Travel Insurance is an inexpensive service you can purchase that protects you against trip interruptions, cancellation fees, lost luggage, unexpected medical expenses and more. Learn what it is and a strategy you can use with it to save 30% or more on your vacation costs.

One of the nice things about booking through a premium travel site (such as Orbitz or Expedia) is that you are generally assured of getting a high degree of customer service. If your experience doesn't live up to your expectation, you have someone who will listen to you and possibly reimburse you for your trouble. You will generally have more flexibility with your arrangements. If you need to change a date, you can do so with little or no penalty.

Of course, you are paying for the privilege. If instead you book through a discount site, you will pay between 30-50% less, but you won't have nearly as much recourse should something go wrong. And if you need to change hotels or your travel dates, you will be subject to heavy penalties.

The idea is simple: purchase your vacation through discounted sites and invest part of the savings in travel insurance. If you save 40% on airfare and lodging and invest 5% back into travel insurance, you're 35% ahead. That could be hundreds of dollars on a one-week vacation. (Note: If you're unclear on how this works, see our step-by-step guide for complete instructions).

Not only will you save money, you are ensured that your overall trip cost isn't going to unexpectedly grow out of control.

Trip Cancellations and Interruptions Are Covered

In our experience, we experience a change in travel plans about one in every three trips. For instance, on the last dozen or so trips, all of the following have happened to us:

• We arrived late at the airport and missed our flight. We were charged $380 to get a seat on the next flight.
• We missed the connecting flight because of bad weather and had to stay at a hotel overnight.
• We wanted to stay an extra day, but couldn't because the airline wants to charge us $500 for the last-minute change
• Our luggage arrived 24 hours after we did, so we had to buy extra clothes and toiletries.
• We had to cancel our trip completely and lost our non-refundable fare.

Travel insurance covered us in all of these situations (except in the third case... we admit it, we don't always get insurance). Most airlines charge $100 + the difference in fares, so a single incident like these will pay for several trips worth of travel insurance.

Other Advantages

A reputable supplier of travel insurance will also cover costs associated with lost passports, emergency prescriptions, cancellation fees due to illness, hotel closures due to storm or terrorist activity, and even bankruptcy. If anything goes wrong on your trip, you have a phone number you can call 24 hours a day to get help.

Cost

Travel Insurance is very inexpensive. It starts at around $30 and goes up depending on the length of your trip, where you are going, and other factors. A good rule of thumb is that travel insurance tends to run no more than about 5% of your total vacation cost, so a $3,000 vacation will require no more than $150 of insurance (and if you're in that ballpark, you could get an annual policy for just a little more ... well worth it).

Suppliers

There are a number of travel insurance suppliers. Travel Guard writes about 6 million policies a year and it's who we use on our personal trips. If you want to shop around, Travel Insurance Center has an automated quote tool that will give you quotes from a number of different carriers.