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Is Vacation Trip Cancellation Insurance Worth It?

September 16th, 2010 · No Comments

In general, no.

Vacation insurance, also known as travel insurance or trip cancellation, is an insurance policy you can buy to protect the amount you’ve spent on a future vacation in the event you can’t go on the vacation. Review the insurance policy carefully because some policies will reimburse you regardless of the reason and some only offer a few reasons (illness, accident, etc.) where reimbursement is permitted. Many insurance companies offer a “cancel for any reason” benefit but they don’t all do, so you really need to read it carefully. It’s gained in popularity with the recent eruption of Eyjafjallaj√∂kull in Iceland, but most of the time it’s not worth it even though a third of travelers buy it.

In this post we aren’t covering other types of insurance like travel medical insurance or supplier default insurance, just trip cancellation vacation insurance.


Vacation insurance isn’t usually worth it for two reasons:

  • It’s expensive – generally the insurance is about 5% the cost of the trip itself. If you think there is a greater than 5% chance you won’t be able to go on the trip, then it makes sense for you. I would argue that you probably shouldn’t book a trip if there’s a 5% chance you can’t make it!
  • You may already have coverage – check your credit cards to see if you already get trip cancellation insurance. My American Express offers some trip cancellation insurance (up to $1,500 per insured persons to a maximum coverage up to $3,000 for all insured persons) and that’s often enough insurance for me.

When it comes to other insurances, like emergency medical insurance, use your judgment. Check to see if your activities are covered by your existing insurance and, if you are participating in some high risk activities, consider if the cost is worth it relative to how likely you’ll need it. With trip cancellation coverage, you have a finite amount on the line (the amount you paid for the vacation), with medical, the sky is the limit!

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