Whether planning travel for business or pleasure, there are many decisions to be made. Luxury or Economy? Direct route or stop over? Peak season or off season? It can be an expensive business, and it is natural to look for ways to cut some of the costs associated with travel. However, with all economy measures comes an element of risk: the cheaper hotel may be in an area it is difficult to get to, the early flight may mean you have to catch an expensive taxi to the airport because public transport options are more limited in the small hours. These are the small risks: the much larger financial risks are non-refundable deposits or emergency changes of plan due to family illness, weather events or natural disasters. These risks can be managed with prudent selection of a travel insurance policy.
Consider for example the large earthquake which struck Christchurch, New Zealand in 2011. As a result many travellers had their travel plans interrupted. The closure of Christchurch Airport impacted customers who were arriving or departing via Christchurch. Adequate travel insurance would cover reasonable additional travel and accommodation costs incurred as a result of travel delay caused by the closure of the airport, including costs associated with any missed connections. The cost to a traveller without travel insurance could potentially amount to several thousand dollars by the time you factor in changes to travel plans and actual loss of physical belongings. Add in any potential injuries and associated costs of health care, and the costs skyrocket further still.
Another factor when working out your personal risk/benefit ratio are your personal circumstances: if you are leaving an elderly parent at home or are travelling with young children your circumstances are somewhat different to a 23 year old backpacking solo. Say you're on cruising holiday in Fiji, when you receive news that a family member has had a serious accident. If you have an appropriate policy, your travel insurance will reimburse you for the costs associated with cancelling the rest of your trip and your extra expenses to get home quickly. Likewise, if your 6 year old falls off their bike the night before you leave and requires surgery to re-set a broken bone, travel insurance will cover the costs associated with cancelling beforehand.
A sensible course of action would be to discuss with your insurance broker which, if any, of your existing policies will cover you while travelling. Your expensive laptop may be covered by your household insurance even if you are away from home. Your credit card may have some travel insurance coverage for unexpected events like your travel company going bankrupt. Your airline may cover lost luggage. You will then be able to work out where the gaps in your coverage are and which contingencies you need to plan for when purchasing your travel insurance.
Ultimately, before deciding if travel insurance is really worth it you need to work out your personal comfort level with the risks associated with travel and a realistic assessment of your ability to meet the costs associated with unexpected events, keeping in mind that if these costs were to include medical evacuation or personal liability, they could be extensive.
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