Do I Need Travel Insurance?
You're finally on your dream vacation, only to wake up sick on the third day. You need to go home, but what about the booking fees and ticket costs if it's too late to get a refund?
Purchasing travel insurance can help you have a safety net when things go wrong on vacation. Find out how it works, what it costs and whether it's worth it.
What Is Travel Insurance, and What Does It Cover?
Travel insurance is a type of insurance you buy when you're going on a trip. It works by reimbursing you for the money you've already spent if a qualifying event happens before or during your trip. Getting some of that money back can help you pay for emergency costs, such as medical expenses, or rebook the trip at a later date.
What travel insurance covers varies widely depending on the insurance company, the type of policy you take out, where you're going and the activities you plan to do while traveling. It's always important to read the details of any potential policy carefully to ensure you know exactly what is and isn't covered. Most travel insurance policies cover any prepaid travel expenses, such as hotel bookings or plane tickets, if a qualifying event occurs.
Typical qualifying events include getting sick while on your trip and having to cut it short or the death of your anticipated travel companion before the trip. Some insurance companies may reimburse you if you have to evacuate because of a natural disaster, while others consider that an "act of God" and not eligible for reimbursement.
According to data from Forbes, the average cost of travel insurance is between 5% and 6% of the trip costs. For example, if you spent $2,000 (CAD 2,705) on the trip, you'd pay between $100 (CAD 136) and $120 (CAD 163) for travel insurance. If the trip is $10,000 (CAD 13,522), the cost jumps to $500 to $600 (CAD 677 to 812).
What Are the Pros and Cons of Adding Travel Insurance to Your Trip?
Travel insurance can bring you some peace of mind when you're planning or on a trip, but there are some potential drawbacks to consider as well.
The biggest pro of travel insurance is that you can get at least some of your money back if you run into trouble before or during your trip. With the average cost of a hotel room running around $212 (CAD 287) per night, a five-night getaway would cost, on average, $1,060 (CAD 1,434). And that's just for the room; it doesn't count what you might spend on travel to and from the hotel or food and entertainment. While travel insurance won't likely reimburse you for all of this, even getting the hotel covered can save you a decent amount of money.
However, travel insurance isn't free, and if your trip goes as planned without any issues, that's money you spent for basically no reason. Travel insurance is also often limited in what it will cover. For example, getting sick while you're on your trip and having to come home is a common qualifying event, but you'll have to prove it. Insurance companies generally require you to have documentation from a medical doctor that includes a diagnosis and notes that your illness was severe enough to need to return home. If your reason for canceling the trip isn't covered or doesn't rise to the severity required by the company, travel insurance won't do you any good.
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Is Travel Insurance Worth It?
Whether travel insurance is worth it comes down to your own personal comfort level with risk. If you're not worried about losing the money for your trip if you need to cancel, you can save a little money by opting out. But if you want to make sure you're as covered as possible, travel insurance gives you peace of mind and can help you have a more relaxing vacation.
All CAD conversions are based on the exchange rate on the date of publication.
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