As you might expect, the answer to this one is ‘It depends.’ When someone asks us ‘Is travel insurance necessary?’ we feel a little twitch because the answer depends on a range of factors:
- how much you have invested in the trip (and stand to lose if forced to cancel)
- how far you are going (if you’re outside your health insurance network and get in a car accident – you could be out hundreds of thousands of dollars)
- where you are going (if you’re in a country that requires upfront payment for medical treatment, will you have the cash or credit card to cover it?)
- what you will be doing (if you’re downhill skiing and miss a turn, will you have the money to pay for your medical care?)
- who matters to you back home (if grandma is important to you and she dies while you’re traveling, will you be able to recover your lost travel costs and get home in time?)
Why Do Many Travelers Think Travel Insurance is Necessary?
Travel insurance is like any other type of insurance – you buy it hoping not to need it.
The purpose of any insurance plan is to protect the insured from huge financial losses. After all, isn’t that why you buy homeowner’s or renter’s insurance? You have it but hope you won’t need it. If your home burns to the ground, most of us would be in a bind to pay for a new place to live, replace all our belongings, and have the money to rebuild without the help of insurance.
Travel insurance is the same – you buy it hoping you won’t need it but when you do, you want that coverage available to you to prevent significant financial losses in the event you have to cancel your trip, you lose your luggage, you miss your cruise departure, and more.
Without travel insurance to cover those unexpected – and often unpleasant – events, you’ll have to recover on your own and out of your own pocket.
When is Travel Insurance Not Necessary?
There are a few situations when travel insurance is not necessary and many of us have taken trips like these:
Last-minute domestic trips with no connections that didn’t cost you a lot of money and plan to keep your luggage in the cabin with you. In this situation, you’re less worried about delays, stolen baggage, and cancellations.
Business trips abroad where your company’s health insurance coverage extends beyond the U.S. border and you’re traveling very light. In this situation, you have medical care taken care of and, again, you’re not concerned about lost or stolen baggage.
Cheap trips inside your home country to stay with friends or family. In this situation, you don’t have a lot invested so you can afford to lose your pre-paid trip costs. Plus, your health care coverage will be there (albeit, it may mean out-of-network charges).
So, is travel insurance necessary? We think it is for many – but certainly not all – trips and whether it’s worth it or not is really up to you, your personal situation, and that all-important factor – what happens on your trip. That last bit is entirely unpredictable and that’s what insurance was designed to protect you against.