Should You Insure Your Cruise?

Booking a cruise is a significant expense, and many people rightfully wonder whether insuring a cruise trip is worth it.

There are several reasons why insuring your cruise is a good idea. For example, your personal health care plan may not cover you abroad, and sometimes credit card-provided travel insurance can be hit-or-miss depending on the card. Even the good credit card travel insurance won’t cover you if your financial circumstances change (i.e., you lose your job).

The purpose of travel insurance is to cover the nonrefundable costs associated with your trip in case of an unforeseen event. Odds are that you won’t use your travel policy, but you need to have it, just in case, unless you are willing to risk thousands of dollars on your nonrefundable cruise reservation. However, that doesn’t mean that you should go into the decision uninformed.

One of the reasons that many people skip travel insurance is because it can get complicated, so here are some tips that will help as you try to decide what insurance is right for you.

Do know what’s covered

Is a job loss covered? How about a death in the family? Be sure to read the terms and conditions of the policy, particularly the schedule of benefits and coverage details, which serve as a summary.

Bottom line: Know what is covered and what isn’t.

» Learn more: What to know before buying travel insurance

Don’t automatically buy coverage from your cruise line

Your travel insurance may end up costing up to 4%-8% of the cost of your trip, so it's a good idea to comparison shop to make sure that you are getting the best deal. You could also check with your travel agent or an independent site, such as SquareMouth (a NerdWallet partner) or InsureMyTrip, which compares policies from several providers.

A little bit of research can frequently get you better benefits for less money. And finally, make sure that your cruise insurance is “primary” coverage, which picks up the cost before forcing you to go through your homeowners policy.

Do consider whether you want a standard or Cancel For Any Reason (CFAR) policy

A standard policy has good protection and comes with a list of restrictions on what’s covered. If you want to make sure that you are covered for any reason, even if it's a last-minute change in plans, look into a “Cancel For Any Reason” add-on to your policy. A CFAR policy is just what the name sounds like. You can cancel your trip for any reason you want and are restricted only by the timing of your cancellation notice (usually two days prior to your trip, but check your policy as terms vary).

CFAR insurance isn’t free though, and comes with a few conditions. First, it can cost 40%-50% more than a standard policy, and it generally won’t cover 100% of your uncovered costs. You’ll find that 50%-75% of coverage is more common.

It’s also important to note that you cannot simply buy CFAR by itself. You must buy a travel insurance policy that is eligible for a CFAR add-on. Many insurance sites will include a CFAR filter in their search tool. You'll also need to buy the policy within a certain time frame after purchasing your cruise, which will vary based on the insurance company.

» Learn more: The best travel insurance companies

Don’t wait to buy your insurance

You may be able to get complimentary “bonus” benefits, but it usually means buying your policy shortly after booking your cruise. For example, an insurer may require you to book your CFAR add-on within two to three weeks of your initial trip payment. If you miss that deadline, you won't be able to purchase the upgrade. These restrictions are common and you should ask about them when looking to book a trip and are considering travel insurance.

Not sure which travel insurance plan you want? Don’t worry, you’re covered. Most plans will give you a “free look” period, typically between one to three weeks..

Booking a cruise is an expensive purchase, so insuring your trip can help avoid any hassles if something unexpected arises. Before you buy it though, make sure that you know what you are looking for.