Packing travel insurance on vacation

Summer travel season is in full swing. As you ponder where to go and what to pack, you may also be considering travel insurance.

The U.S. Travel Insurance Association, an industry group, estimates Americans spent over $2.2 billion in 2014 on all types of travel protection.

While popular with some travellers, it isn’t always necessary, so we talked to experts about when you might (and might not) need it.

WHAT IT IS: Travel insurance is designed to help protect you from financial losses related to your trip, such as the cost of cancelling a vacation because of a death in the family or being airlifted off a mountain because of a skiing accident.

According to the Insurance Information Institute, travel insurance breaks down to three basic types: medical, assistance and trip cancellation, interruption or delay coverage.

The cost is based on the age of the traveller, type of coverage and cost of trip but generally costs about 5 to 7 per cent of the total, according to the institute. A “Cancel for Any Reason” type of policy, which is more comprehensive than a standard policy, usually costs more.

WHAT IT IS NOT: Travel insurance is not the same as cancellation waivers or warranties that cruise or tour operators may offer, said Jeanne Salvatore of the III. Waivers are not as expensive and do not provide the same coverage. They also are not regulated by state insurance departments and usually won’t cover you if the business closes or goes bankrupt.

WHY YOU MIGHT NEED IT: Travel insurance doesn’t typically make economic sense, but it may provide invaluable peace of mind for some people, said Robert Hunter, director of insurance for the Consumer Federation of America.

Hunter suggests considering what it is you really are worried about happening and shaping your search for coverage based that. You may find you already have coverage through an existing policy or credit card service.

If you face a major financial loss if a trip is cancelled and there is no way to get reimbursed, Salvatore suggests looking into travel insurance. Or if your health insurance doesn’t provide coverage where you are travelling or you have a health condition that may require special care, perhaps consider it.

WHY YOU MIGHT NOT NEED IT: You may already have insurance that covers some scenarios — such as a homeowners policy that would cover lost luggage or health insurance that would pay for a hiking accident.

“It can be a life saver in certain types of situations, but you want to make sure you aren’t paying for duplicative coverage,” Salvatore said.

Experts also warn there are also many restrictions on policies, so read the terms closely. And make sure the insurer is licensed to do business in your state. That way if something goes wrong you have a regulator you can turn to for help.