Do I need travel insurance for my summer vacation?

With vacation season just around the corner, many travelers are asking themselves, "Do I need travel insurance for my summer trip?"

Stefany Di Manno Ceccato already knows the answer. But she found out the hard way. A friend vacationing in Mexico smashed his head on a nightstand in his hotel, sustaining a serious injury.

"He had to fly to California for medical treatment, which cost him $75,000," she says.

Travel insurance could have covered all his expenses.

Ceccato says now she always buys travel insurance for herself. And, as a travel advisor, she also recommends it to her clients.

But what does travel insurance cover for you this summer – and what doesn't it cover? What do you absolutely need to know about buying travel insurance? And how can you determine if you need it?

Travel insurance can fit your vacation needs

"If you're traveling more than 100 miles from home, you should consider purchasing a travel insurance plan," says Will Nihan, CEO of Travelex Insurance Services.

You have more options this summer than ever, he notes. Travelex recently released a full suite of new travel protection plans, introducing new coverages, benefits and upgrades that travelers and travel advisors have requested. The idea of fitting coverage around the traveler – instead of the other way around – is gaining traction in the travel insurance business. And just in time.

"Think of all the things that can go wrong," says André Disselkamp, CEO of the German travel insurance website Insurancy. "Travel insurance can make all the difference between enjoying your trip and stressing over it."

All of which brings us to the No. 1 mistake summer travelers make: not buying travel insurance.

"That could lead to hefty losses should you encounter travel disruptions that prevent you from taking your summer trip, such as an illness, extreme weather or delay of a travel carrier," warns Jenna Hummer, a spokeswoman for Squaremouth.

What does travel insurance typically cover?

Travel insurance generally covers trip cancellation, trip interruption, trip delay and medical expenses.

"While many other coverages are available, travelers typically want to protect their trip investment by covering medical costs if something happens," explains John Rose, chief risk and security officer at ALTOUR.

A related – but often overlooked – type of coverage is emergency assistance, he says. For example, if you find yourself without necessary medication, you need someone who can help you replace it quickly. Or if your trip is interrupted and you need to reach your final destination, who will help you?

Rose says a travel advisor can help, but travel insurance can fill the gaps.

What doesn't travel insurance cover?

But travel insurance isn't a magic bullet if you're protecting your trip.

"It doesn't cover interruptions like a hurricane that was already forecast to affect your destination," says Joe Cronin, CEO of International Citizens Insurance.

You can get coverage for pre-existing conditions under certain circumstances, but if you try to get hurricane coverage when a storm already has your destination in its crosshairs, good luck with that.

The closest thing to a magic bullet is a "cancel for any reason" policy, which is more expensive than a regular policy but will reimburse at least part of your prepaid, nonrefundable expenses, regardless of the reason for cancellation."

Jason Block, chief executive officer of WorldVia Travel Group, a collection of travel companies in the United States, explains the process. Travel insurance can cover pre-existing medical conditions through what's called a pre-existing condition waiver if you meet specific requirements.

Typically, you must purchase the insurance within 14 to 30 days of your initial trip deposit, you must insure 100 percent of your prepaid nonrefundable trip costs, and you must be medically able to travel at the point when you purchase the policy," he says. "It's crucial to understand your specific policy requirements."

Trip insurance also can also include activity limitations, such as an exclusion for extreme sports.

"It's awful to discover your illness or injury is not protected because you participated in a restricted activity," says Harding Bush, associate director of security operations for Global Rescue.

Understand your policy

One of the biggest problems with travel insurance is that people don't take the time to read the fine print and understand what is – and isn't – covered.

Mitch Glass was traveling to Mexico with his pregnant wife when he discovered how his travel insurance defines "pre-existing" conditions.

His wife fell ill on the second day of their trip and spent five nights in a hospital.

"Turns out, she had hemorrhagic dengue, which is a potentially deadly infection that comes from mosquito bites," he says. "We had travel insurance coverage, but our claim was denied because dengue has an incubation period of seven to 10 days before symptoms appear. So even though she felt perfectly fine when our coverage started, the insurance company said she must have been bitten by the mosquito before leaving home."

Glass, a travel coach, says it's an absurd way to define pre-existing conditions.

"When you buy travel insurance, you trust you'll be covered if you get sick abroad. But with this line of reasoning, you could hypothetically go on a week-long trip and never be covered for these types of diseases that have incubation periods," he says.

How to make a travel insurance decision this summer

While travel insurance can cover many – and also doesn't cover many others – there's one main reason to get it this summer: if you're traveling internationally and you need medical coverage.

"Most domestic health insurance does not cover you overseas, and universal health care is not intended for travelers," explains Jeremy Murchland, president of Seven Corners Travel Insurance. "So you need travel insurance to pay for treatment if you get sick or hurt or need an emergency medical evacuation."

Murchland says anything can happen when you travel this summer. It could be as mundane as the flu or as life-threatening as a car accident. Medical systems in other countries usually require you to pay for treatment up front or before they discharge you.

"You don't want to find yourself in a medical emergency, unable to get necessary care or return home because you can't afford it," he says.

How do you know if you need travel insurance this summer?

Every trip is different. For example, a weekend visit to see relatives this summer might not be something you should insure. But a safari in Tanzania, definitely.

"You need to assess your trip's complexity, cost and potential risks before deciding on coverage," advises Raymond Yorke, a spokesman for Redpoint Travel Protection.

Go through all the types of coverage:

Trip cancellation or interruption: Reimbursement for prepaid, nonrefundable expenses if your plans change because of a covered reason.

Medical emergencies: Coverage for unexpected medical expenses or evacuation needs while traveling.

Lost or delayed baggage: Compensation for essentials if your luggage is delayed, damaged or lost.

Travel delays: Reimbursement for additional expenses caused by significant delays.

Ask yourself: What kind of coverage do I need? And what are the exclusions?

"To determine if travel insurance is necessary, consider factors such as international destinations, expensive prepaid activities or potential risks like extreme weather or illness," adds Yorke.

Common mistakes include overlooking policy exclusions, underestimating coverage needs or purchasing insurance too late in the booking process.

Don't wait too long

One more thing. If you're thinking of getting insurance, timing is important.

"From analyzing thousands of customer decisions, I've noticed summer travelers often make the mistake of waiting until the last minute to purchase insurance," says Eamonn Turley, CEO of Multi Quote Time, a UK-based travel insurance site. "Buying early, ideally when booking your trip, ensures you're covered for pre-trip cancellations so that you get the most value from your policy."

In other words, this is the ideal time to think about travel insurance – before you book your trip. Run through all the scenarios and consider the best coverage for your summer trip. You'll be glad you did.