Is Travel Insurance Worth It? Here's When It Does — and When It Doesn't — Make Sense

ByJames Dennin

Travel insurance is at the top of everyone's minds for a pretty depressing reason. 

After terrorist attacks hit some of the most popular travel destinations in Europe this summer, searches for travel insurance related to terrorism jumped more than 200%, data from the travel insurer Squaremouth showed.

"Since Brussels, really, we've seen that number growing and growing," Rachael Taft, a spokeswoman for the company told the New York Times. 

Insurance for travel is a huge industry: Americans spent more than $2 billion on travel insurance in 2014. But many experts are skeptical that it's all that helpful for most people. 

Is travel insurance worth it? Sometimes! Here are three rules of thumb that will help you decide.

Avoid overlapping coverage

There are about a dozen different kinds of common travel insurance, though many types may overlap with coverage you already have.

Most of the worst that can happen to you on a trip — for instance, if you fall ill or die — is likely already covered by your existing health and life insurance, since your existing policies usually follow you overseas.

"If you're worried about dying in a plane crash, you should get term life insurance rather than flight insurance, because you might die in a car crash," Bob Hunter, director of insurance at the Consumer Federation of America, told Consumer Reports.

All you have to do to make sure is call your provider before leaving the country: Beware that visiting certain at-risk countries might mean you are not covered. You should also inquire about network hospitals in the city you're visiting, so you can avoid having to appeal any denied coverage. 

In general, if you lose your ATM card, for example, you aren't going to be liable for all the charges especially if you report the loss right away; though it may take longer to resolve a dispute about a transaction in a foreign country.

Federal Trade Commission

If you are worried about a terrorist attack, be advised that most policies don't usually cover cancellations based on simple fear: You have to be able to point to a specific way your trip was affected, and insurers tend to handle claims like this on a case-by-case basis.

Read the fine print to avoid scams

"Travel insurance rates are heavily regulated," Taft said. 

This makes comparison shopping relatively easy: Just go to a comparison website like QuoteWright and be sure to check multiple providers to find the most affordable and highest-rated plans.

Still, there are still a lot of reasons you need to pay attention to the fine print. 

For instance, many forms of travel insurance relating to terrorist events or other disasters have extremely specific time-frames, or don't apply if there have been multiple attacks within a certain time period. 

Consider it if you really love danger 

If you're really worried about traveling, so much so that it will be hard to relax during your trip, then insurance is probably a good idea — particularly if you're doing a dangerous activity or traveling somewhere remote.

For instance, if you break your leg hiking the Andes and need to be evacuated, you could end up covering those costs out of pocket: Possibly to the tune of $100,000.

Travel insurance isn't that expensive, usually about 5 to 7% of the total cost of the vacation, which isn't a huge price to pay for some peace of mind. 

Lastly, those paying for big expenses upfront might want to invest in travel protection so they can get money back if a trip gets cancelled.

If the upfront costs of your trip are significantly more than the cost of travel insurance, because — for example — you're pre-paying for the full stay at your hotel, then cancellation insurance might make sense. 

Before you leave the country, be sure to read the State Department's guide to handling emergencies abroad.

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