Travel Insurance: Vacation Savior? Or a Waste?

March 8, 2010— -- Snowstorms, hurricanes, missed flights or a case of the flu all ruin countless vacations each year. To protect against such unexpected disasters, many travelers have turned to travel insurance. But before you go out and add to the cost of your getaway make sure you understand what is covered and what isn't.

The two main types of travel insurance are very different. The first, called trip cancellation insurance, is aimed at protecting travelers if they miss a flight or cruise, or suddenly get ill before heading off to the beach.

The other, medical travel insurance, focuses on health issues that might arise when you travel, mostly in foreign countries that don't accept American medical insurance.

"Generally, travel insurance is a broad topic and is very confusing to most travelers," warned Chris McGinnis, business travel expert for Best Western.

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Trip cancellation insurance protects you if you book a trip that requires a deposit or involves something non-refundable like airfare or a cruise. McGinnis said such policies typically cover cancelations for a wide variety of reasons "from your personal health or job status to natural disasters."

"There's also trip interruption insurance if you have to return early and want a refund," he said.

It is best to buy such insurance as close as possible to booking to ensure that you can collect the benefits. For instance, if you try to buy insurance after a hurricane is forecast for your destination or dates … well, it's too late.

"The most important thing is that you want to consider travel insurance if you are planning a very expensive, prepaid vacation," said Jeanne Salvatore, a senior vice president at the Insurance Information Institute, a non-profit education organization funded by the insurance industry.

Basically, that would mean you should get insurance for big cruises, ski vacations or organized tours.

For other trips, Salvatore said, insurance isn't probably worth it.