When it comes to insurance, I always have more questions than answers, and travel insurance is no exception. For starters, is it even necessary? If so, what exactly does it cover? (This is the million dollar question when filing your claim.) The answers are contained in the fine print (a daunting bunch of legal mumbo-jumbo from which you are supposed to be able to determine whether or not you really need the insurance policy in the first place.) For a seemingly simple concept, things can get complex fast.

In an effort to put the power back into your hands, I've gotten out the magnifying glass and read the so-called fine print and consulted insurance experts. Although each trip is different, I can point you in the right direction so you can make an informed decision when choosing whether or not to buy travel insurance.

Lets start with what it is and why it's useful. By design, trip insurance exists to protect you from losing the money invested in your vacation should something unexpected happen. Insurers say that travel insurance offers protection on your investment should any unforeseen events occur that prevent you from taking a trip. Such events usually include the following: You, your travel companion, or a family member are admitted to the hospital before your trip; you or your travel companion get into a car accident on the way to the airport; or a natural disaster occurs.

However, you would most likely not be covered if a pre-existing condition flares up that prevents you or your travel companion from traveling (unless a special exclusion was made). Also, bankruptcy coverage may be minimal or nonexistent and you won't be covered should a viral infection hit the area where you're headed or if you simply change your mind. Be wary of policies that promise terrorism or war coverage. Most don't and those that do are often limited.

This means that you really do need to know what is covered and what is excluded in the policy. This brings us back to the fine print: unfortunately, you have to read it. Prepare by thinking of some scenarios that may fall into the category of potential unforeseen events and run them by the customer service agent regarding your insurance coverage.

As a general rule, thorough trip insurance should cover the following:

  • Trip cancellation and delay
  • Baggage loss and delay
  • Flights
  • Accident and sickness
  • Emergency evacuation (for travel abroad)

While insurance execs will recommend that you always have travel insurance, that's not necessarily the case. It depends on the kind of trip (an inexpensive flight or a car trip to Grandma's where you're staying two nights in a hotel probably don't warrant additional insurance, whereas a honeymoon or family vacation for five to Hawaii probably does.)

If you're still trying to find the answer, ask yourself these questions: What is my risk? (In other words, how much am I spending?) Is it worth spending a little more to ensure that if something unexpected happens, I'll get the money back?

Here are some tips to remember when you are considering when and if you should buy travel insurance:

  • Use a reputable company with offices worldwide that will be around if you need to file a claim.
  • Look for a company with 24/7 customer assistance, especially if you're traveling to another time zone.
  • Jot down the 1-800 number and make sure you bring it with you on your trip.
  • Familiarize yourself with your home owner's insurance policy, car rental, and credit-card policies (some may already offer coverage.)
  • Consider the cost of the insurance and weigh that against the cost of your investment. (More than 10 percent of the cost is very high, depending on the kind of insurance you buy, some can be less than five percent of the cost.)
  • Read the fine print to make sure you aren't buying unnecessary or inadequate coverage.
  • Do not expect to be covered for a "change of mind." If you want to ease your tension about whether or not you should travel, look for flexible fares and refundable tickets and lodging.