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Do you need travel insurance for your summer trip? 

May 5, 2014 at 2:48 PM ET

Murphy's Law — the idea that what can go wrong, will — seems especially applicable for travel these days. But does that mean you need to purchase a travel insurance policy?

Flight delays and cancellations have been on the rise. In the past year, 76.91 percent of flights were on time, according to the Bureau of Transportation Statistics. That's down from 81.48 percent a year earlier.

Not exactly a good omen heading into the busy summer travel period, which also happens to mark the start of hurricane season. Add in the perennial worries of illness, work commitments and other mishaps that can waylay a trip, and buying travel insurance can seem like smart idea.

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Without it, such problems put travelers at the mercy of travel companies' refund and trip-change policies — and advocates say that with many of those companies now selling travel insurance themselves, they're less inclined to give unprotected travelers a break.

"They've gotten so much stricter in the last five years, it's incredible," said Christopher Elliott, author of "How to Be the World's Smartest Traveler." Affected travelers may lose any nonrefundable portions of their trip, and be subject to pricey change fees to reschedule a trip or head home earlier than planned.

There is, of course, some company self-interest there, Elliott said: "The more stories get out of people losing, the more policies they are going to sell." And because the bulk of policies go unclaimed, they can represent substantial profit for the sellers, said Jason Clampet, co-founder of travel advice site Skift.com. It's win-win for them. "If they don't get you with change fees, they can get you with what they sold you with insurance," he said.

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Pressure aside, whether travel insurance is a smart bet depends on the details of your trip. "There are a lot of people who could benefit from travel insurance that don't have it, and fewer who have it that would benefit from having a better policy," said Elliott, who advocates on behalf of travelers through his site, Elliott.org.

Here's how to figure out where you stand:

Decide: Do you need it?

Check travel providers' policies to calculate what your out-of-pocket costs might be for a last-minute cancellation, or if something disrupts plans mid-trip, said Linda Kundell, a spokeswoman for the U.S. Travel Insurance Association. "To one person, a $200 change fee might be significant, while another might be willing to absorb that," she said. "It's a highly individual decision."

With that in mind, insurance is usually a more valuable hedge for expensive trips (Elliott sets the bar at $5,000), international destinations and complicated itineraries (say, connecting flights before hopping on a cruise, or a multi-city tour). On less expensive, domestic trips, you might not need it, Clampet said.

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"If you're just going to Cleveland for the weekend for a wedding, you're probably not going to need [insurance]," he said. "The big trips — a honeymoon, the once-in a lifetime vacation — you want to be protected along the way."

Carolyn Brown, editor-in-chief of CruiseCritic.com, said travelers may also consider insurance or a medical evacuation policy if they have health problems. Such coverage could be particularly valuable for a "baby-moon," adventure travel, or a trip to a remote destination where you'd need to be airlifted out in a medical emergency. "If you had to pay out of pocket, my god, you'd be paying for that for a lifetime," she said.

Before you buy a policy, see if you're already covered, said Loretta Worters, a vice president with the Insurance Information Institute. Homeowners insurance may cover a lost or stolen bag while traveling, while your health insurance may pay for medical evacuation or a hospital stay abroad. "Your credit card company may provide travel-related services and coverage which could be duplicative," she said. "Check with them to see what kind of coverage you may have."

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Compare policies

Not all travel insurance policies are created equal. Some of what you might see on a booking site isn't even insurance, but rather, a protection plan or waiver that gives you a little more leeway to cancel or change plans, said Clampet. "Make sure they're not selling you assurance instead of insurance," he said. (A hint: If the site isn't calling it insurance, it's not. You might also look to see if the provider is listed in the USTIA's database.)

In fact, it's best to buy from a neutral third party — as in, not the company that is selling you the travel, or providing it, said Brown. "That way, there's no chance of a conflict of interest," she said. Providers' own policies may cover fewer potential problems, and there's no chance of payment if they go out of business. Look instead to comparison sites including SquareMouth and InsureMyTrip, which provide quotes from several insurers. Aim to purchase a policy within a week or two of booking the trip; wait longer, and you may not be able to get coverage for pre-existing medical conditions and other perils.

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For a named peril policy, which covers only specific problems, costs usually range from 4 percent to 8 percent of the cost of your trip, said Elliott. So-called cancel-for-any-reason policies, which offer broader coverage, add about 50 percent to the cost of a policy premium, said Kundell, bumping the range to roughly 6 to 12 percent. Frequent travelers can also get an annual policy covering all their trips, for as little as $200 to $300 per year.

Check the policy's per-night and per-trip limits against the out-of-pocket costs you already calculated, Kundell said. Assess coverage against concerns such as lost baggage, delayed flight, bad weather or an interrupted trip. Pay particular attention to medical coverage — pre-existing conditions are one of the most common exclusions that thwart travelers, Elliott said. If you're worried say that your bad knee will flare up, you may need to opt for a more comprehensive policy.

"Take time to read the fine print," he said. "It's clichéd, but there are a lot of exclusions, and the insurer is going to interpret the policy in the way most advantageous to them. Make sure you're not getting insurance you can never use."

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