Do You Need Travel Insurance? The Real Scoop!

So a trip is coming up and you’re asking yourself: Do I need travel insurance?

I’ll admit that I don’t always have travel insurance.

Sometimes I wonder if wanderlust and risk-seeking behavior are correlated. That definitely seems to be the case, if travel insurance statistics are any indication. Only about 30% of American travelers buy travel insurance, according to the US Travel Insurance Association (USTIA).

Anyways, the answer to whether you need travel insurance is: Maybe you do, maybe you don’t.

On one hand, travel insurance can protect you against incidents that could otherwise be financially disastrous. On the other hand, the only reason the insurance industry makes a profit is because most people lose money on their policies.

Whether you need travel insurance really depends on a few things, which I’ll go through in this post.

How to tell if you need travel insurance

You don’t always need travel insurance, even though it is the safer way to travel

If something going wrong won’t be a catastrophe for you, it’s okay to not get insurance for that particular thing. A small, manageable loss is an acceptable risk to take.

However, it’s your job to define “small”, “‘manageable”, and “acceptable risk”. Nobody else can do it for you.

For example, losing a bag full of clothes would suck, although I’d consider it a small and manageable loss. Personally, I wouldn’t insure that bag.

But say I sustain a serious skiing injury and need a $50,000 airlift to get me to the nearest hospital — this could put me in debt for years! That’s neither small nor manageable for me, but it could very well be small and manageable for a billionaire.

(Yes, this probably means rich people don’t need insurance as much as the average traveler. Yes, it’s unfair. What can I say? Life isn’t fair.)

Like any other kind of insurance, you should only buy enough to protect you against incidents that would be a disaster without that insurance.

Here’s a rule of thumb: Insure what you can’t afford to lose.

You may need travel insurance if…

You’ve made expensive, non-refundable bookings

If you’ve only booked cheap budget flights, you probably don’t need insurance for delays and cancellations. You can easily buy more cheap airfares if you have to.

If, on the other hand, you’ve booked a luxury, all-inclusive, once-in-a-lifetime stay at an exotic private island, it would probably hurt if you suddenly can’t make it.

Travel cancellation insurance would help reimburse your unused bookings and help you get over the disappointment. And if the emergency happens in the middle of your trip and you have to abandon the rest of the trip, you’ll be reimbursed if you have a trip interruption policy.

You’re going on a high-risk trip

If you’re only planning on lounging by the resort pool the entire trip, and the resort is right next door to the best hospital in town, you probably don’t need emergency medical evacuation insurance. Why, you probably face more dangers driving to and from work every day.

But if you plan on doing some adrenaline-pumping activities, like skiing or bungee jumping, you probably need travel insurance. With serious injuries, the sooner you get treated the better your chances of full recovery. And what can help you get the appropriate medical treatment as quickly as possible? That’s right — travel insurance.

Okay, I think I need travel insurance

Hold up, not so fast.

There are several kinds of travel insurance, and you may not need all of them.

Also, you may not know it, but you probably already have some kind of travel coverage from your travel operators, credit card companies, and other financial products. These free perks may be enough!

I’ll post more about travel insurance next week, so stay tuned.

And meanwhile if you definitely need to get that travel insurance right now, check out World Nomads. They’re reliable and their prices are reasonable. They can give you a price quote in a matter of minutes.