Pros, cons of picking travel insurance

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Typically, travel insurance is bought per trip, but some frequent travelers buy an annual policy.

How much does it cost? Trip insurance costs, on average, 4 to 8 percent of the cost of the trip. The price is based on coverages chosen, the age of the traveler and cost of the trip.

What's the biggest warning about trip insurance? Know what a policy covers before you buy it. Only scenarios specifically listed in the policy are covered. And there are exclusions. For example, if your problem arose because you were reckless or drunk, your claim is likely to be denied. Call an insurer or broker to talk out your concerns to make sure you get the proper policy, Grace said.

What's the main argument for buying trip insurance? If you're traveling outside the country, emergency medical and evacuation coverage is probably a good idea, assuming you're not otherwise covered. "It could be a $2,000 ambulance trip or it could be a $150,000 (medical) flight from China to the U.S.," Grace said.

What's the main argument against buying trip insurance? Duplicate coverage. You might already have coverage for some of the travel risks you face. Consumer Reports and the Consumer Federation of America have been lukewarm on travel insurance for just this reason. For example, if you have adequate life insurance, you don't need accidental death insurance.

Check first and foremost with your health insurer. Then check your homeowners, life, and auto policies to determine what they cover when traveling. Also check with your credit card company to determine what travel insurance it offers when the card is used for travel charges. And being a member of AAA gets you some benefits similar to those offered in a travel insurance policy.

How does my homeowners policy help? Your homeowners or renters policy will usually provide coverage for off-premises theft — if your luggage is stolen, for example. However, filing a claim on your homeowners policy for a few hundred dollars might be a bad idea. First, you have to pay your deductible, which might exceed the value of your claim. Travel insurance has no deductible. Second, filing a claim might cause your insurer to raise your rates or drop your coverage, Grace said.

Where can I purchase travel insurance? Travel suppliers, such as airlines, hotels, cruise lines and tour operators sell it, as do travel agents, private insurance firms and insurance brokers, including those online. Buy your trip and your insurance from separate companies. If you buy from a tour operator that goes out of business, you lose your vacation and your insurance.

How do I get a good deal? The industry has become more competitive in recent years as more companies join and create an "arms race" to add more benefits to policies, Grace said. "In the end, it's better for consumers," he said. "The stuff that's out there today is really advanced, really tuned to the travel risk that people have today."

So compare prices and coverages. Examples of online brokers include InsureMyTrip.com, TravelGuard.com, Squaremouth.com and QuoteWright.com.

Look for online reviews of travel insurers. One can be found at the review section of InsureMyTrip.com.

gkarp@tribune.com

Twitter @spendingsmart

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