Travel Insurance is Probably Not Worth the Cost. Here's Why

Jason and Sandi Naiman booked a rock-n-roll-themed cruise earlier this year. It was their third one. 

“It’s one of the best weeks of my life, going on the rock-n-roll cruises, music on the water, it’s wonderful,” said Mr. Naiman. 

The couple also paid $1,000 for travel insurance, concerned that something might go wrong. And sure enough, it did. Their flight to Florida, where the cruise was departing, was repeatedly delayed, bumped to the next day, and eventually canceled.

The couple couldn’t get to Florida in time for the cruise, so they had no choice but to cancel. They later filed a claim with their travel insurance company, Travel Insured International, to recoup the cost of the cruise. 

I bought this policy in good faith that if something happened that resulted in missing our vacation, that was out of our control, we'd be reimbursed the cost of our vacation. That was apparently an unreasonable expectation.

Jason Naiman

“You don’t get to your cruise ship in time because the plane doesn't take off, that should certainly be covered by a travel insurance policy,” said Mr. Naiman. 

But that wasn’t the case.

Travel Insured International reimbursed the Naimans roughly $2,500 for a cruise that cost them $7,200. The couple learned their “trip cancelation” policy didn’t cover a cancellation that was caused by a canceled flight. Travel Insured didn’t even have to pay the Naimans what it did, but told the I-Team it did so because it wanted to give the claim every consideration.

“I bought this policy in good faith that if something happened that resulted in missing our vacation, that was out of our control, we’d be reimbursed the cost of the vacation. That was apparently an unreasonable expectation,” said Mr. Naiman.

Kevin Brasler, the executive editor at the consumer advocacy site checkbook.org, thinks travel insurance is often a waste of money. 

“I’m hearing a lot of advice these days, because there are so many problems right now, especially with airlines, that people should buy insurance. And I think that’s often bad advice,” he said.

Brasler says most policies are too difficult to understand and have too many limitations and exclusions.

“A big problem with these insurance plans, and something most consumers don’t realize, is that they're built to cover unexpected problems, not expected problems,” he said. 

For example, the Naimans' policy didn’t fully cover their trip due to a canceled flight, which these days can be expected. But their trip would have been fully covered if they’d been hijacked, their passports were stolen, or if there was a terrorist incident in the city where they live. 

Before buying travel insurance, Brasler suggests consumers examine how much they’ll lose if their trip is canceled. He points out that airlines will give you a flight credit, hotels often have friendly cancellation policies, and many tour operators will allow you to reschedule. 

“You need to evaluate, ‘What’s the financial risk here? If I can't take this trip, what do I lose out on?’” said Brasler.

Travel Insured International told the I-Team, in part: “Consumers are always given the option to shop around to choose the plan they prefer and are also allowed time after purchase to review the plan and return it for a full refund if they are not satisfied with the terms…”

The Naimans said next time they’ll thoroughly read their policy, and they hope others learn from their costly mistake. 

“I can survive the loss of $5,000. I just don’t want to see this happen again to anyone else,” said Mr. Naiman.