When travel insurance pays off

By Jen Haley, producer


NEW YORK (CNN) -- The enormous ash cloud from an Icelandic volcano continues to wreak havoc on travelers. One way to protect yourself financially from events like this: travel insurance.

People who bought travel insurance for travel within Europe before April 13th are able to get non-refundable costs reimbursed. And depending on the policy, that could be $150-$250 a day for meals and accommodations says Jim Grace of Insuremytrip.com.

Generally, policies will cover these costs up to 5 days.

Keep in mind that if you do have a trip scheduled to the areas affected by Iceland's volcanic eruption soon and you don't have any insurance, you won't be able to get it now. Policies don't cover events that are either in progress or have already happened.

And travel insurance is not cheap. It's generally 4-8% of the cost of your trip.

You'll want to think about buying travel insurance if you've made down payments to a cruise line or a tour operator and there would be a large penalty for canceling, according to Ed Perkins of SmarterTravel.com.

If you're on Medicare and you're taking a trip overseas, you may want to think about getting extra medical insurance coverage. Medicare does not cover medical expenses incurred outside the U.S.

If you're thinking about going to a developing country or booking an adventure vacation where the chances of injury is greater, it's a good idea to think about travel insurance polices.

But it's probably not in your best interest to buy travel insurance if you don't have to put down a large down payment or if you can cancel your plans without penalty. And remember, too that you may already have some insurance protection when you're traveling. For example, many homeowners' policies provide coverage for theft and other losses away from home. And your medical and auto insurance may be valid in other countries.

Here are some things you should know before you sign on to a travel insurance policy. First, shop around. Check out insuremytrip.com, quotewright.com and squaremouth.com. These sites will let you compare prices and policies. It's not always in your best interest to buy insurance from the travel agent or the cruise line operator.

Also ... if you are going to buy travel insurance, do it within 7-21 days of booking your trip to get the most out of your coverage. After 21 days you won't be able to get protection in case the airline or tour operator goes bankrupt.

Talkback: Have you ever purchased travel insurance? To top of page

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