Travelwise

How to decide when travel insurance is right for you

 

New York Times

Would you like to add travel insurance to your purchase?

That little pest of a question pops up every time I book a flight, confirm a hotel room or reserve a rental car. It’s become the “Do you want fries with that?” of online travel booking. The difference: Sometimes I buy the fries.

I have never bought travel insurance because instinct has always told me that it’s a bad deal. I rarely pay for hotel rooms, tours or rental cars in advance. I don’t pack designer clothing in my checked luggage. I’m generally healthy, and I have medical insurance that covers me abroad. (It claims to, at least.)

But instinct is a poor way to make decisions about insurance. So with a three-week trip to Asia approaching, I finally decided to figure out whether I should be traveling with insurance and, in general, when it is smart to have it and when is it unnecessary.

Travelers tend to buy insurance if they are more at risk or more likely than the average policyholder to make a claim. In economics that’s called “adverse selection” — but it’s adverse only for the insurance companies. For consumers, it’s just smart. Imagine two people looking at a $100 insurance policy for a two-week trip: One is a 65-year-old heading to India, where he plans to rent a scooter, eat street food and sleep in already reserved five-star hotels every night. The other is a 30-year-old going to London, planning to crash at a friend’s apartment and buy discount theater tickets every night. It’s pretty clear who should buy insurance.

For my own coverage, I looked at packages offered by World Nomads (worldnomads.com), a popular and well-regarded company that provides travel insurance plans online. (If you are buying insurance, try them — or examine the options at insuremytrip.com, a travel insurance search site.)

Generally, travel insurance is sold in packages, combining various categories of coverage. Go through them all, determining what you need and what you don’t, either because you’re not at risk or you’re already covered. If a package doesn’t seem worth it, more customized policies (which you can find through insuremytrip.com, among other sites) offer certain a la carte options. But you may not end up saving that much.

Coverage for my Asia trip through World Nomads would cost me $85 for its standard plan, and $116.40 for slightly more elaborate “explorer” coverage. I looked at each element of their plans — which are similar to most other packages out there — to calculate whether, overall, they might be worth it. Here is a breakdown.

•  Medical: If your regular health insurance doesn’t cover you while abroad, you need some when you travel. Medicare participants and citizens of countries covered by national health services generally fall into this category. Others should check on the specifics of their policies. I have coverage through the Freelancers Insurance Co., which uses the Blue Cross Blue Shield program; my policy states that I’m “assured of receiving care from licensed health care professionals no matter where” I am through the Blue Card Worldwide network.

I went to the Blue Card Worldwide website and was relieved to find many affiliated hospitals listed in the Asian cities I was planning to visit.

But I was still suspicious. I offered a hypothetical to the customer service phone line: What if, in an emergency, I ended up at an out-of-network hospital because I couldn’t communicate with paramedics or there was no affiliated hospital nearby?

The representative was stumped, put me on hold and came back. “I checked with a supervisor,” she said. “The claim would come through, we would deny it, then you would have to appeal it,” she said.

Appeals, she added, were made on a “case by case” basis.

In other words: Good luck. On the other hand, many travel insurance policies will reimburse medical expenses no matter what hospital you end up at.

Freelancers wouldn’t speak on the record to clarify further. But since I wouldn’t be engaging in any high-risk activities and I had a fighting chance of being covered should the very unlikely worst-case scenario occur, I decided the medical coverage added minimal benefit. I did, though, arm myself with a printout of all the affiliated facilities in the areas I was visiting.

•  Emergency evacuation: This one is simple: Without coverage, if I have to be medically evacuated home from a distant land, I’m out something like $30,000. So it comes down to how likely the scenario is. Headed to a particularly isolated region? Climbing mountains or fording rivers? Then having evacuation coverage as part of a package or separately (the cheapest I found for my trip on insuremytrip.com was $40) is a good idea.

•  Travel protection: This kind of insurance offers reimbursement (sometimes partial) for prepaid reservations if your trip is canceled, interrupted or delayed. I rarely spend much on a trip before I leave beyond the plane ticket (always coach) and maybe the first night in a hotel (always cheap). But for others, with expensive seats and long prepaid reservations, it might make sense.

Also worth noting: Some credit cards will provide similar coverage. My United Mileage Plus Explorer card from Chase does. And although it is probably harder to get a claim processed with Chase than with World Nomads, I didn’t see much justification for duplicate coverage.

•  Baggage protection: World Nomads will reimburse you for items lost or damaged in transit and cover expenses incurred because luggage is delayed. For me, this was triplicate coverage: My credit card covers this, and airlines are legally required to reimburse you as well, with limitations.

But the Nomads policy also covers damages and loss beyond your flight. I carry around about $3,000 of electronic equipment everywhere I go, and World Nomads would cover up to $500 per item (after depreciation). It’s worth it to determine the value of what’s inside your baggage and do the math.

Of course, whether you get reimbursed is partly up to you. A World Nomads customer service representative gave this example: If you leave your cellphone in your bathing suit and go into the water, it’s not covered. That’s not only the kind of thing I do, it’s exactly what I did on a New Year’s Eve a few years ago in Rio de Janeiro.

•  Accidental death and dismemberment: I’ve never understood this one. If you need life insurance, wouldn’t you want it for the whole year, not just when you’re traveling? And if you lose a limb, will a few grand — what World Nomads offers — really help? (Note that life insurance companies will ask about your travel habits; so be sure you’re honest when you apply — and if you already have coverage, be sure it covers the countries you’re visiting.)

So is it worth it?

Although some elements of the World Nomads package might have benefited me, I decided the package as a whole didn’t make sense for my trip. (I did end up buying a yearlong medevac plan I found through insuremytrip.com for $225.)

Although my initial instinct to avoid package insurance had been (coincidentally) right, the process was valuable anyway: I now know a lot more about my medical coverage and credit card perks. Everyone should make similar calculations.

Of course, there’s one more variable: If you’re a worrier and having coverage for every imaginable circumstance will allow you to relax and enjoy your trip, then go ahead and do it. I just won’t be joining you.

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