From airport security to tighter Visa rules, 9/11 changed the way we travel. Events like Hurricane Katrina and the tsunami in SE Asia starkly illustrated that unexpected events can turn a vacation paradise into a nightmare. The economic downturn has caused us to be more cautious about the possibility of losing large sums of money. All this has added up to explosive growth for the travel insurance industry. According to the nonprofit US Travel Insurance Association, before 9/11 only 8%-10% of travelers bought insurance. Now almost half of leisure travelers purchase insurance.

Travel insurance typically covers 3 areas: flight insurance; medical evacuation and insurance; and trip cancellation. These components can be sold separately or as one comprehensive package. Expect prices to be 4%-12% of the cost of your trip.

Many companies include additional services in their coverage, like arranging to transfer money to you when you are abroad, finding a legal adviser or helping you replace lost tickets or passports.

When to Buy Travel Insurance
The bigger your investment and the earlier you book your vacation, the more you need coverage. That $10,000 cruise booked a year in advance? Get complete coverage. A week in Mexico staying in budget hotels? Probably only medical coverage is needed. If you’re going to Italy instead of Mexico, you may even forgo the medical coverage if you are healthy. Italy has an excellent government-run medical system that provides inexpensive care. A 10-day vacation to Disney staying at top resorts? Trip cancellation coverage could give you peace of mind as you put down the nonrefundable deposit on your luxury suite. Driving across the state (or the country) to go camping at a national park? No coverage is needed, as presumably your health and auto insurance will give you needed protection in case of a mishap.

Coverage is strongly advised for adventure travel, travel in third world destinations, expensive tours and long, multiple-stop itineraries with complicated air routes.

Before You Buy
Review all of your existing insurance policies (medical, homeowner’s, renter) to ascertain what coverage you already have.

• If your medical insurance policy covers you even in a foreign country, then you will not need medical insurance. If it does include services in a foreign country, but only up to a few thousand dollars, then you might consider buying secondary coverage, which will kick in once your primary insurance coverage is exhausted.
• Check your homeowner’s insurance to see if lost luggage is covered.
• Read up on the coverage offered by the issuer of your credit card used to pay for travel arrangements. If you have a “premium” card, many items, including baggage, emergency medical evacuation, and death and dismemberment, could already be covered or could be available for a smaller fee than charged by a travel insurance company. Additionally, many companies offer merchant dispute benefits. If you were unable to reach your destination due to the airlines and they refuse to reimburse you or arrange for satisfactory alternative transportation, the credit card supplier may refund your money after it is clear that the airlines will not.

Read the Fine Print
It is critical to read the policy’s fine print carefully and understand what is and is not covered.

Unfortunately, you cannot always rely on the agency or insurance representative on the phone to give accurate answers. The only document that is indisputable is the actual policy itself. Insurance companies generally give you a period of time to review the policy and cancel with no penalties or a small administrative fee. This is your chance to study the document to make sure that it meets your particular needs.

Medical Coverage
Emergency Evacuation: This is essential if you are going to be far from adequate medical services. Expenses related to evacuation can be very high (for example, renting a helicopter to fly into a remote spot in the Amazon plus the flight home). Not all medical evacuation policies offer repatriation (the expense of getting you, or your mortal remains, home) coverage. Ascertain whether evacuation is only to the nearest health facility, or if it will pay for you to be transported all the way home. If family members also have emergency evacuation on the same policy, coverage allows them to accompany you home.

Many higher end tour companies provide this coverage in the tour price.

You may break an arm in a country where you do not feel confident having the doctor set it. If you do not require hospitalization, many policies will not cover the flight home; this would only be covered by a trip interruption policy. 

International Medical Insurance: These plans provide coverage for emergency medical procedures. Each policy is different so carefully read the fine print. Many do not cover the effects of a preexisting condition, so if you have a history of heart disease or are pregnant, you need to find a policy, or invest in an upgrade, that will provide the necessary protection. Engaging in dangerous activities, like high-altitude mountain climbing or even SCUBA diving or jetskiing, may also be excluded. Acts of terrorism or war may not be included as well. 

You will probably have to pay medical expenses out-of-pocket, as most international facilities will not be equipped to bill your insurance company. Retain all receipts to send to the travel insurance company for reimbursement.

Find out if you need prior approval for medical care, and if you do, make sure you know how to contact the company from abroad.

Recreational drugs, incidents that occur while intoxicated, sexually transmitted diseases and mental health expenses are never covered.

Medical coverage may not be necessary if you are traveling to a country with government-wide medical care, like Canada, Japan or most countries in western Europe. While there may well be fees associated with any care you receive, they are unlikely to be high and some services may be free.

Many health insurers will not cover you if your cruise ship is sailing under a foreign flag, which is the case with the majority of cruise ships, even those plying domestic waters. Check your existing health insurance policy. If they consider your cruise through Alaskan fjords international because the ship is registered in a foreign country, consider buying supplemental health insurance.

Flight Insurance
Flight insurance covering death and dismemberment, sold by the airlines, credit card companies and from airport kiosks, are not necessary. Most people are covered by their life and health insurance in the very unlikely event that you suffer grave injuries or die on a plane. Per trip fees, though they may look small, are actually some of the most expensive insurance coverage around considering the duration of your flight and the safety of air travel in general, and some of the most unnecessary since you are probably covered elsewhere.

Flight delay or cancellation reimburses you for accommodations, meals and alternative bookings if your flight has been delayed by 6 hours or more (depending on the policy) or canceled. Usually this is only important for complicated air travel itineraries, or if it is crucial that you reach your destination by a certain time, for example for a cruise departure.

Baggage insurance may be included in comprehensive coverage, but does not need to be purchased separately. Airlines already cover lost luggage. Your homeowner’s insurance should also include baggage and many policies do not cover expensive items like jewelry or electronics. Coverage usually kicks in 12 hours after you have reached your destination without your bags.

Flight insurance may also include some emergency medical and evacuation coverage, and protection against lost baggage, cancellation, interruption and delay.

Trip Cancellation or Interruption
If you have bought expensive, nonrefundable tickets or put down a large deposit on a cruise or a tour, trip cancellation coverage would be a good investment. Buy the insurance immediately upon purchasing the tickets or putting down the deposit. Check carefully when the insurance company no longer offers benefits; for some it is as early as 7 days after booking. Generally, coverage is only for cancellation due to illness, injury or death either of the insured or a family member. Again, be careful of those preexisting condition clauses. If you bought your ticket when you knew your father was gravely ill, then canceled the trip due to his death, the insurance company could deny your claim.

War, civil unrest and terrorism in your destination country or a sudden inability to pay for your trip due to job loss or other financial circumstances are not covered, though you can get coverage through an upgrade to a cancel for any reason policy.

Trip cancellation also protects you if the tour company or airlines you booked with goes out of business. However, due to the high risk nature of many travel companies, financial default is no longer covered for all companies. Each insurance agency has a list of carriers and travel suppliers for which they do not offer coverage.

If a weather event, an incident on the way to the airport or some other legitimate reason prevents you from catching your plane, this coverage will reimburse the costs associated with arranging another flight. However, if you cancel because you thought a hurricane would hit, and it didn’t, the policy may not cover you.

A cancel for any reason upgrade will cover you no matter why you decide to cancel. For example, with the emergence of the H1N1 virus (swine flu), most cancellation policies would not reimburse for a cancellation due to fears about contracting the flu. But if you had the cancel for any reason clause on your policy, you would be reimbursed for canceling your trip. Though it is expensive, it offers greater protection against the unforeseen events that can thwart even the most meticulous planning.

Terrorism, War and Civil Unrest
It was partly due to 9/11 that the insurance travel business has boomed. Ironically, most policies now specifically exclude acts of terrorism, war and civil unrest from their coverage. If you are traveling to or through a high-risk area, check to see if your policy covers acts of terrorism. Many basic policies do not and you may need to purchase supplemental coverage. Also check to see if your destination is on the insurer’s list of exempt countries. Generally these are countries for which the US government has issued a travel warning.

Annual Travel Insurance
If you travel frequently, you can buy annual travel insurance for emergency medical expenses anytime you travel that year up to a certain number of trips or travel days. The advantage is that you don’t have to sign up for insurance every time you travel, but the maximum reimbursement is generally pretty low. Usually, trip cancellation coverage is not provided, or is available for an extra fee.

Seniors
As with health insurance, the older you are, the more expensive, but more crucial, the coverage is. Some companies do not cover travelers over a certain age, while others offer senior-specific policies. Medicare rarely covers expenses incurred abroad. Carefully check the wording on preexisting conditions.

Travel Agents and Tour Operators
Travel agents receive commissions on selling travel insurance, but they are not familiar with all the details of the policies. Do not rely on their answers to your questions. Contact the insurance company directly for answers and always read through the policy itself.

Do not sign up for optional travel insurance with a tour operator unless you fully understand the protection provided. As with everything, it pays to shop around, and to go with an insurance company that has your confidence. Ensure that claims are paid in cash, and not in credit to the travel company. The insurance should be from a company that is independent of the tour operator; if the operator goes out of business they will not be able to process your claim for the trip they did not provide you.

Insurance Companies
Make sure the insurance company is reputable. Check with the Better Business Bureau or the US Travel Insurance Association for insurance companies in good standing.

Comparison shop online through an insurance aggregator website like Square Mouth and InsureMyTrip.com for quotes offered by various companies.