Travel Insurance Vs Trip Protection: Which Is Right For You?

Trying to understand the difference between travel insurance and trip protection is a lot like differentiating between breeds of dogs or cats. They're essentially the same but also completely different. Some are a lot better than others, but it also depends ... sounds super simple, right? Well, we're here to try and help you see the forest for the trees and make sense of the nonsensical. You know, just your typical foray into the wonderful world of insurance.

So here it is. Trip protection can be understood as an unregulated version of travel insurance most often offered by private travel companies or agencies. Trip protection is typically cheaper than travel insurance but is very specific in what it's offering you, such as waiving a cancellation fee for a missed cruise or offering credit for a canceled trip. Trip protection plans may also have lots of loopholes that make it hard for travelers to make use of it when issues occur.

On the other hand, travel insurance is a regulated industry whereby travelers can count on being reimbursed for losses incurred on their trip should something like unforeseen natural disasters occur, you get sick, baggage is lost, or you get into a car accident with a rental. Travel insurance typically costs between 5 to 7% of your total trip costs, and while this can be expensive, it's more all-encompassing.

While the explanation above may seem to have laid to rest the trip protection vs travel insurance debate, you'll need to keep your eyes peeled when seeing these terms in the wild. This is because travel agencies and companies use trip protection and insurance with abandon, without regard for consumer perception and the confusion it may cause. Maybe that's the goal ... but we'll keep our tinfoil hats off for now.

What you need to know is this: when you see trip protection or trip/travel insurance offered by a private company, you really need to read the fine print. Every time. This is because sometimes trip protection will seemingly bundle travel insurance into the plan but may not actually reimburse you for anything in the event of a cancellation. Rather it will just waive the cancelation fees. If you had to cancel your trip because of a family member falling ill or freak weather grounding flights for a couple of days, this would sure be a kick in the pants.

But there are times when it might make sense. Let's say you already have health insurance with travel health insurance built into your coverage, and then you also have a credit card that covers car rental insurance, lost luggage, and delays. It wouldn't make much sense to then buy travel insurance just to cover your expensive tour or cruise. In this case, buying trip protection would be a smart move.

In general, travel insurance is going to cover all of your bases when you don't have coverage from other sources. Don't have a travel credit card and are worried about your luggage going missing? Travel insurance. Health insurance doesn't cover travel, and you're worried about stomach bugs on your trip to South East Asia? Travel insurance. This is an especially good idea if you're spending a lot of money on a big trip that puts a serious dent in your savings. Can you bounce back easily if you were to miss it? No? It might be time to look into some insurance plans.

Unlike trip protection, travel insurance plans are underwritten by insurance companies and regulated by state insurance agencies. What this means is, essentially, if a cruise company that gave you trip protection goes out of business or files for bankruptcy, you're out of luck. On the other hand, travel insurance companies are very rarely liquidated, and if they are, the policyholders are handed over to another company. So, if you need it, this makes travel insurance a surer bet than your other options.