Traveling involves risk, just like everything else in life. While nobody wants to cancel a trip, or expects to become seriously ill while they're traveling, it's worth considering some kind of insurance to cover your risk. First, let's look at the different kinds of insurance, and what they cover.
Trip Cancellation InsuranceTrip Cancellation Insurance
covers you against the risk that you become ill before or during a trip, and have to cancel. It doesn't pay any of your health care costs, but reimburses you the money you paid for a trip if you have to cancel or leave a tour early due to illness. Most companies have all kinds of restrictions on pre-existing conditions, and what does and does not constitute a valid reason for canceling a trip. It is incumbent upon you to check out the details of individual companies' policies.
If you'll be doing an independent trip this kind of insurance may be of little or no value to you, since most of your costs don't occur until after the trip has started. If you do purchase Trip Cancellation insurance for an independent trip, consider insuring only the value of the items that are difficult to cancel or change.
Airline tickets, even restricted fares, can almost always be changed to a later date — usually with a penalty, but at least you don't lose the whole thing. Most hotel reservations can be canceled without a penalty 24 to 48 hours in advance. Rental car reservations can be usually canceled with no charge. Railpasses often incur a 15% refund penalty, but many point-to-point ticket, such as the cheapest Eurostar Channel Tunnel tickets, don't allow any changes or refunds. If you cancel or change dates, you would lose all or most of the money you paid for these items.
If you're taking a tour you probably have a lot of up front costs at risk, especially if you have to cancel in the last 60 to 90 days before a tour, which is when most companies require final payment for a tour. Once the final payment has been made, most tour companies will not refund anything if you have to cancel. In this case, it's up to each individual to weigh their own risks against the cost of the insurance.
There are lots of companies selling travel insurance. You can spend hours on the phone or internet comparing policies, but I find that it is quickest and easiest to use a broker that deals with multiple companies, making it easy to compare policies and costs at a glance.
You input some basic information, like your age, the amount you're insuring, and where you're headed, and the broker's web site displays policies from just about every travel insurance company out there, complete with rates and policy comparisons.
One of the easiest I've found to navigate is Square Mouth
(an odd name, but they are
an insurance broker).
Travel Health Insurance
Once your trip actually starts Trip Cancellation becomes less important, as the chances of you being hurt or becoming too ill to continue during a tour are small. It does happen, though, so again each individual needs to weigh their own risk.
During a trip there are really only two types of services that you might need: Health Care
and Emergency Evacuation.
Traveler's Health Insurance
covers care and treatment that you undergo if you become ill or are injured while overseas. Your regular health insurance may cover treatment abroad, but increasingly many do not (Medicare, for example, doesn't cover any treatment outside the US). Ask your insurance company specifically about their overseas coverage.
Even if your insurance company covers overseas treatments, European doctors and hospitals will require you to pay up front. Once you return to the US, you'll need to have the bills translated, and then submit them to your insurance company for reimbursement.
Traveler's Health Insurance covers these costs for you, without having to pay up front or worry about reimbursements once you get home. Most companies also provide services that are just as valuable when you're overseas: referrals to English speaking doctors, translators if necessary, and assistance in contacting family members.
Statistically, very few people require Emergency Medical Evacuation
(which is probably why it seems like such a bargain, compared to Trip Cancellation or Health Insurance). Emergency Evacuation covers the costs of having you transported to a medical facility where appropriate treatment can be provided. Some companies will only transport you to the nearest facility, while others will transport you anywhere you want to go, including from a hospital in a foreign country to a hospital near your home.
If you're traveling in western Europe, where medical training and care are very good, chances are that a nearby hospital will be able to do anything for you that you could possibly need.
If you're traveling in less developed areas, like parts of eastern Europe, Asia or Africa, then Emergency Evacuation is definitely something to think about. The costs of emergency transportation can be extremely high. Most evacuations cost between $3000 and $15,000, but in some instances can be much higher.
For Emergency Evacuation take a look at MedjetAssist, a medical transport membership program. If a Medjet member becomes hospitalized more than 150 miles from home and meets transport criteria, Medjet will arrange medical transport to the hospital of their choice within their home country at no additional cost. All the member pays is their membership fee.