Travel insurance nice but not necessary

We see terrorist attacks at airports, record airline delays and bankruptcies among travel providers. No wonder people are buying so much travel insurance.

But is all that spending – $1.3 billion in 2006, at least twice the annual figure before Sept. 11, 2001 – worth it?

Not necessarily.

You may already have coverage for some of your travel concerns. And considering that the typical policy runs 4 to 8 percent of the cost of your trip, that can be a sizable sum to buy what you already have.

“We’re not huge fans of travel insurance,” says Greg Daugherty, executive editor of Consumer Reports.

Travel insurance reimburses nonrefundable travel expenses if you, say, cancel your trip because of an illness or your flight is delayed or canceled. It can cover medical bills, lost luggage or meals when flights are hours late.

Many policies, too, will reimburse the cost of a canceled trip if a terrorist act occurs in the city of your destination.

“People are more concerned when they travel today and 9/11 opened a lot of eyes,” says Brad Finkle, president of the U.S. Travel Insurance Association. “We’ve had increased security and delays that go with that.”

The best argument for a policy is the medical care benefit, particularly if you’re not in the best of health and traveling abroad. Medicare – insurance for those 65 and up – won’t pick up medical bills outside the United States, except in very limited situations. Even younger travelers may find that their health insurance won’t cover them outside the country.

Some travel experts also suggest insurance is worthwhile if you’ve been saving up for an expensive trip for years and you don’t want to lose money if you suddenly can’t go or your cruise line goes out of business.

Indeed, there’s another reason to buy the insurance: Peace of mind.

“Anyone who is so nervous and can’t sleep should buy it,” says Robert Hunter, director of insurance for the Consumer Federation of America.

As for everyone else, he says: “Save the money on travel insurance and get a nice meal.”

Most travelers buy insurance to protect themselves in case they must cancel the trip because of a family illness or loss of a job, or if a trip is canceled on them because their tour operator went belly up.

If you think you might have to do the canceling, contact the airline or travel provider to find out its cancellation policy, says Sandy Praeger, Kansas insurance commissioner and president-elect of the National Association of Insurance Commissioners.

Praeger, for example, says she recently canceled a trip because of a death of a close family friend.

“I was able to get a full refund without travel insurance,” she says. “The airline was very understanding.”

But when she canceled another flight with a different airline because of a back injury, she lost her money.

“It’s hit or miss,” she says.

Travel policies often provide a death benefit if you die on the trip. But if you already have life insurance – and you should, if you have people depending on your income – then you don’t need to spend money on buying more insurance for vacation.

If you still want travel insurance, read the details of policies before buying. Some insurers might not cover medical expenses related to a pre-existing condition. Others will if you buy insurance within a couple of weeks of booking your trip.

You can shop online and compare prices and terms at www.insuremytrip.com. For instance, a 67-year-old taking a three-week cruise to Alaska can find insurance packages ranging from about $244 to $554; a 25-year-old on the same trip would pay $135 to $283 for coverage.