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Travel Insurance: When It Actually Makes Sense to Buy

Trip Disruptions • Lost Luggage • Cancel-for-Any-Reason Policies • Medical Evacuation

More Americans are buying travel insurance than ever before, and we found that more policies and providers are on the market than ever before. However, consumers still have no easy way to determine whether they have to have travel insurance.

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Crystal Cruises/Boeing

When retirees Diana and Bob Mattson booked a cruise from Miami to the Caribbean through their travel agent in 2013, they also bought travel insurance. Their comprehensive plan through Allianz Global USA cost $142, and Diana says it gave her peace of mind for their upcoming trip.

Three days into their cruise that November, Bob had a heart attack as the ship approached St. Maarten, and he required immediate medical attention. Diana handed her insurance information to cruise-ship personnel, who contacted Allianz to open a case. An ambulance was waiting when the ship arrived in St. Maarten, and the Mattsons were whisked off to a nearby hospital. Allianz organized the transportation, paid for a hotel room for Diana, arranged the next morning for an air ambulance to fly the Mattsons and two paramedics to Miami and had an ambulance shuttle the group to South Miami Hospital, where a cardiologist and private room awaited.

Bob had heart surgery, and the couple were home 3 days later. They missed most of their dream cruise vacation, but Bob, now 70, made a full recovery, and their travel insurance paid for most of his medical costs. They also received a check in the mail 2 weeks later for the unused portion of their cruise.

“The travel insurance was worth every penny,” Diana says. “If you have to arrange your own air ambulance transportation back home, you’re talking $50,000.”

We’re glad that things worked out for the Mattsons. We always said buying travel insurance is smart when you take an expensive trip or go on vacation in a foreign country where a travel-insurance policy can cover unexpected medical expenses.

Americans increasingly are deciding to buy travel insurance. In 2014, the most recent year for which data exist, at least 152 million Americans were covered by $2.2 billion of travel insurance, according to US Travel Insurance Association (USTIA), which is a trade group. That compares with 129 million Americans who were covered by $1.9 billion of travel insurance in 2012.

USTIA tells us that two factors drive the increase in travel-insurance spending: a gradual increase in leisure-travel spending and a rising awareness of events that could affect or disrupt trips, such as airline delays, extreme weather, natural disaster and terrorism, because of pervasive social-media coverage.

Travel-insurance plans cost $8 (for lost luggage) to $600 (for emergency evacuation). Travel insurance typically costs about 4 percent to 8 percent of your travel costs, says Rachael Taft of Squaremouth.com, which is a travel-insurance comparison website.

How Much Does It Cost?

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Many companies sell travel insurance, including 30 that belong to USTIA. All 11 experts whom we interviewed tell us that more policy options exist than ever before. So many choices exist now that four websites compare travel insurance for consumers—Insuremytrip.com, Squaremouth, Travelinsurance.com and World Nomads. The websites allow you to enter your trip details and compare dozens of travel-insurance policy options. If you have a problem with the provider that you choose, the four websites say they will mediate with the provider on your behalf until your complaint is resolved. (We haven’t tested these mediation claims.)

We recommend that if you consider travel insurance, then you should use a travel-insurance comparison website, because experts tell us that travelers have more policy options than ever before. We also found that the market is more confusing to navigate than it was previously. (See “How Much Will It Cost?”)

Experts also tell us that third-party travel-insurance companies are a good idea for consumers, because in the past 4 years, airlines and cruise lines have cut back on their refund policies to persuade people to buy travel insurance.

“It used to be that if you slipped and fell and broke a bone the day before the cruise, the cruise line might have given you credit for a future cruise,” says Christopher Elliott, who is a travel writer and consumer advocate. Today, most cruise lines won’t give you credit or a refund unless you buy travel insurance, Elliott says.

“They’re doing a hard sell on their insurance,” he says. If people experience any difficulties, the cruise lines are telling them, “Well, you should have bought travel insurance; we warned you,” Elliott says.

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