In a recessed economy, vacations give way to staycations as a money saving measure. Homeowners put up with outdated bathroom fixtures instead of installing a new modern bathroom vanity. The economy is recovering now and the travel industry along with it, though people's penchant for saving money wherever they can has remained. By all means stay at a hostel instead of a hotel and fly out in the off season to save on fares. But one thing you should not neglect to buy is travel insurance.

There are two types of travel insurance: medical insurance and trip cancellation/delay insurance. When both are together it is called comprehensive insurance. We advocate buying both, but if you absolutely have to pick between them, buy the medical insurance. Travel insurance is different from the company insurance that makes protective radiation eyewear at work mandatory. You buy it for the specific length of your trip.

Medical insurance covers your medical care outside your home country. Most health insurance policies, including all universal federal health plans, are invalid once you leave the country. Countries with universal health care do not extend benefits to visitors, so if you get injured jumping over a horse fence in Australia, you'll have to pay for your care out of pocket unless you have valid travel medical insurance.

Cancellation insurance pays for your travel expenses if anything unforeseen comes up that requires you to cancel your trip. For instance, if your son injured himself on plastic tubing cutters and you needed to come home early. Certain types also cover any expenses you incur due to delays in transportation, such as overnight hotel costs or meals.

Travel insurance is relatively inexpensive (about $100 for a three week trip to Europe) and offered by many different companies, so you should be able to find a plan that fits your budget. When you're choosing, make sure the policy covers accidents and acts of god (including terrorism), doesn't make you pay out of pocket with the promise of reimbursement, and doesn't have a maximum limit.

Once you've bought your policy, carry proof of it on your person at all times during the vacation. You should also store a spare copy in your luggage and leave another at home with a friend. If you happen to be non-severely injured, such as spraining your ankle tripping over a piece of sheet lead, make sure to call the insurance company before you get treatment to make sure you're conforming to their policies.