There are hundreds of circumstances that could cause you to cancel your trip, return home early or force you to seek emergency medical treatment while traveling.
A travel insurance policy usually offers two coverages: trip cancellation/interruption and emergency medical evacuation.
Trip Cancellation/Interruption
Trip cancellation/interruption coverage will reimburse you for any non-refundable deposits you put down on a trip if it turns out that you won't be able to go after all, or if you have to leave early. The catch? It will only pay out if you have to cancel or leave early because of a covered reason. That's why it is important you read and are aware of the fine print. Some policies will cover only medical reasons and some will not cover pre-existing medical conditions.
Trip cancellation/interruption will pay the difference between what you can get refunded from the cruise line, tour company, or airline, and what you originally paid. That means that you must seek a refund first with the tour company before you file a claim on your trip cancellation/interruption insurance.
Trip cancellation/interruption policies may also cover "unforeseen emergencies," such as an accident on the way to the airport, a hijacking, a natural disaster, a fire or flood at your house, or a call to jury duty. However, they probably still won't cover you if you change your plans, if your job forces you to stay in town, or if you can't go because of personal finances. Travel insurance in general also excludes self-inflicted injuries and problems arising from the use of illegal drugs.
Emergency Medical Evacuation
Emergency medical evacuation is for really big problems. It makes the most sense to buy this coverage if you're going on an adventure vacation or to an area where you'll be far from modern medical facilities.
If you have health insurance, find out from your health plan what benefits apply when you're abroad. If you won't have any health coverage while you're traveling, you might want to look for a travel insurance policy that includes medical coverage.
Cost
Most comprehensive travel insurance policies, which include travel medical coverage, medical evacuation, and trip-cancellation or interruption insurance, costs between 5 and 7 percent of the price of your trip. Prices are based on your age and the cost of your trip — where you're traveling generally doesn't factor into the price — as well as the amount of medical coverage and baggage-replacement insurance you buy.
Not all travel insurance is the same: When purchasing travel insurance, it's important you look closely at the coverage and services you'll receive from your insurance policy.
Before buying travel insurance, be sure you don't already have sufficient coverage through your home insurance, health insurance, or as a perk on your credit card if you charged your trip.
