agents would tell us. It never felt right for a travel agent to sell travel insurance since it was a conflict of interest. In 2006 a friend told us to try a website they found called http://www.tripinsurancestore.com . That was a refreshing and welcome surprise. We particularly like their pre-screened selection of companies and the options available. And their proactive recommendations in response to my comments when we call are spot-on. We love dealing with tripinsurancestore.com for our travel insurance. We are very pleased with reliability of service and support/assistance when needed.

  31. As a follow up to my previous note on medical evacuation insurance, this is the only company I am aware of that specifically includes international medical evacuation to the facility of YOUR CHOICE and in the US. Please note that I post this only as a helpful piece of info. There may be other companies as well and I do not have any financial or vested interest in this company.

    http://www.travelassistnetwork.com

  32. @Dan

    You raise an interesting point. That a FF with plenty of miles in the bank and a form of self insurance that other travelers don’t have.

    I wonder if there would be a market for stripped-down discount travel insurance for FF?

  33. We take out medical anytime we leave the country as my husband is on Medicare, and Medicare doesn’t cover outside the US. His secondary coverage does but….. the peace of mind of having a trip protection plan that is primary on medical is worth the price.

  34. You should always have travel insurance. I think that paying a few hundred dollars was worth it to avoid costs of potentially thousands of dollars. (ER in America is crazy expensive! Nearly 3,000AUD for a two night stay!)

  35. @ mark

    It’s not part of their supplemental insurance it’s part of their basic membership. It took me less than a minute to reread it by googling “DAN medical evacuation”.

  36. What card would you say has the best rental car benefits? I always use my Amex Plat but the Chase SP sounds good too. What card do you use?

  37. For frequent travelers, self-insurance really does make sense. Typical travel insurance cost is 7% of trip cost; that means if you take more than 15 trips lifetime, and have to cancel out of 1, you’re ahead self-insuring (and you don’t have the hassles of dealing with the insurance company).

    The one coverage I do buy for international travel is medical evacuation through MedJet Assist, which does provide evacuation to the hospital of your choice within your home country. Regular $260/year for individuals; $215/year with AARP discount. Can save tens of thousands of dollars on an evacuation (plus it might save your life, since without it you may be dealing with people who don’t know how to evacuate you when needed).

  38. I’ve never purchased this. For me, I tend to use hotels where I pay 10% or so extra to be able to cancel up to the day before….and then sometimes cancel that a few days in advance if a better prepaid rate comes up.
    AMEX Platinum has paid out twice on car rental damage, and they handled it directly with the car insurance company. I have found their premium protection plan at $19.95 for up to 6 weeks of coverage on a primary basis to be worthwhile (meaning I have made a lot, or saved a lot in increased premiums) renting with the platinum.

    Over the years I have thought about cancelling the card many times when I didn’t use it a lot, but every time I remember back to when plasma TV’s first came out and I paid $9000 for one that went out 1 yr and 11 months into it’s use (AMEX doubles the warranty). AMEX paid $5000 to CDW for a new TV that went out in about 40 days, over a holiday period. CDW refused AMEX’s request to take the TV back because it was past the 30 day period, even after a CDW supervisor had assured me in an email they would take it back . Amex ate the $5000 for a third TV. don’t know if they still do business with CDW after that.

    So, I’d say I’m way ahead on my annual fees, having covered that for more than 10 years with just one claim, and 20 yrs if you count both TV’s.

  39. As Denise and others have noted, medical coverage under Medicare and other insurance often does not cover medical costs outside the US.

    It is beyond the scope of Gary’s article but there is a need for Gary Leff style, left brain analysis on this topic. A big sweet spot as the baby boomers take on international travel during their golden years.

  40. I have always self-insured until I got stuck in Chicago a few months ago and had to pay $100+ for a hotel because the connecting flight was cancelled due to weather and the airline doesn’t cover you for weather delays/cancellations.

    Realized an annual travel delay insurance (that covers all of my flights for work, personal and award travel) would more than pay for itself given how much I travel.

    For just $119/year, I can get up to $300/day (and $1,000 per trip) coverage through Amex Travel Insurance. You don’t need an amex card to buy the policy although I happen to be a Platinum cardmember

    The coverage states: “Reimbursement for lodging and other necessary expenses if your travels are delayed, including: flight is overbooked and you are involuntarily denied boarding, if you miss your flight connection, and if your flight departure is delayed or canceled. 6+ hours or by 11:00 pm of the same day as your flight.

    Would be nice if it was earlier than 11pm or 6 hours, but it is a hell of a deal since they’ll cover hotel, food, transportation to and from airport, and basic clothing…so you can really maximize that $300 benefit if anything happens.

  41. I live in Canada where, like an earlier poster, I rely on my credit card (RBC Gold Preferred) to give me the cover I need. No experience with claims yet. Lucky me.

    While I was living in the UK, I used to have an annual policy covering all my (many) trips. Like an earlier poster mentioned, those policies are cheap in the UK and cover a lot.

    One thing that I have not yet seen in the responses is that in the UK credit card companies are (or at least were) jointly responsible with the vendor. So if the vendor does not deliver, the credit card company has to pay up. When Canada 3000 went belly-up many years ago, I had my money back from my credit card company before my travel companion, who lived in Canada, had a chance to return the paper work to her travel insurance company.
    For everyone who lives in the UK’s sake, I hope the rules are still the same. They served me well.

  42. Gary and others mentioned about auto insurance coverage by Amex Plat and Chase SP. Are we talking about primary Collision Damage (CDW)Waiver? I don’t believe these 2 cards provide free CDW.
    I have the United Mileage Plus Explorer that provide FREE Primary CDW.

    TY

  43. I’m so glad that my husband and I purchased travel cancellation insurance last year for the month-long Silversea cruise that we were taking. We had to cancel the trip right before the sailing due to my emergency back surgery. The insurer refunded every penny that we had paid out on this very expensive trip. One thing to know: you must keep every credit card statement that shows a payment for the trip, especially if you pay in installments the way we usually do. This will be required as proof of payment.

  44. For my last two vacations, I bought trip insurance with cancel for work reasons coverage. It’s a bit more expensive and like pre-existing condition coverage needs to be bought at the same time as the initial deposit or a few days later. But the risk is worth it for me. We have a trip coming up with a bit over 10k in nonrefundable elements. Trip insurance with 100% cancel for work coverage was about $300. Since canceling for work is a real possibility, it’s a good hedge for me. The other coverages on the policy are gravy.

  45. @43 Pieter Z – yep, the Consumer Credit Act still provides for joint liability between the credit card company and the seller 😀

    As others have said it’s a totally different ballgame over here. Most of us don’t have medical insurance (as we’ve got the NHS) so for travel it’s a no-brainer to buy some. Sure the EHIC provides for cover within Europe, but a cheap annual multi-trip policy further enhances this and adds a whole lot of extras re. cancellation, etc. If you travel a lot then having multi-trip in place just means you never need to worry about individual trip cover (which does tend to be over-priced, certainly when sold by tour operators). It’s a very different setup to the US.

  46. We purchased travel insurance from InsureMyTrip which looked pretty good. However when my traveling companion broke the neck of his femur in Italy and wound up in the hospital for almost three weeks, our dealings with InsureMyTrip’s underlings were horrendous.On Call International mishandled every hospital, ambulance and plane transaction we had to make. We finally, after more than a week, booked our own trip home. Now we are dealing with Travel Insured International, the claims section of InsureMyTrip and they are impossible. I have a lawyer ready to take our case and also will be visiting Banking and Insurance in Vermont to see that this company never sells another policy in Vermont. BE VERY CAREFUL ABOUT BUYING TRAVEL INSURANCE111

  47. How stupid of me to only read about this after the fact. As I was traveling internationally and had to make several connecting flights to reach my final destination I thought it would be wise and prudent to buy travel insurance to cover for the unexpected. I bought an Expedia Total Protection Plan by Stonebridge Casualty Insurance Company which had trip cancellation & trip interruption benefits. I was unable to make my domestic connecting flight (thanks to United Airlines 5 hour international flight delay). I have to buy another domestic flight ticket as PAL would not take into consideration that I was unable to make my scheduled domestic flight due to an international flight delay. Just found out that Stonebridge does not cover flight delay. YES, TRAVEL INSURANCE COMPANIES JUST WANT TO MAKE MONEY and i have so much money to give away! WHAT A SCAM!

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