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Do you need travel insurance?

By Sean O'Neill
updated February 21, 2017

The largest travel insurance company, AIG Travel Guard, has revamped some of its policies, shaking up the industry.

I'll give a rundown on the biggest of these changes in a sec. But first, let's quickly recap Budget Travel's stance on travel insurance:

If all you have reserved are flights and hotels, insurance generally isn't worth it: You can rebook a flight and only suffer a $100-per-ticket (or so) fee, and hotels rarely have strict cancellation policies. But if you're headed on a cruise or a once-in-a-lifetime adventure, such as a safari, insurance looks better and better, because tour operators and cruise lines (which are less likely to get any last-minute bookings) tend to penalize those people who cancel. You should also consider buying travel insurance when you think the odds are decent that you won't be able to take the trip for one reason or another. Just make sure you understand up front exactly what is and isn't covered, which situations allow you to cancel, and what the cancellation time frame is.

Traditionally, travel insurance policies have limited the reasons for paying out claims. The most common permissible excuses for canceling a trip were a medical emergency or a death in the family. That was about it.

Say you had a boss who is the kind of a jerk who makes his staff cancel their trips to finish a project. You'd be out of luck--and out of your trip expenses--if your boss forced you to scratch your vacaton. Most policies did not cover such situations.

Then, a year ago, the insurer Access America began to allow travelers to insure against trip cancellation due to unreasonable bosses, corporate mergers, and business disasters (such as fires). The cost of this BizPak option is $19 per person, per trip, on top of a standard travel insurance policy.

Thus began a trend in the industry toward offering broader trip insurance options.

A couple of weeks ago, the largest travel insurance company, AIG Travel Guard, rolled out the same "cancel for work reasons" clause, charging $24 a person.

The company also introduced "cancel for any reason"

For a fee, it will add a "cancel for any reason up to 48 hours before departure" clause to select policies. You can be reimbursed for between 50 percent and 75 percent of your trip's expenses. Previously, you could only cancel for a limited set of extreme circumstances.

A tip: When shopping for travel insurance, know that you'll generally receive the best rate and most comprehensive coverage if you buy a policy from an independent insurance agency. You'll save by cutting out the middleman, whether the middleman is a travel agency, tour operator, or cruise company. To compare policies and rates, visit InsureMyTrip.com.

What about insuring against disasters?

Here's Budget Travel's official view: Recent history has shown that travel companies are incredibly sensitive when a terrorist attack or natural disaster occurs, and they almost always drop their usual restrictions and allow their customers to rebook or cancel without penalty. Of course, there's no guarantee that this will always be the case.

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