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SMART QUOTE

"The world is full of
willing people some
willing to work the
rest willing to let them."

Robert Frost,
American poet

Mumbai - $399 + approx tax ($158) on Kenya Airways Valid to 31 July 2006
London - $595 + approx tax ($215) on Kenya Airways valid to 31 july 2006
Addis - $240 + approx tax ($94) on Ethiopian Airlines valid to 31 july 2006

**Please note these airfares are on a special booking class and will be subject to availability at time of booking**

I get a lot of questions about travel insurance this time of the year, when travelers are finalizing their summer trip plans. A typical recent inquiry asked, "We are booking an 11-day tour including a cruise. Who has the best trip-cancellation insurance? Do I need additional coverage?" Although the subject sometimes appears to be a bit daunting, the underlying principles are straightforward.

Cover your major risks

The purpose of just about any insurance—travel or otherwise—is to reduce or eliminate your financial risk if some unforeseen event sticks you with an unanticipated bill. In the case of travel, the main risks are (1) loss of nonrefundable prepayments in the event that you have to cancel or postpone a trip, (2) unexpected expenses if you need emergency/medical treatment while traveling, and (3) damage to, or loss of, some of your personal belongings while you're traveling.

Your initial challenge is to assess each of these risks—whether you can afford the consequences, or need to insure against them. With travel insurance, you have an additional challenge: to determine if your existing insurance covers you while you're traveling or if you need to buy additional coverage. Let's look at all three areas through those lenses.

Trip cancellation/interruption

What do cruises, vacation rentals, and other big-ticket travel services have in common? Once you pay, your payments are either largely or completely nonrefundable, especially if you cancel a few weeks or days before scheduled departure. Anytime you have more than, say, a few hundred dollars in nonrefundable prepayments at risk, you should think about trip-cancellation insurance. It reimburses you for any prepayments you can't recover if you're forced to cancel a trip for a "covered" reason. Although specific lists of covered reasons vary a bit from supplier to supplier, the core listing is common. You, a close family member, or a traveling companion suffers illness or an accident, gets called to jury duty or called as a witness, or has a fire that makes home uninhabitable; also, if terrorism breaks out in your destination, your tour operator fails, and a bunch of related calamities. Similarly, almost all policies exclude self-inflicted injuries, injuries resulting from a high-risk activity, and such.

Trip-interruption coverage, the complement to trip-cancellation, reimburses you for any additional expenses if, during your travels, you have to cut a trip short because of any of the covered reasons. Both coverages are almost always sold together as trip-cancellation, which I abbreviate as TCI.

Medical/emergency evacuation

If you fall ill or have an accident while traveling outside your Country of residence., you may face immediate requirements to pay local doctor and hospital bills. In a worst-case scenario, you might have to pay for high-cost emergency evacuation from a remote area either to a major medical center or back to your home country. Travel medical/emergency-evacuation insurance, which I abbreviate as Medevac, covers all of those contingencies.

Unlike TCI, however, your existing medical insurance may well cover you while you're traveling, anywhere in the world. Even HMOs often include provisions for reimbursing you if you need medical services outside the HMO's service area. Most Medevac insurance is secondary, meaning that it pays only the amount you can't first recover from other sources-in the case of Medevac, from your regular medical insurance. So if your regular medical insurance covers you while traveling, buying extra Medevac can be a complete waste of money.

Even if your regular medical insurance covers you outside your country of residence., it may not cover emergency evacuation. If you're heading to a remote area of the world where local health coverage may be poor, consider Medevac even if you don't need the other medical benefits. Some insurers plug emergency evacuation as their primary product, with or without other coverages.

Clearly, the amount and type of Medevac you need depends on (1) the risks which you might encounter and (2) which of those risks are covered by insurance you already have. A quick assessment of conditions at your planned destination(s) and the provisions of your current medical insurance should let you reach a decision quickly and easily.

Other travel insurance

Travel insurance companies offer a bunch of other coverages, including theft of valuables, lost or damaged baggage, expenses during a delayed or cancelled flight, collision coverage to a rented car, and others. I'm generally negative about such additional coverages:

Your regular homeowners' or household policies cover many of those risks, even while you're traveling. And airlines and cruise lines are responsible for reimbursing you for lost or damaged baggage and for at least some expenses of cancellation or delay. Since a travel policy is likely to be secondary, you may well find your claim denied even when you suffer a loss.

Even if you suffer loss, damage, or theft, travel policies generally exclude the more vulnerable of your possessions: cash, valuable documents, jewelry, cameras, electronics, and such. Your best bet is not to carry expensive stuff you don't really need-jewelry, currencies, and valuable documents especially-and instead leave it at home.

These coverages are often bundled into comprehensive policies with TCI and Medevac. If you get them anyhow, fine. But don't buy an expensive gold-plated policy just to add them if you can get the same essential coverages for a lot less money through a bare-bones policy.

Buying your policy

Your first step is obvious: Identify and add up the risks you face. That tells you what kinds of insurance you'll need-and how much of each. Keep in mind that it does you no good to overbuy.

Your next step should be to take a look at the programs your cruise line or tour operator might offer. You'll quickly notice that the cost of travel insurance increases with age-dramatically so when you go past 75 years. I've seen several policies for 80+ travelers that cost up to 25 percent of the total trip cost.

My advise is always buy Travel Insurance.