Should You Buy Travel Insurance?

Would you like to add travel insurance to your purchase?

That little pest of a question pops up every time I book a flight, confirm a hotel room or reserve a rental car. It’s become the “Do you want fries with that?” of online travel booking. The difference: sometimes I buy the fries.

I have never bought travel insurance in my life because instinct has always told me that it’s a bad deal. I rarely pay for hotel rooms, tours or rental cars in advance. I don’t pack designer clothing in my checked luggage. I’m generally healthy, and I have medical insurance that covers me abroad. (It claims to, at least.)

But instinct is a poor way to make decisions about insurance. So with a three-week trip to Asia approaching, I finally decided to figure out whether I should be traveling with insurance, and, in general, when it is smart to have it and when is it unnecessary.

Travelers tend to buy insurance if they are more at risk or more likely than the average policyholder to make a claim. In economics that’s called “adverse selection” — but it’s adverse only for the insurance companies. For consumers, it’s just smart. Imagine two people looking at a $100 insurance policy for a two-week trip: one is a 65-year-old heading to India, where he plans to rent a scooter, eat street food and sleep in already-reserved five-star hotels every night. The other is a 30-year-old going to London, planning to crash at a friend’s apartment and buy discount theater tickets every night. It’s pretty clear who should buy insurance.

For my own coverage, I looked at packages offered by World Nomads, a popular and well-regarded company that provides travel insurance plans online. (If you are buying insurance, try them — or examine the options at insuremytrip.com, a travel insurance search site.)

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