The time has finally come to book your dream vacay. Determined to enjoy every minute of it — and maximize every penny you put into it — you’re happy to spend a little cash on a vacation wardrobe update or even a business-class upgrade. But perhaps you’re not as excited to make room in your trip budget for travel insurance. After all, is travel insurance necessary? 

While not legally required in most domestic travel circumstances, if the last few years have taught us anything, it’s that our plans can quickly veer off course. Depending on the circumstances of your trip, buying travel insurance can save you time, money, and frustration should anything go awry while you’re away. 

Start your journey close to home by visiting your local credit union. Credit unions focus on people rather than profits, so they often provide members with all types of insurance benefits and attractive terms that commercial financial institutions don’t.

Do I need travel insurance?

Since a standard travel insurance policy usually adds another 5% to 6% to your vacation budget, you’ll want to ensure it’s worth the money. Travel insurance protects you from some common risks and losses vacationers may encounter. While it doesn’t cover everything, it can help pay for expenses and fix situations that could create significant setbacks. Generally, if losing, replacing, or rebooking something would be a big blow to your bottom line, you’ll probably want to insure it. 

In fact, in some circumstances, travel insurance is required. If you’re traveling to another country, you may be wondering, "Is travel insurance necessary for international travel?" Although not required in all locations, there are dozens of countries that do require tourists to carry some amount of travel insurance. 

What does travel insurance cover?

Travel insurance can help resolve problems ranging from trivial to tragic. So, what does travel insurance cover?

• Baggage and belongings. At some point, almost everyone deals with a baggage delay or loss. Travel insurance pays to replace what’s missing, from pricey medical equipment to fancy parkas for your ski vacation. Yes, your airline will try to track your bag down, but they may take their time or have inconvenient deadlines for filing claims. Travel insurance usually kicks in when your bags have disappeared for around six hours. 

• Unplanned transportation expenses. It’s not always the luggage that gets delayed. Sometimes, it’s the people who miss connections due to flight delays or weather — or forgetting to set their watch to the local time when the cruise ship is in port. Travel insurance covers transportation costs to get you caught up, as well as hotel stays along the way. It can also reimburse you for meals and non-refundable outings you missed due to the delay. 

• Emergency medical care. Unfortunately, injuries and illnesses don’t know you’re on vacation. Even the fittest athletes may feel sick after elevation changes, drinking local water, or overindulging in greasy food or alcohol. And adventurous excursions may leave some travelers sore or injured. Finding in-network medical or dental providers can be hard when you’re out of town. And your insurance plan may not pay for expenses incurred overseas. Travel insurance can cover the cost of medical care and the bill for transportation to a larger facility or home if your condition can’t be handled locally. In the worst-case scenario, many plans cover accidental death and dismemberment and transportation of remains.   

• Financial default. More than one traveler has gotten stuck when a tour operator or budget airline suddenly goes out of business. Without trip insurance, you’re often out of money and stranded in a place where you don’t understand the language, perhaps even paying for lodging you can’t use. Insurance can help you get reimbursed for the money you spend to get home or to the next leg of your journey.

• Cancellations. Of course, sometimes an emergency ends your vacation before it even starts. Last-minute cancellations usually mean you’ll need to eat the cost of non-refundable payments if you’re uninsured. But with insurance, you can get most of this money back if you cancel for a covered reason. These vary by policy but can include illness, injury, or death in the family, job loss, lost passports, natural disasters, dangerous weather, transportation strikes, jury duty, and other non-negotiable situations. 

• Other reasons. You can also purchase “cancel for any reason” coverage, which lets you recover up to 75% of pre-paid expenses. But these policies are pricey — they can add another 50% to your insurance costs. And you’re usually required to buy it within a week or two of making your vacation deposit. These kinds of policies are invaluable when traveling to or through areas where civil unrest is likely. Standard policies usually reimburse you if terrorism prevents or interrupts your trip. But if you decide to cancel due to strikes, protests, or other political conditions, you’re likely on your own.  

When is travel insurance worth it?

Insuring a once-in-a-lifetime epic vacation is a no-brainer. But it’s a good idea even for shorter international trips, where the location alone can complicate the journey home. As mentioned, travel insurance is often necessary for international travel.

Trip insurance is also important when you’ve invested serious money on a cruise, resort reservation, or expedition. However, be sure to check the specifics to avoid coverage gaps. For example, if your cruise line cancels your voyage, basic policies might not cover the airline tickets you purchased to get to the port. 

If you’re planning adventurous excursions like scuba diving, cliff jumping, or parasailing, ensure your travel insurance covers higher-risk activities.

Also, consider how you’ll be getting around. Standard car insurance usually covers domestic rental cars. But if you’re renting a vehicle overseas, you’ll likely need a travel policy. Most plans only cover collision damage, so make sure another policy covers medical treatment or property damage sustained during an accident. 

When does travel insurance not make sense? The added cost isn’t worth it if you’ve purchased flexible, refundable airline tickets that can be easily changed. Likewise, you may not need insurance if your reserved lodging has a generous cancellation policy. 

Additionally, if you’ve used rewards points to cover some costs, those portions usually can’t be insured without special waivers. 

So, if you’re wondering if travel insurance is necessary, remember this mantra: If you can’t afford to lose and rebook, you should probably insure your investment.

Where do you get travel insurance? 

Buying travel insurance can be as simple as checking the appropriate box when you book a flight or hotel, but easier isn’t always better. 

Many credit cards offer cancellation insurance when you use them to book your flight or rental car. It’s usually built in but probably won’t cover other portions of your trip. Comparison shopping with different travel insurance providers gives you more customization options, but it takes time and effort to locate and contact individual companies. 

Using a travel insurance comparison website can help streamline the process and give you the best customization options. But, of course, you’ll need to read and compare carefully and hope you can make sense of the fine print.  

Alternatively, a travel agent can help answer questions if you need to discuss the terms and conditions. Just know that travel agents can only offer a handful of plans that may or may not meet your needs.

Your local credit union may offer more personalized, customizable help. Many credit unions offer robust travel insurance plans to their members. In addition, credit union travel insurance can include features you may not find elsewhere, such as ‘inconvenience payouts’ when your flight or luggage is delayed.  

Further resources on travel insurance

Let’s face it. Planning Insta-worthy excursions are more fun than ruminating about what could go wrong. But a few minutes of preparation can keep mishaps from spiraling into disasters. Here are some further resources on travel insurance:

• Hurricane season travel. Once a storm is named, it’s usually too late to buy insurance for trips to or from affected locations. If traveling between June and November, know how to prepare before booking. 

• Make your presence known. Concerned about emergency contact in case of natural disasters or civil unrest? Registering with the Smart Traveler Enrollment Program helps the local embassy contact you if the unexpected happens. 

• Additional coverage options. Traveling with high-ticket possessions like jewelry, sporting goods, or musical instruments? Travel insurance may only partially cover your valuables. Don’t skip travel coverage, but consider a floater policy hitched to your homeowner’s insurance for your most prized possessions.

A local partner who will go the distance

Still wondering, do I need travel insurance? A short trip to visit the helpful experts at your local credit union can clear up any lingering questions you may have about the coverage. Consider a credit union for all your travel insurance needs, from same-day activation to exclusive member discounts and more.

Did you know?

Many credit unions offer affordable travel insurance options that can be customized for your individual trip, unlike the one-size-fits-all coverage banks tend to offer along with their credit cards. In addition, credit unions are not-for-profit and owned by their members, so they can focus on member needs rather than shareholder profits.