Friday, April 9, 2010

Trip Cancellation Insurance: To Buy or Not to Buy?

Are you planning a vacation or trip? Have you wondered if it would be wise to purchase cancellation insurance? The answer to that is- it all depends. Are you concerned about the possibility of an older parent becoming ill? Maybe you have an adult child who is expecting a baby? Or are you concerned that your absence from work could jeopardize a project if something goes awry?

Trip coverage insurance can be inexpensive or costly, depending on the level of coverage you want. Costs vary depending on the type and extent of coverage, your destination, and the age of the traveler. Some policies do not cover travel companions, so each person would need their own policy. When added together, this can put a big dent in the vacation budget. However, if you want the peace of mind that comes in knowing you are insured, it may be the way to go. While most policies cover things like accidents or illnesses or a death in the family, not all policies provide protection for trip cancellation due to events like terroristic threats, jury duty, or job loss. These are often optional items to be added to a package at an additional cost. Even those that do provide such types of coverage may have clauses that contain limitations or requirements such as length of time employed before the layoff occurred.

Some people like to play it safe by purchasing “cancel for any reason” policies, but these types of policies carry a hefty premium- sometimes as much as 50% of the cost of the trip. And there are specific criteria that need to be in place before you can insure the full values of your trip. Many policies expire a few days before the actual trip is scheduled. This prevents people from cancelling vacations at the last minute for any old reason.

Worried about missing your cruise ship because of problems with the airline getting you to the dock on time? Make sure that any trip cancellation/interruption policy you are looking at considers this a legitimate reason for reimbursement. Industry experts claim that most insurers typically reimburse claims at roughly 80% of covered expenses even though they may advertise that they cover you at 100%. The closer the cancellation is to the travel date, the more likely you are to incur some of the costs anyway.

The bottom line is “read the fine print”. Know what you are buying, and be sure to understand the limits, conditions, and qualifications. Consider how much the trip cost vs. the added cost of the insurance policy.

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