Travel insurance: Pros and cons

The tragedy of Maui brought renewed questions about travel insurance from many sources. So here's a current look at nine principles:

1 IT'S THE MONEY

Insurance — all insurance, not just travel — is about money. It's not going to repair a ruined vacation, and it's not going to compensate you for any of travel's many hassles, frustrations and aggravations. If you have money at risk that you can't recover if something goes radically wrong with your trip, you probably need insurance; if not, you probably don't.

2 THE IMPORTANT STUFF

The main money risks most travelers face are unexpected medical bills and loss of nonrefundable prepayments and deposits they incur if they cancel or interrupt a trip. Travel insurance can cover those risks. Many policies also cover delay expenses and such, but those risks are chump change compared with the bigticket risks.

Almost everyone these days needs medical-insurance coverage if they face hospitalization or a doctor visit while traveling. Young and middle-age people's policies more often than not include foreign travel, so those folks probably don't need additional medical coverage. Seniors on Medicare, on the other hand, probably need travel medical insurance if they're leaving the United States. And a few travelers of any age might want specialized travel insurance that covers emergency transportation home.

If you have to cancel your trip before you leave or return home unexpectedly while you're traveling, cancellation/ interruption, or TCI/TII, as the name suggests, covers any prepayments and deposits that you can't get refunded. TCI/TII covers problems at your destination and problems at home that affect your travel plans. In cases such as the Maui disaster, where airlines and hotels give refunds or arrange alternatives, you don't need insurance. On the other hand, if, say, a vacation rental owner stonewalls you, insurance can save your prepayment.

3 FINE PRINT

Most travel insurance is "named peril" insurance, which means it covers only those contingencies that are specified as "covered reasons" in the contract. The exception here is "any reason" trip cancellation, which costs extra and usually covers less.

4 WHO PAYS

Travel-insurance coverage comes in two flavors — primary and secondary. Primary means the insurance pays whether you have other insurance or not; secondary means you have to use all other available insurance coverage before the travel policy pays. This applies mainly to medical policies. Primary is better and usually more expensive. TCI/TII is inherently secondary — the insurance pays only what you can't get back from your airline, hotel, tour operator, cruise line or other supplier.

5 TIMING IS IMPORTANT 5

Most travel-insurance contracts exclude claims related to a preexisting medical condition. But many waive that exclusion if you buy insurance covering the full trip cost within a week or so of making your first travel payment. Don't gamble — if you think you'll need insurance, buy it before you pay for anything else. Typically, it costs 5% to 10% of your trip cost.

6 NO COUNTRY FOR OLD TRAVELERS

Most travel insurance is age-rated: The older you are, the more you pay. When you get to be an old geezer like me, insurance can cost far more than the typical price.

7 DON'T DUPLICATE

Don't pay for extra insurance when you're already covered. Your regular medical insurance and your credit card may include all the insurance you need, and buying extra doesn't increase your payout.

8 BUY RIGHT

In general, you should avoid buying insurance from or through a tour operator, cruise line or other supplier — it usually covers fewer contingencies. Instead, buy from one of the several independent online travel-insurance agencies, such as Squaremouth (squaremouth.com), Quotewright (quotewright.com) or Insure My Trip (insuremytrip.com). They all have online displays that let you compare all the main policies, see the fine print — which you need to read carefully — then buy exactly the coverage you need

9 DON'T IMPROVISE

Once you have a travel-insurance policy, follow the rules. Most specify that any new arrangements and payments have to be made through the insurance system; you won't get reimbursed, for example, if you book your own replacement flight.