If you’ve ever lost your luggage, there’s a good chance that it ended up in Scottsboro, Alabama. The small Southern town is home to Unclaimed Baggage, a 40,000-square-foot warehouse stocked with items that airlines failed to reunite with their owners, all for sale to the thousands of yearly visitors who walk its aisles and shop the orphaned goods. Visitors expect to find the common things one might pack for a trip such as cameras, ski equipment, and DVDs — many well below their original retail prices — but there’s also diamond rings, tuxedos and designer gowns, Rolexs, and even, occasionally, shrunken heads and suits of armor.
Although airlines successfully deliver the majority of lost bags to back to travelers, one scan of the hangar-size facility might make you think twice before opting out of travel insurance the next time you book a trip.
But is that the right decision? Do you really need travel insurance, or is it simply a waste of money?
Before answering these questions, you might benefit from more information about travel insurance.
What is Travel Insurance?
Travel insurance is one of many types of insurance available and is, as the name implies, specific to travel. It's an insurance product available for occasional or frequent travelers, designed to cover unexpected mishaps that result in unforeseen personal property losses, injuries, and illnesses during travel. Ideally, the coverage is in play whether traveling domestically or internationally, so it's always important to ask this vital question when speaking to a travel insurance agent.
Basic travel insurance policies only cover emergency medical expense-incurring incidences while traveling internationally. However, more comprehensive policies go several steps above medical coverage and include matters such as lost luggage, theft or accidental loss of money and credit cards, trip cancellation, flight delays, accidental death, and other unexpected expenses beyond a traveler's control.
There are some special types of travel insurance to consider as well.
Public Liability Insurance
For business travelers, many travel insurance providers include public liability coverage, specifically covering you while performing business activities for your own business or an employer. Some incidents covered under public liability travelers insurance include personal injuries, property damages or losses, and in extreme cases, death. Many times, businesses offer travel insurance to employees who frequently jet off across the country or across the pond, so make sure you check with your employer before investing in travel insurance for business purposes.
Compulsory Travel Insurance
When traveling outside the United States, check to make sure you don't need special insurance to enter your destination country. Certain nations require visitors from other countries to provide proof of sufficient travel insurance. Such insurance is often a condition for granting a visa or allowing visa-free entry to countries like Belarus, Cuba, Egypt, Thailand, Turkey, United Arab Emirates, and the Schengen Area in Europe. Tour-related businesses and cruise ship companies might also require passengers to provide proof they've obtained a minimum amount of travel insurance before joining the tour or boarding the cruise ship.
Optional Coverage for Special Circumstances and Conditions
Travelers who suffer from pre-existing illnesses or conditions might want to take extra precautions before setting off on a business or vacation travel expedition. An increasing number of travel insurance providers now offer coverage for such declared pre-existing conditions, including diabetes, asthma, cancer, and conditions resulting in seizures or other dangerous and debilitating predicaments.
In a similar vein, this type of insurance is also useful for those who are healthy but plan to engage in high-risk sports and other activities, such as hiking, trekking at high altitudes, scuba diving, hang gliding, bungee jumping, skydiving, ziplining, and skiing. Travelers who plan to rent a car or drive a friend or relative's car might also invest in travel insurance for rental car damage and other driving-related liabilities. For whatever adventures you might want to get into, you could use some extra protection.
Now, let's get back to our question regarding whether travel insurance is worth it. We sought expert advice from Eldad Boker, EdD, professor at Johnson & Wales University Providence College of Hospitality and the College of Online Education. He has spent the last 30-plus years teaching and studying international travel and tourism and has visited 74 countries throughout his travels.
According to Professor Boker, here are the top three questions you should ask yourself before purchasing travel insurance.
What does travel insurance cover?
There are several different types of travel insurance (car, trip cancellation, lost luggage, terrorism, etc.), and just like you wouldn’t pack a snorkel for an Alaskan cruise, you don’t need coverage that doesn’t match your trip. Once you’ve narrowed down what you need, make sure you know what it covers; for example, health insurance may cover only doctor visits or hospitalization or both.
“If you’re traveling internationally for any length of time, you should seriously consider purchasing medical and evacuation coverage,” Boker says. For example, imagine that you are in a Central American jungle or on a Himalayan mountaintop and need urgent medical care. With insurance, you could be evacuated for less than $100. Without it, you’re looking at a “large out-of-pocket expenditure of perhaps thousands of dollars” according to the Centers of Disease Control and Prevention.
On the flip side, Boker believes that car rental insurance is typically unnecessary. All of the major credit card companies offer rental insurance, so you may already be carrying in your wallet the same benefit the rental car company is trying to sell you for $15 per day (just be sure to use that card to rent the car). A quick call to your credit card company prior to your trip can give you specific information on your coverage — and peace of mind.
In addition, if your ticket is already refundable, why purchase trip cancellation insurance? “There’s no reason to be overinsured,” says Boker.
"Never buy any type of insurance on the same site where you purchase your travel. In general, you will pay more money for less coverage."
How much does travel insurance cost?
It’s wise to shop around for travel insurance, but, other than the provider, there are a few factors that will affect how much you pay.
- Age and health of travelers
- Length of trip
- Cost of travel
- Various options
Clearly, some items you have control over and some you don’t. Expect to pay 4 to 12 percent of the cost of your trip to insure it.
What is the reimbursement process if I do need to make a claim?
So you’ve decided that you need to purchase travel insurance and you found a reasonable package that covers your trip. Don’t forget to ask about the reimbursement process, if and when you have to access your plan. “It can be very easy … or very difficult,” says Boker.
Overall, Boker says that travel insurance is “very valuable.”
He offers this rule of thumb: “Never buy any type of insurance on the same site where you purchase your travel. In general, you will pay more money for less coverage.”
So where should you shop for travel insurance? Here are a few sites he recommends:
Does Travel Insurance Cover Pandemics?
While this is an issue most people wouldn't have considered before 2020 and 2021, travel insurance coverage for pandemics is now on the table and will likely remain there for years to come. Talk to any friends who had travel plans in 2020, and you'll first note the disappointment in their face and voice when they probably inform you their plans were changed if not canceled. While domestic travel has carried on, it has changed quite a bit, now requiring passengers to present a negative COVID-19 test result and wear masks, according to the Centers for Disease Control and Prevention.
Forbes notes that travelers now ask about travel insurance instead of looking at it as an afterthought pre-coronavirus. Many travelers might have thought it was a money-making venture and viewed the concept with a raised eyebrow as far as how much, if any, value it provided. Perspectives on travel insurance, like most things, have changed significantly as everyone has come to face a new reality filled with risks. People continue to search for new ways to avoid or mitigate risks, especially when putting themselves in situations where exposure to the coronavirus is a possibility. Travel is definitely an area where people should proceed with caution since they might find themselves on a plane with someone infected or need to visit an area with a high infection rate for work or personal reasons.
In addition to medical coverage for pandemic-related travel, top travel insurance plans cover matters such as trip delays and cancellations, medical expenses, baggage issues, emergency medical evacuations, or your option to cancel for any reason.
A few travel insurance companies that cater to travelers' needs regarding COVID-19 include HTH Worldwide, John Hancock, Seven Corners, Trawick International, USI Affinity, and AIG Travel.
Is Travel Insurance Worth It?
Even before the coronavirus-related events of 2020 and 2021, travel insurance had value for travelers. Now, with so much uncertainty, it's an essential part of a healthy travel plan, one that offers peace of mind and protection from all kinds of matters, from health and wellness to your ability to cancel a trip as a safety precaution without making a huge dent in your wallet.
In any case, travel insurance has more value when you buy before you reach your airline checkout counter, mere hours before departure when you are in a rush (and so is the attendant). When you wait until the last minute, you don't have time to consider what you might need. You might end up rejecting it outright, even though you don't know if you might experience a pickpocket or your destination suddenly closes entry to foreigners due to an uptick in COVID-19 cases.
When talking to your travel agent or planning a trip on your own, proactively search for travel insurance coverage and plans that apply to your life and travel considerations to get the most out of it.
Remember there's a lot of value when you get to enjoy your journey and keep peace of mind.