Guide to Travel Insurance

It's fun to think of the great time you are going to have on your vacation, but what if something goes wrong?  What if you get sick with the Norwalk virus, or you have to return home when a family member is hospitalized with a serious illness?  You can lose part or all of a prepaid trip (such as a cruise), or you can incur thousands of dollars of additional expense. 

Travel insurance can help with unexpected expenses.  An excellent discussion of travel accident and medical insurance, as well as trip cancellation insurance, can be found on Frommer's website.

But there are substantial differences between different travel insurance policies.  Let's take a look at the different types of policies, and what we recently found when we were researching travel insurance for an upcoming trip with a company that specializes in bus tours worldwide.  First up was a travel insurance policy that is sold by the tour company.  They make this process simple -- just check a box and you're insured.  But, as you'll see shortly, that was the worst option for this trip.  Next, we have two separate policies that are issued by independent travel insurance companies, not affiliated with any tour company, cruise line, or travel agency.  We've named these Company A and Company B (they are in the list on Frommer's website, but we haven't used their names).  Here's a quick breakdown:

1.  For Trip Cancellation coverage, are you covered if you have to cancel your trip when a close relative (father, brother, sister, etc.) is hospitalized?  How about if they die?
     -- Tour company - No if hospitalized, Yes if they die
     -- Company A - Yes for both questions
     -- Company B - Yes for hospitalized but only if life threatening, Yes if they die.

2.  For Trip Cancellation coverage, are you covered if you cancel your trip because you are summoned to serve on a jury, or are involved in an auto accident on the way to the airport and miss your flight, or if you are laid off from your job and need the money?
     -- Tour company - No to all
     -- Company A - Yes to all
     -- Company B - Yes to only jury summons

3.  Once you are on your trip, something very serious may happen at home.  Are you covered for the refund of the unused portion of your trip expense if you have to return home due to a hospitalization or death of a family member?
     -- Tour company - No
     -- Company A - Yes
     -- Company B - Yes, if hospitalization is for life threatening illness or accident, Yes for death

4.  Once you have made your final payment, you find that you are unable to travel due to circumstances that are not covered by your insurance (or maybe you just change your mind).  Can you recover the amount you have paid?
     -- Tour company - Yes, with refund made in vouchers good for future travel (less the nonrefundable deposit)
     -- Company A & B - No

As you consider the purchase of travel insurance, think about the scenarios where you will want or expect coverage.  Then you will need to read the policies offered by each company (they're all online at the companies' websites).  Reading the policies is no fun, but they are understandable if you know what your concerns are and can look for coverage in the policies.  The examples above are just some of the many scenarios that might impact your trip, and of course what is important to one person may not be important to another, and vice versa.  One of our favorite sites for comparing travel insurance plans is QuoteWright, where you can see parts of the actual policy language.

Travel Tip -- if you have questions, do not rely on a verbal explanation of coverage from your travel agent.  You can always e-mail the insurance company and ask them your questions, and you will then have the answer in writing.