Travel insurance is probably the least exciting thing about travel, but it’s one of the most important. When things go wrong on vacation, whether it’s as minor as cancelled flights or lost baggage – or it’s something much more serious – insurance can be a lifesaver. But making sure you have the right coverage is equally important. Read on to learn more about why and when you need insurance, along with tips for buying the right policy for your needs.

Let’s start with why you need travel insurance. Just like you wouldn’t buy a house or a car without purchasing insurance, you shouldn’t make significant travel plans without making sure your investment is covered. That’s not to say you must purchase insurance every time you leave town, but if you can’t afford to cover the losses that may arise from travel hiccups or if you’re traveling overseas where things like healthcare or emergency evacuation will not be available to you, travel insurance really is essential.

Why You Need Travel Insurance

There are so many things that could go wrong on your travels that could leave you either out of pocket, stranded or in real danger, such as:

  • Missing a connection or having a flight cancelled
  • Losing your passport
  • Being in an accident
  • Having a medical emergency
  • Your luggage is lost or stolen
  • Damages and legal expenses due to negligence
  • You have to cancel your trip unexpectedly
  • Your travel company goes under (think the recent Thomas Cook bankruptcy that left 600,000 travelers stranded)

Unexpected hassles and emergencies happen to travelers every day. Chances are it won’t happen to you, but it’s better to have the peace of mind that comes with insurance in the unlikely event it does.

What Travel Insurance Covers

Most insurance policies cover things like cancellations, loss or delays, medical costs and emergency evacuation, but the extent of coverage will vary by company and policy. It’s important to make sure the policy you choose provides the right level of coverage, so think about your needs carefully before you buy. Things to consider include: type/s of travel (i.e. flights, cruise, car rental, etc.), your activities (i.e. skiing, sky diving or other risky activities) and the value of your belongings.

Most insurance companies will offer a range of policies at different levels, so you definitely need to look at the fine print to understand exactly what you’re getting. For example, some policies will cover medical expenses only while you are abroad, so if you were injured en route to or from the airport within your home country, you wouldn’t be covered. Another policy clause in which there can be a lot of variance in what is covered is trip cancellation. Unless you upgrade to a “cancel for any reason” policy, your policy will only cover trip cancellation costs for specific reasons, so make sure you review their list of covered reasons before committing.

You also need to check all of the policy exclusions. Generally, most policies don’t cover certain pre-existing conditions, high-risk activities or travel to high-risk countries. If you have a pre-existing condition that could require treatment during your travel, you will need to purchase additional coverage. The same goes for high-risk activities. And when it comes to high-risk countries, don’t assume your destination is covered. It is your responsibility to check current government travel warnings before you purchase travel insurance.

There are many other things your policy may exclude. These could include pretty big events such as acts of god (severe weather or earthquakes for example) or acts of war, but they can also be more minor exclusions like being delayed by customs. Most policies will also not cover you for any event that occurs while you are under the influence of drugs or alcohol. The bottom line: make sure you read through all exclusions to know where you stand in all situations.

You should also take the time to read the policy limits and associated excess fees. Just like home or car insurance there will be a deductible on any claim you make, so it’s important to understand what you will have to pay out of pocket in the event of a claim. And you should also familiarize yourself with any requirements around claims. For example, in the event of a theft, you may be required to obtain a police report and submit it within a prescribed time period. Make sure you are aware of the supporting documents the insurer requires and their timeframes.

Some Final Tips For Buying Travel Insurance

  1. Compare policies and prices online. A good place to start is with aggregator sites like InsureMyTrip.
  2. Read the entire policy before purchasing.
  3. If you are a frequent traveler, consider an annual policy. It may cost less than multiple single trip policies.
  4. Make sure you keep digital copies of your policy and carry paper versions with you while traveling.
  5. If you are traveling domestically, check your home or contents insurance policy. Your policy may cover your belongings outside of your home for loss or theft.
  6. Not every trip necessarily requires insurance. Cheap domestic trips are one example. Assuming you already have health insurance and your travel costs are low, insurance might not be worth the cost. You would still be at risk for lost baggage or travel delays, but these are usually more of an inconvenience than a major cost.