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Try-It-Out Tuesday: Should You Buy Travel Insurance?

As any travel expert will tell you, August is a peak time to travel — yet it’s also the month that sees its fair share of disastrous weather. Consider: Hurricane Andrew hit the Gulf of Mexico in August 1992, Hurricane Katrina devastated New Orleans in August 2005 and Hurricane Irene slammed the Caribbean and East Coast of the U.S in August 2011. If you have an upcoming trip this month, you might be wondering: should I protect that trip with travel insurance?

In general, the answer depends on your situation: your tolerance for risk, your health, and how long ago you booked your trip. For a trip happening in a week or two, that last consideration might give you an easy yes or no.

iStock_000019714677Small“Travelers want to insure their tip once they make the initial deposit. Seven to 30 days after they book that trip — and no later than that,” said Jim Grace, CEO of InsureMyTrip.com, a site that lets you compare plans from over 20 different travel insurance providers. “You couldn’t buy a cancel-for-any-reason policy now if you paid for your trip back in January.”

Grace says that basic trip insurance will cost four to six percent of the cost of the trip, per traveler, though that cost can rise to eight to 12 percent if you want a comprehensive “cancel-for-any-reason” policy that will let you cancel for, yes, any reason (travel anxiety, sick grandmother, hurricane, anything) as close as 24 hours before the trip. A more basic package will still cover trip cancellation, trip delay, medical treatment and evacuation, though it is possible to buy just a medical policy or just an evacuation policy.

Ultimately, the decision to buy travel insurance — and which policy to buy, if you do decide to buy one — boils down to these three questions:

Do I need health coverage? If you’re traveling domestically, the answer is probably no. If you’re traveling internationally, it’s worth checking to see if your primary insurer includes international coverage; if they don’t and you or a travel companion has a health condition, it might be worth getting a travel medical policy so that you’re covered should you need to see a doctor or visit the emergency room in a foreign country. And if you’re on Medicare, like Bill Golden, a 65-year-old retiree who enjoys going on Caribbean cruises with his wife, it’s also worth looking into a travel medical policy. “Medicare doesn’t cover you when you’re out of the country. The healthcare part is very important to us,” Golden said. On the 11 cruises for which he’s purchased travel insurance, he’s never had to use it — but he’s never regretted buying it. “We’ve never collected, not even for loss of luggage,” Golden said. “But it’s the peace of mind that’s worth it.”

Do I need an escape option? Linda Fallon, senior vice president of travel insurance provider RoamRight, said that if you’re traveling to a third-world country with subpar medical treatment, it’s worth buying a policy that covers evacuation back to the U.S (or a country that can provide good health care). “You’re not going to want to be treated in a third-world country. Something that can get you flown to a quality standard of care is essential. Not only does it protect you financially, it protects you physically,” Fallon said. She also noted that an evacuation policy would cover the cost of quickly leaving a country where there is a security crisis, a terrorist incident or unexpected civil unrest. (Fallon said that insurers can’t geo-rate the pricing, meaning evacuation coverage is the same cost in France as it is in Egypt. The only country RoamRight won’t cover right now is Afghanistan.)

Do I care if I lose this money? InsureMyTrip’s Grace said that the ultimate litmus test to determine whether or not you need travel insurance is to ask yourself whether or not the amount of money you’d lose if a trip is cancelled is an amount you mind losing. “If someone is going to Disneyland for $500, that may be a lot of money and they want to insure it. You have to look at your tolerance for risk,” Grace said. “I’m uncomfortable losing $1000, so I’ll spend $40 to $50 dollars to cover what I need.”

Finally, it’s important to note that if you’re booking last-minute travel now for late August or early September, you can still get trip cancellation coverage to protect your trip from a Hurricane Gustav or Hurricane Floyd. The key, both Grace and Fallon said, is to buy the insurance before the storm is on the National Oceanic and Atmospheric Administration (NOAA) map — and before it’s named. “If it’s named, you can’t buy the insurance for that particular storm. It’s a known event, it’s going to happen somewhere,” Grace explained. To see what storms are heading down the pipeline, you can head to NOAA.gov or weather.gov for predictions and information.

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