Why You Should Skip Trip Insurance

Dear Ben,

This is a response to "Insurance for Your Next Dive Trip"in the January 2012 issue. We've been around this issue before, as you may well remember, but the topic makes me so crazy that I simply have to write again. It is guaranteed that the insurance companies that sell travel insurance are going to make a profit. It then follows from that fact, with absolute mathematical and logical certainty, that the people who buy travel insurance, over the long haul and on average, are going to come out paying more for the insurance than they get back from their claims.

Imagine someone who did the following. Every time he booked a drive trip, he drove to the nearest casino and put down $50 on a single number on the roulette wheel. On occasion, he might win and get a free dive trip! His winnings of $1,800 would pay for the trip he had just booked! But over the long haul, he is going to lose 37 times out of 38, and his $50 will be wasted.

You write that trip insurance costs 5 to 8 percent of the cost of the trip. Let's take the more conservative figure of 5 percent. Do your readers really believe that canceled trips are as frequent as one trip out of every 20? The insurance companies are not going to lose money. Whatever percentage they pick, it is because they know from their data and experience that with insurance at that price, the buyer will lose over the long haul, and they will profit.

- - Samuel Johnson, Greensboro, NC

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Dear Dr. Johnson,

Of course travel insurance companies bring in more money than they put out, just as all insurers do. However, that doesn't stop me from buying fire insurance on my home. Though, I will admit, as a frequent traveler, I rarely buy trip insurance because of the reasons you cite. I see long odds in my favor that my dive boat will not sink, floods will not prevent my plane from landing, and my travel agent won't keep my money and run.

That said, there are a few circumstances when I consider trip insurance. One is if I'm taking a liveaboard, and my arrival time is too short before the boat's departure -- and I know the boat won't come back to get me. The second is if I'm traveling smack in the middle of hurricane or cyclone season. Third, if it's a trip that if I don't take now, I can never take again, like seeing an eclipse aboard a ship in the Straits of Magellan.

You overlook one thing: One may have to cancel the trip before or during for health reasons. So if one has aches and pains he's concerned about and has never seen a doctor for them, that might be a consideration. And trip insurance is necessary if one is on Medicare and without supplemental insurance that covers health problems abroad. I have anxious friends who just feel more comfortable when they're traveling abroad if their trip is covered. But I don't, because most of the cost of airline tickets can be reused, and you can usually get some accommodation from the resort (maybe not a liveaboard) for future travel. I can't predict whether I'll break an ankle on a dive boat or drop dead before I depart, so I don't buy trip insurance for medical reasons. As our article said, if you travel a lot and don't buy insurance, you're probably far ahead. I am.

I think our article tried to show what surprises may greet travelers, and how trip insurance has flaws, but I should have been a more careful editor and not let us suggest that trip insurance is a wise investment for everyone. For two people to pay $500 to $800 to insure a $10,000 trip is not, in my mind, smart consumerism except, perhaps, under the circumstances I suggested earlier. I'd prefer to pay my money and take my chances, which are very much in my favor.

- - Ben Davison