Insurance for a Budget Trip

Insurance companies -- like everyone else in the business world -- will sell you as much of their products as possible. Their sales goals might not match your best interests.

Before buying any of these policies, consider the worst-case scenario. You aren't likely to be financially crippled if a $200 non-refundable airplane ticket is suddenly useless. But a $3000 cruise or tour payment could hurt you, and minimize the options for scheduling at a later date.

Another key is to consider reasonable risks. For example, if you're planning a Caribbean cruise for October, it is reasonable to expect an itinerary to be altered or canceled due to weather.

Some general tips:

Consider medical coverage if traveling to another country This is especially important if you're in a developing country with limited medical resources. Weigh the costs of a policy that will pay to transport you to help. Odds are slim that your medical insurance covers foreign treatments. They're even slimmer that the policy would pay to have you evacuated to better treatment.

Check policies already in effect for possible coverages

Most travelers decline car rental company insurance because their auto policies cover them in such situations. The same may be true for a wide variety of other travel needs. For example, theft and loss prevention could be covered in your homeowner policy. Buying duplicate coverage does not double your benefit. It wastes money and creates confusion that could actually delay payments.

Frequent travelers should consider year-round policies

This coverage is sold by time frame, not by trip. It can be quite inexpensive--sometimes less than $100 USD per year.

The fine print counts

You might feel quite comfortable with trip interruption or cancelation insurance. But make note: these policies almost always spell out specific reasons for a cancellation. If your particular situation isn't mentioned, the company does not have to pay. Be certain a lengthy list of reasonable causes is listed before you buy.

Don't rely on your travel agent alone

They are experts on travel, not insurance. Check with the insurer by email or on a toll-free "help line."

Ask lots of questions

These will begin with the phrase "what if...?" You'll never cover every possible problem, but you'll begin to see a pattern after a few of these are answered. That pattern might tell you the coverage is too narrow and therefore not worth the expense.

Buy coverage from a source independent of your other arrangements

There are several reasons for this advice. If a cruise line files for bankruptcy, will their insurance package protect you from cancellation costs? Probably not. In addition, tours and cruise lines tend to build in a lot of exceptions to their policies. An independent source is less likely to do so. Expect to pay at least 5-7% of your trip cost for the policy.