The other day I was talking to a client of mine who is in the process of planning a trip of a lifetime.  He’s going on a cruise and taking all his children, their spouses and grandchildren.  In all, there are over 20 people going.  After discussing whether he can afford the trip or not, which he can, the question came up as to whether he should buy travel insurance.  The travel agent that he is dealing with recommended it to him.  He is somewhat balking at buying travel insurance because of the cost.  The cost of the travel insurance was approximately 10 percent of the trip’s cost.

I’ve always been a believer that insurance, whether it is life insurance, disability insurance or travel insurance, is a means of covering risk.  The question you always ask yourself is if the event you are insuring happens, do you have the resources to protect yourself or would the loss cause a financial hardship.  If the loss would not cause any financial hardship then probably insurance is not needed.  On the other hand, if the loss would have a financial impact, then insurance is something to consider.

For those of you who do consider travel insurance, the first thing to understand is not all travel insurance is the same.  There are a variety of different policies that cover different risks.  For example, you could buy a travel insurance policy that provides medical benefits in cases of emergency, while other policies will provide reimbursement if your luggage is lost.  Probably, the most popular type of travel insurance is one that provides protection if for some reason you need to cancel your trip.  Therefore, before you consider buying travel insurance, the key is to determine what you are insuring.  In that regard, it is important to also recognize that you already may have certain types of coverage.  For example, with lost baggage you do have some coverage through the airline but in addition, many charge card companies provide this coverage automatically if you use their charge cards.  Therefore, prior to buying any type of travel insurance, it is important to see if you’re already covered.

When most people buy travel insurance they go through their travel agent.  After all, it is easier.  However, it is generally more expensive.  Therefore, I recommend that just like when you buy life insurance, homeowners or auto insurance,  you shop around.  Two websites that you can look at to receive competitive bids are www.insuremytrip.com and www.squaremouth.com.  Both these cites allow you to receive competitive bids from a variety of travel insurance companies.

Remember, in receiving a competitive bid, it’s not the cheapest company that you should automatically go with.  It’s not that cost is not important because it is, but when you think about it, the most important thing for insurance companies is whether they honor their claims and the coverage provided is actually what you need.  Therefore, when you do your research, don’t forget to spend some time researching the company itself and the terms of the coverage. Not all policies cover the same things.  Also, keep in mind that the best insurance companies are the ones that honor their claims.

By the way, after discussing travel insurance with my client, he did decide to purchase it and he did shop around.  He called and told me that he was able to reduce his cost of the travel insurance by 40 percent. My view, the 40 percent he saves looks better in his pocket than it does in anyone else’s.

Good luck!