“Any time you face a potential loss that’s more than you can comfortably walk away from, you probably need some combination of Trip-cancellation, Trip-interruption, and medical insurance.” That’s the basic rule of travel insurance, and it dictates how to decide whether you need insurance for any given trip, and if so, how much coverage of which different types.
That means assessing your financial exposure in the event some unforeseen circumstance disrupts your plans.
Trip Cancellation (TCI)
Start by deciding on the risk associated with each major component of your planned trip: transport, accommodations, and activities. The most important assessment is determining how much money you expect to lay out in advance in full payments or deposits and how much you’re likely to get back if you have to cancel. Specifically, you need to determine whether the air tickets you intend to buy are refundable or not.
If, as is often the case, it’s nominally nonrefundable but with the ability to retain credit toward a future trip, decide whether you’re willing to accept that credit if you cancel or want to buy insurance that gets you cash back. You face the same question with a tour package, cruise, or advance-payment hotel/resort reservation.
A related assessment is to review the typical list of “named peril” contingencies that trigger a refund. Keep in mind that most policies cover only contingencies that are unforeseen at the time you buy. If you need more flexibility, you need to include “cancel for any reason” provisions.
