A Guide to Travel Insurance

05/06/2015 07:19 pm ET | Updated May 06, 2016

Without travel insurance, medical emergencies, accidents, theft and legal threats on foreign or domestic trips can carry price tags big enough to wreck a person or family's personal finances.

Travel insurance can help, but buying smart means doing the right amount of research first and smart trip-planning afterward. Here are some tips to help find travel coverage that fits your needs and destination.

Check your personal coverage first. If you pay for life, home, auto or health insurance out-of-pocket, call your respective agents before you make a single reservation for your trip. Discuss where you're staying (conventional lodging or room-sharing) and any planned activities, particularly sports-related. Get an idea of where your personal coverage ends and where buying travel coverage might be beneficial. Some travelers, for example, might be surprised to know that some homeowners policies actually offer liability coverage on out-of-state or foreign trips if you accidentally injure someone. Some health policies offer medical evacuation insurance but with a large-enough deductible that you may want to add travel insurance coverage that can cover that amount. Evaluate travel insurance coverage available through your credit card company. Every trip is different, so don't generalize -- write down detailed questions about potential risks before you plan a trip and get specific answers on where your potential coverage gaps might be.

If you are traveling on business, talk to your employer about additional insurance. If your employer hasn't briefed you on the company's travel rules and coverage standards and you know you're going to be traveling soon, call your benefits department. Employers who do business in risky areas where crime, geopolitical conflict or rough weather are common may have specific systems in place for these issues. As above, it may also be relevant to contact your personal insurers to see if your existing policies may provide applicable coverage.

Travel insurance includes different categories and can cover the following in comprehensive or separate policies:

  • Trip cancellation and/or trip interruption
  • Baggage loss
  • Medical and/or dental
  • Pre-existing (medical) conditions
  • Evacuation (medical or otherwise)

Before making an investment in travel insurance, compare costs. It is difficult to cite average premiums for trips because every trip and traveler is different. Coverage for short domestic trips with basic coverage for cancellation or lost baggage might cost some money; comprehensive coverage for a major world excursion may go well into the hundreds. Online resources make it easier than ever for travelers to compare features and coverage, so study policies carefully.

When an airline, cruise line or any company directly connected to your trip offers to sell you travel insurance, investigate -- but be cautious. While such policies may indeed cover all risks adequately, keep in mind that travel providers are not full-time travel insurers. They may not be able to match the quality of coverage or customer service that an established travel insurance company can. You will hear these independent carriers referred to as third-party carriers.

Like most insurers, travel insurers may resist paying out claims to customers who take extreme physical or excursion risks or fail to properly document claims. Travelers should pay attention to what is known as the exclusion clause in a travel insurance policy to avoid uncovered behavior and to make sure claim filing is smooth.

Knowing the limitations of your coverage is the first step in making sure you're buying the right insurance, so read policy information carefully. If you do have a claim, document quickly and promptly. Copies of receipts for valuables lost or stolen should be kept in a safe place as well as all ticketing and paperwork related to a trip, a tour or a particular segment of a trip cancelled for reasons covered by the policy. If your claim is the result of a criminal act, make sure you obtain and file a copy of the police report at your destination and gather any other relevant documentation safely.

Before you set off for the airport, make sure you take proper precautions against both weather and man-made disasters. The U.S. State Department features its own global travel alert and warnings webpage to prepare travelers for local crime, terrorist attacks or geopolitical conflict. The U.S. National Weather Service has websites for its Storm Prediction Center and National Hurricane Center that show up-to-the-minute weather patterns that may affect travel and destinations along the route.

Bottom line: Travel insurance can more than pay for itself when illness, personal emergencies, bad weather or local conflicts threaten or cancel a much-anticipated trip. But before you buy, evaluate the risks you're likely to face on an upcoming trip and whether the costs and coverage of travel insurance will meet them.

Jason Alderman directs Visa's financial education programs. To follow Practical Money Skills on Twitter: