Can Travel Insurance Save Your Vacation From a Natural Disaster?

The earthquake in Indonesia is a stark reminder that sometimes the unexpected happens.
Buying travel insurance can help prevent your plans for a dream vacation from costing you a fortune.

A magnitude 7.0 earthquake struck the idyllic island paradise of Lombok, Indonesia, leaving at least 98 dead. The natural disaster serves as a stark and tragic reminder of Mother Nature's ability to lay waste to even the most tranquil-looking places on Earth, a fact many travelers often overlook when planning trips.

When calamity strikes the destination of a long-anticipated vacation, those whose bags are packed and ready to go often find themselves on the hook for the costs they have already sunk into airfare, hotel reservations and more—unless, that is, they were savvy with their travel insurance. According to a recent AAA survey, 38% of Americans plan on picking up a travel insurance policy for their next international trip. But is it a smart purchase? Read on to find out when you should pony up for travel insurance.

When it makes sense to buy travel insurance

Like every other kind of insurance, travel policies vary greatly from plan to plan as far as what they cover. Don't just blindly buy a plan and expect you'll get a full refund on your travel costs if the weather forecast calls for rain in Myrtle Beach. With regard to natural disasters, most trip cancellation policies only take effect if your destination is rendered completely uninhabitable or inaccessible. While anyone with a trip booked to Lombok would almost certainly be reimbursed for the nonrefundable payments already made, another traveler wanting to cancel a trip to Bali— which was close enough to Lombok that people felt the tremors—likely wouldn't be covered.

With that in mind, purchasing travel insurance to safeguard against natural disasters makes the most sense when your trip involves a lot of expensive transportation and accommodation costs to a destination prone to unpredictable weather patterns and, in some cases, catastrophe. Some of the more popular offenders are:

  • The Caribbean: From June to November of this year, hurricane season in the Atlantic makes travel to these gorgeous islands a roll of the dice. Last year, six hurricanes were classified as Category 3 or higher and the region incurred billions of dollars in damage from the storms.
  • Greece and Turkey: These two Mediterranean nations regularly suffer earthquakes, thanks to their position near tectonic plates in the area. Last July a quake shook the Greek island of Kos, killing two tourists and injuring 115; this past April, a magnitude 5.2 quake shook southeastern Turkey, injuring dozens.
  • Northern California: Once known mostly for its celebrated wines, this region of the Golden State has battling record wildfires in recent years. Currently the Mendocino Complex fire has burned through 425 acres in Northern California, with 1,550 buildings reduced to ash so far. The state's infernos have degraded the air quality of Yosemite Park to such a degree that portions have been closed for the safety of those visiting.

Paying for peace of mind

Beyond protecting your vacation funds against a natural disaster, there are other financially sound reasons for purchasing travel insurance. Medical evacuation and emergency coverage is a huge incentive for anyone traveling to a country where the standard of care is unknown or dicey at best. Having the right kind of travel insurance that covers these medical expenses can help you avoid paying tens of thousands of dollars out of pocket.

How much will this peace of mind cost you? Again, the price of individual plans varies, but an educated guess ranges from 4 to 10% of the trip's cost in nonrefundable payments. In other words, a jaunt to Turks and Caicos that costs $3,000 in airfare and accommodations could, on the high end, demand a travel insurance policy costing $300.

It's not an inconsiderable amount of money, especially since the odds are you'll never have to collect. But should misfortune strike, it’ll be worth every penny.

James Ellis

James Ellis is a former Staff Writer for ValuePenguin, covering credit, banking, travel and other personal finance topics. He previously wrote for Newsweek, Men's Health, and other nationally-published magazines.

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