Unlike many codswallop’s out there, I don’t think you should take out travel insurance. Travel insurance is for your granny, who books her coach trips on Greyhound, via fax machines. I self insure, and if you can do the same, I highly recommend it. People who tell you otherwise are either selling the stuff and making money off you, or they are grandmothers.
Self insurance isn’t straightforward, in order to do it you need to break down your ‘needs’ and then offset them with a solution. Here’s some needs:
- You miss your flight
- You break your leg on a scooter in Thailand
- You lose your bags
Old school thinking is that you can pay a fee to some guy in a tie and he will bundle your worries up into a travel policy. Which is nice. However, if you are sophisticated about your travel you can tackle each line:
Before you flight, what does your ticket say? Are you covered in the event of missing it, are there exceptions? If you are totally out of luck, how much does it cost to buy a new one from scratch? By how much I mean how many points… real world example: We missed our flight coming back from JoBurg, just were late, I headed over to the sales office in the airport thinking I was going to have to pay 2-3K in tickets to get us home the next day, and they swapped us out for $175 per person processing fees. Now I pretty much have enough points to get us home from anywhere so it is doubly covered.
Break your leg
Check your health care before you travel, a good policy may cover you overseas. If one does not, consider a supplemental. I’m a member of DAN (Divers Alert Network) and they cover me for $100K of evacuation costs. Also credit cards cover some things like this.. and also, real world example, we fell off a scooter in Thailand, went to a clinic and paid $30 to patch us up, it wasn’t a break, but falling off doesn’t necessarily mean you break something and need to go into an oxygen tent somewhere. That said, there are times when based upon a risk evaluation you really should take out a regular policy.
You lose your bags
Truth is, if you have medicine, cash (and cards) and travel docs in your hand, you can do pretty much anything, buy a silly T shirt till you figure it out. It’s a pain in the butt for sure, but it will work out.
My self insurance policy
With this in mind, I self insure by having a mix of points on hand. I supplement this by knowing (hopefully) which cards cover me for what, and make sure that I use them for the entire payment of a transaction, so they don’t weasel out of it. And most recently, I’ve made a paradigm shift when it comes to insuring with credits, or even cash!
My first claim..
Backstory: I’m a cheap bastard. I saw 3 tickets from CUN-JFK available for 7900 JetBlue pts. I transferred that amount from Amex Membership Rewards.. and then I saw the plane was EMPTY I mean, I think it was just us and the pilot… I booked seats A and C to ‘discourage’ someone from picking B, and figured we were good. I rolled the dice, and crapped out.
It’s a first for me and I am still coming to terms with it. Someone elected to sit in seat B, and there were only a couple of seats left on the plane. My only recourse was to move seats.. and the only place to move was the ‘More Legroom’ section, at a cost of $60 per person. Now, I could have gambled again, but by this time, I wanted some more zen in my life, so I booked up a seat for Dylan, paid 8900 for that (and extra 1000 pts, and they devalued, so a few more MR there too…) and paid $60×3.
The cost of my self insurance decision was $180+1250 MR. Luckily I work with the finest insurance companies, and not only did I get them to move my seats around, but for the price of about $200 I got us a (somewhat minor) upgrade… nothing but the best!
I’m a gamblin’ man
Here you see how I changed the way I book travel because I am ‘insured’ I take the risk that someone might sit in seat B, and therefore don’t pay upfront. This means, more often than not I keep money in my pocket, twice. Once for not booking the full price itinerary, and once more for not paying someone to insure me. It’s pretty cool… I get to play the house, and can decide when to underwrite something with insurance, or when it is time to call in and book the extra seat.
In this particular example I was unfortunate to have to pay the upgrade cost also, but that actually creates another avenue – if all seats do sell out, it’s likely that Main Cabin Extra/ or whatever they call it to have an inch or 3 more leg room is open. These seats may be given to Elites on the day of travel, but I can track flights a week out and make calls on booking and upgrading if needed.
I paid for the upgrades with my Ritz Carlton card. They offer $300 in credit per year for things like this. It is possible to monetize this credit, but I have done this too many times with Amex and never spend it anyway, so I’m actually using it as intended, I actually think this creates better value, as I don’t book revenue tickets.
No Grandmothers were harmed in the production of this post, we sincerely appreciate all your babysitting skills and general fussing. Also this is the last trip we have booked with only 2 seats, though we may revert to this policy for seating in the future if we book an aspirational trip.