A previous thread
"Travel Insurance for Luxury Travelers" got locked because the thread went off the rails a bit. But I was thinking about this topic recently, and for me it comes down to three categories of risks. The first two are pretty clear cut for me, but I'm not really sure what people do about the third and whether insurance policies even cover it to the levels expected:
- Medical coverage: US health insurance generally doesn't cover international anything, so for me this is not controversial. I don't self-insure for medical at home, so why would I abroad? [it's cheap too]
- Losing prepaid stuff / not going on the trip / losing out on part of the trip: for me, this is where I'm pretty comfortable to self insure. I'm going to spend the money if I take the trip. It will be very frustrating if I lose prepaid hotels and plane tickets and essentially get nothing in return, but I can afford it by definition (if I was going to spend the money anyway). [this is usually pretty expensive so I skip it]
- Tail risk of high expenses due to unusual circumstances: you have arrived without a travel delay but your hotel burned down while you were on the plane and you have to buy alternative accommodations at a "walk up" rate in high travel season or buy a full fare day-of airplane ticket back home. Or there is a natural disaster and you are stuck there for two extra weeks. Or you are injured / sick and can't travel home and have to stay in a hotel for 1 extra week, volcanoes with unpronounceable names, etc.
Re:
#3 , when it's just me and my partner, self-insuring seems fine. But sometimes I bring along family members, etc. and then you end up insuring yourself and multiple other parties. Even if you can afford it in the worst case, sometimes you'd prefer to have a "stop loss" kind of coverage where you are paying some fixed but lower amount upfront vs. doubling or tripling your vacation cost unexpectedly in the worst case. (And with 5 star hotels, business class, etc. the worst case adds up).
The main problem I see is that even if you wanted to insure that, it's not clear to me that most travel insurance policies even clearly cover things like that up to the limits of the policy. For example if I quote a $10k trip interruption benefit with Allianz, the policy says,
"Additional accommodation and transportation expenses if the interruption causes you to stay at your destination (or the location of the interruption) longer than originally planned. There is a per certificate maximum of $250 per day for 5 days."
So what are the collective thoughts on that? Thanks.