4 times you can skip travel insurance—and 3 times you should buy it

If you’re going on vacation this summer, you’ve probably already booked some of the key elements, like your flight or cruise. But have you purchased travel insurance? Travel sites make it pretty easy these days to add trip protection to your purchase, but what does that fee get you, and when is the extra cost actually worth it?

There are generally two kinds of trip insurance:

• Basic trip cancellation protection, which usually covers lost bags, reimbursements if you miss a connection and a refund if you can’t travel because you’re sick or hurt.
• Comprehensive travel insurance, which typically covers all that, plus any expenses related to medical or dental emergencies, disaster evacuations and even costs associated with accidental deaths. Basically this is a combo of travel and medical costs.

If you’re going to get trip or travel insurance (the two terms are pretty much interchangeable), experts usually recommend the comprehensive kind. You can even purchase a policy that comes with a “cancel for any reason” safeguard, which is ideal if you’re traveling to places that might experience political unrest.

If you haven’t paid extra for the “cancel for any reason” policy, you’ll likely encounter strict guidelines for when you’re eligible for reimbursement. For example, if you get sick before a trip, you’ll need to get a doctor’s note before cancelling if you want to be reimbursed.

“Do a little bit of homework as to how much risk you’re even taking on so you can make an informed decision,” Maria Teresa Hart, executive editor of the hotel review site Oyster.com, tells CNBC Make It.

All-in-one policies cost about 56 percent more than basic trip insurance, according to an analysis by finance research site ValuePenguin of the top 50 offerings on the market. You can expect to spend, on average, $164 for each. For those on a tight budget, that extra money can be the difference between being able to afford a fancy dinner or a nice hotel and not being able to splurge. So it pays to know when you really need to spend on extra protection.

When You Don’t Need It

Consider your vacation an investment. Would you be OK losing that money? On a whole, if you’re spending a relatively small sum on your trip, insuring that investment is probably not worth it.

• Skip It: For U.S. travel

Traveling to Florida? Road-tripping around the American Southwest? You can probably skip any extra insurance. Travel within the U.S. is typically a less expensive investment — and most people tend to plan only a few weeks in advance. ValuePenguin estimates the average domestic trip spans about four days and costs $576 per person.

Plus, if you have medical insurance, you’re typically covered for any emergencies that occur. As always, double check the fine print, but experts generally recommend opting out of trip insurance for short trips within the U.S.

• Skip It: If your card offers it

Check your wallet before buying any travel insurance, since some credit cards actually offer it as a perk. For example, the Chase Sapphire Preferred credit card offers built-in trip interruption insurance that reimburses up to $10,000 per person if your trip is cancelled or cut short because of situations such as an illness or severe weather. The Citi Prestige and Citi ThankYou Premier cards also offer baggage and trip cancellation protection.

So even if you are traveling outside the U.S., if your credit card’s coverage is thorough, you won’t need to purchase anything extra.

• Skip It: For flights

It can tempting to purchase trip cancellation insurance when a flight costs hundreds or thousands of dollars. But the basic policies are usually not worth your money to insure just your flight if you know your rights as a passenger.

For example, if your flight is cancelled, you’re generally entitled to have the next available seat on the next available flight going to your destination. Having insurance is not going to make much difference in getting you re-booked faster, Hart says.

Depending on your destination, if you do experience significant delays or the flight is cancelled, you could be entitled to compensation — no insurance needed. When you return from vacation, check with AirHelp. If you’re eligible, the service will work to secure you a pay out (the company takes 25 percent of any compensation won).

If you do need to get to your destination at a specific time, say, for a cruise departure, simply taking the next flight out may not work. Especially if you’re on a budget airline that only offers a limited number of flights and routes. In that case, consider using a service like FreeBird. The service allows passengers to re-book cancelled or significantly delayed domestic flights on any airline starting at $19 per leg.

• Skip It: Just for flexibility

Trip insurance should not be used to just so you can keep your options open. “Some people make that mistake; they think of it as kind of a cancellation policy,” Hart says. That can be a waste of money, especially when it comes to your hotel. Instead of purchasing a whole comprehensive policy, opt for a hotel reservation with free cancellation right up until your stay.

When You Do Need It