The Costa Concordia Tragedy and the Need for Travel Insurance

Travel Insurance and Costa Concordia

The Costa Concordia

It’s likely that the photo of the Costa Concordia luxury cruise liner lying capsized in the water off the coast of Italy will become one of the iconic images of 2012.

We’ve all been glued to the news as the heartbreaking and bizarre story continues to unfold.

Vacationing via cruise ship has always seemed to be one of the safest modes of travel, but it’s clear from the news of the Costa Concordia that a catastrophe can strike anytime and anywhere.

The Christian Science Monitor reports that Carnival Cruise lines has announced that the passengers of the Costa Concordia will be provided with refunds, lodging, transportation home, and replacement value of possessions lost on board.

Not every company can necessarily afford to be so generous, however. If you are traveling sometime this year, you might want to consider how to protect yourself financially in case of vacation disaster:

1. Travel insurance through your credit card. If you purchase your travel using a credit card, you will often be offered some sort of travel insurance as a perk of using the card. Credit cards offer insurance on anything from rental car collision to trip cancellation to fatal travel accidents to lost luggage.

However, the insurance offered by credit cards should be considered a secondary form of travel insurance, since there are many rules, exclusions, and coverage holes in the average credit card travel insurance package. And the most common need for travel insurance—covering a cancellation due to illness or family emergency—is only covered by 15% of credit cards.

In addition, credit cards generally do not offer medical or evacuation coverage. For those traveling abroad or on a cruise, this is an important exclusion to note. If you were to fall ill or be injured outside of the United States, you could potentially be on the hook for your medical care and emergency flight back home.

If the passengers of the Costa Concordia were not being reimbursed by the company and only had their credit card travel insurance to rely on, they could be facing some hefty bills between them and getting home.

2. Cancellation insurance. This offers you a refund for the price of the trip should you be unable to take it. Generally, cancellation insurance costs 5%-7% of the price of the trip. For travelers taking a structured vacation—like a cruise or a tour—the company will often offer a cancellation waiver for about $40-$60.

The waiver is similar to cancellation insurance, but it has a number of restrictions, including a prohibition on canceling your trip at the last minute. Unfortunately, that is when most vacations need to be cancelled.

The news of the Costa Concordia has understandably made travelers with 2012 cruise plans skittish about their vacation. If you have not purchased cancellation insurance or a cancellation waiver, it is still possible to back out of your cruise, although it may cost you.

The typical time frame for canceling a cruise for a full refund is more than 75 days before the ship sails. After that point, you could lose up to 75% of your purchase price—or the entire purchase price if you cancel within two weeks of the sail date.

Adding 5%-7% to the price of your trip could help you rest easy that your vacation won’t be an expensive empty room on a cruise ship.

3. Personal effects coverage. This is one type of travel insurance that most vacationers probably don’t need. Often, your renter’s or homeowner’s insurance will cover the loss of your possessions, no matter where those possessions happen to be in the world.

However, if you’re traveling with a great deal of expensive photography equipment, sports gear, or your heirloom jewelry, it might be worth your while to purchase an endorsement to your existing homeowner’s policy to cover those items while you are traveling.

The endorsement will cost you less than a travel-specific personal effects insurance policy, and it will protect your valuables just as well.

4. Travel medical insurance. In many cases, your medical insurance will cover some or even all of any medical emergency you have while away from home. However, each policy is different, and it’s a good idea to go over your policy and figure out what is and is not covered.

For instance, you may be covered for an extended stay in a foreign hospital, but you might have to pay upfront and be reimbursed.

It’s generally a good idea to purchase travel medical insurance any time you are traveling abroad or are planning an active vacation.

The Bottom Line

The Costa Concordia tragedy has made it clear that thinking “It won’t happen to me!” can be risky. Before your next vacation, spend a little time thinking through your insurance options. The peace of mind is worth the money.

Image by Aah-Yeah

This post was featured in the sesquicentennial edition of the cavalcade of risk.

Last Edited: February 18, 2012 @ 5:28 pm The content of is for general information purposes only and does not constitute professional advice. Visitors to should not act upon the content or information without first seeking appropriate professional advice. In accordance with the latest FTC guidelines, we declare that we have a financial relationship with every company mentioned on this site.
About Emily Guy Birken

Emily Guy Birken is a former English teacher, and an excellent freelance writer. She's also a stay-at-home-mom. She resides in Lafayette, IN, with her engineer husband and son. Emily's thoughts on parenting and life in general are found at The SAHMnambulist.


  1. Seems like lots of cruise lines have been having problems the last couple of years. Sickness breaking out, running out of power, running aground, etc.

  2. ontargetcoach says:

    In most small trips, I’d be ‘self-insured’, but I might consider some kind of insurance if spending more than 2K on a trip.

  3. The Costa Concordia is a great disaster and a reminder that we still need to use caution when on vacation. Great tips about the various types of insurance to cover. Every year I make sure our insurance will cover my family when we travel outside the US. I also believe my American Express has several of the benefits you mentioned.

  4. madonahilton says:

    A good travel insurance should cover some things like your companion or a family member has a medical emergency or dies,You need emergency transportation / evacuation, Your cruise line, airline or tour operator goes broke, Bad weather, A plane crash , Lost, stolen or damaged luggage, You’re laid off from your job of at least 3 years’ employment, A city you’re visiting has a terrorist incident, Cruise ship sicknesses etc.

  5. I heard that the company is proposing $14,000 in compensation per passenger, but many are expected to refuse this in favour of a class-action lawsuit…

  6. Cavalcade of Risk #150 is up, and your post is in it:

    Please tell your readers.

    And a friendly reminder to newbies and regulars alike that, while it’s not mandatory to give a link back, it’s the way that carnivals work best. If your submitted post has been included in the Cav, please remember to post about it on your blog because it helps us all.


    Hank Stern