Budgeting for Your Holiday? Don’t Forget Travel Insurance

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The following is a guest post. Enjoy!

Budgeting for Your Holiday? Don’t Forget Travel Insurance

The annual holiday can provide well needed rest and recuperation.  However, while you may feel that you’ve more than earned a luxury break away, the finances may not always be in place to meet the cost of your dream vacation if you have not planned a holiday budget ahead of time.  

Selecting Among Travel Insurance Options

Many focus on the obvious costs of transport and accommodation, forgetting about more mundane necessities like travel insurance.  While the bulk of your vacation planning, and therefore required holiday budget may vary considerably, there are several important rules of thumb when it comes to selecting travel insurance that can save you money in certain circumstances – and sometimes this can mean significant cash.

Buying travel insurance from a reputable and established provider, rather than purchasing a policy from the travel agent who is selling you the vacation can seem to save little money at the point of initial outlay.  However, as with all insurance, the key features of any travel insurance policy lie in the detail of the contract.  Put simply, this means that you need to be aware of what is covered in the policy, and far more importantly, what is not covered, or excluded from the travel cover provided.

Travel Insurance Features – “The Devil is in the Details”

Every insurance policy naturally contains exclusions and limitations.  However, many “budget” products in the travel insurance market can prove to be worth less than the paper on which the contract is printed if you are unfortunate enough to have to claim.
To pick just one example, suffering the theft of personal belongings can put a dampener on the day, but with reasonable travel insurance, a claim should provide the money required to replace these goods.  However, if your policy will not pay out without a police report – which can be difficult to impossible to obtain in many foreign locations in the case of petty theft – the ‘cheap’ travel insurance can simply end up being something that you spent money on, adding to your overall holiday budget, without receiving any palpable benefit.
Other common exclusions with sub standard travel insurance can crop up when taking part in reasonable holiday activities like hiking or cycling.  The bottom line is that you must check that all activities in which you may take part during your vacation will be covered by the medical element of your insurance should you suffer injury.

Using Travel Insurance for Medical Care Expenses

The cover limit for medical care can be critical, and a travel insurance policy that falls short on this front can leave you looking at the very real prospect of financial ruin if you are unlucky enough to need hospitalization during your vacation.  Again, this is particularly the case if you will be venturing abroad.  Take advice from reputable, governmental sources on the level of medical cover that you will need given the location of your vacation.       


In summary, travel insurance requires due care and attention if you are to compile an accurate holiday budget that is not going to go bust thanks to being let down by a sub standard policy when you need it most.  If you take the hint of the less than interesting research well before your holiday, you can avoid any unwelcome drama when the vacation arrives, and something goes not entirely according to plan. 

How about you all? Do you generally purchase travel insurance when you go on trips, purchase rental cars, book hotel rooms, or book plane tickets? Do you feel travel insurance is worth the cost?

Share your experiences by commenting below!

Jacob’s Thoughts – Listed below are my random thoughts as I was reading this article.

  • @ How I plan/save for vacations – 
    • At the beginning of the article above, it is mentioned that accumulating the funds needed for the “perfect” vacation can be quite difficult. Indeed, I agree that this is definitely an accurate statement. 
    • However, I feel that there is a solution for saving for vacations that makes the grim prospect a little easier. What’s the solution, you’re probably asking? It’s called automatic transfers.
    • For many years before setting up my Purpose Focused Financial Plan, I wanted to save for vacations. However, when the end of each month came, it seemed like all of my money had been exhausted. In this way, I never made any progress saving for a vacation. 
    • The best way I’ve found to remedy this procrastination and ineffective-saving habit was to set up an automatic transfer once per month (at the beginning of the month though) from my checking account to my life values and dreams savings account with a pre-determined amount. This pre-determined amount is specifically earmarked for enabling me to fulfill a vacation determined from my yearly financial review of my life values and dreams. 
  • @ Whether or not travel insurance is needed? Is it a good idea at all?
    • First off, I just want mention that I think the advice given in this article is pretty accurate for how to proceed ONCE you know for sure that travel insurance is right for you.
    • However, I feel that determining WHETHER OR NOT travel insurance is right for you is an entirely different discussion. 
    • In short, in my opinion, I don’t feel that travel insurance is worth the money one bit for most normal individuals and families. Here’s why….
      • Similar to the way rental car insurance companies try to push rental car insurance policies because they are wildly profitable since claims rarely need to be made, most purchased travel insurance policies will never be touched. 
      • And, when claims are filed, I’m willing to bet that it was completely unnecessary because the traveler was already covered in some form or fashion by either their own health insurance or credit card insurance policies (if credit cards were used for the purchase).
      • So, yeah, it would be “ideal” to have travel insurance. But, in tough economic times especially, you have to think about what you REALLY NEED.   
    • So, now that I’ve gotten that out of the way, I do feel that travel insurance has its certain place or niche in the “travel economy.” 
      • I feel that travel insurance is a good thing to have whenever an employee is traveling on company business. 
      • At many companies, the employer is actually liable for an employee’s well-being and health when they are “on the company clock.” And, having a relatively inexpensive travel insurance policy is, in my opinion, a wise idea in order for all parties to know how damages will be paid if any accidents or damage is done by the employee to rental cars, etc during a trip. 
      • This ensures that there is not the tension between the employer and employee about deciding who is “liable.” Instead, the situation is already paid for, and the employer-employee relationship can continue on a little smoother.

***Photo courtesy of http://images.cdn.fotopedia.com/flickr-2597316650-hd.jpg


  1. I really enjoy traveling but I can say I have never in all my years bought travel insurance. I don’t know maybe I have taken it lightly but other then the little extras I pay to cover my electronics I rarely put insurance on anything other then my home and car and of course myself. As for as vacations and holidays I usually have a separate account that the funds go into so that when the time comes the funds are there. If I don’t see it I wont spend it.

    • Sounds like a great way to save Tiffany. And, I'm with you – I have never thought to get travel insurance either. Like I mentioned above, I suppose it'd be BEST to have insurance on every little thing we do in life. However, this simply is not possible since we all have limited resources/money. Therefore, we must pick and choose our battles.
      My recent post What if the Entire World Worked From Home?

  2. We are lucky because we have travel insurance through our employer. We also get some extra on our credit card. It is so expensive if you have a health problem so my heart goes out those that do. Whatever the cost though it is always good to be protected.
    My recent post Are You Wasting Valuable Energy and Money?

    • Wow PrairieThrif! Travel insurance through your employer! I've never heard of that. Is that for personal vacations/travel as well as business?
      My recent post What if the Entire World Worked From Home?

  3. thefrugaltoad says:

    We haven't bought travel insurance since our honeymoon, and let me tell ya that was awhile ago! Always decline the DLW insurance with rentals as our auto policy covers us.

  4. I am not a big fan of travel insurance! My wife left my camera lens in a taxi in Spain and could get my claim approved because I could not make a police report.
    My recent post How I Cut My Expenses?

  5. Financial Manager says:

    I’ve never had to deal with travel insurance much, because I’ve never left the country. However, one of our clients swears by it. He took his soon-to-be fiance to Paris in order to propose….and lost the ring somewhere at the hotel. Fortunately, he jumped through all the hoops he needed to and was reimbursed through travel insurance.

    • Thanks for sharing that story Financial Manager! I'm kind of surprised the insurance company paid for the ring since it was probably the guy's fault for losing it. I guess travel insurance is a pretty broad coverage type!
      My recent post Was The “Lost Decade” Really Lost For Investors?

  6. I've never even considered buying travel insurance for a vacation. I'll actually be looking into this next time I travel overseas. I guess there is insurance for everything these days!
    My recent post What’s Up With Housing?

    • There sure are Steve! In fact, there's almost annoying too many types of insurance. I think it almost makes life more difficult.
      My recent post Was The “Lost Decade” Really Lost For Investors?

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