Everything you need to know about Travel insurance
It’s summertime, and all you’re thinking about is going on vacation. As you plan your trip, buy tickets or reserve your hotel rooms, it is possible that someone asks you this question: “Would you like to add on travel insurance?”
Travel insurance is designed to cover some or all of your costs in case of unexpected events that can occur while traveling. Benefits that a travel insurance offers include coverage for medical emergencies, trip expenses, and luggage. So, is it really worth it? And what does it actually cover? In this article, I will try to answer to the most frequent questions asked when it comes to travel insurance plans.
Travel insurance seems like one of those types of insurances you don’t need or sounds like just one more expense. However, there are some cases in which travel insurance makes sense. Here are some reasons why a travel insurance plan should be taken into consideration:
Because you don’t want to risk losing money. This mostly applies to travelers who spend a lot of money on a vacation and, of course, don’t want to lose all their vacation investment. Even the best-planned trips sometimes can go wrong and unexpected events occur. Can you afford to lose all the money you’ve spent on your trip? Travel insurance can reimburse you for the prepaid, nonrefundable trip costs when you have to cancel for a covered reason (we’ll talk about covered reasons later on). For more tips and advice on how to save money on your trip read our article here.
Because you worry too much. Travel insurance can offer peace of mind for your upcoming holiday, especially if you are a nervous traveler. Accidents can – and do – happen while traveling, so why not pay some extra money in order to relax and enjoy your trip?
Because it can be really expensive to get medical care abroad. Your domestic health insurance policy will probably not be accepted by most hospitals overseas. Foreign medical facilities will require cash payment up front before you receive care and they will want your credit card for it. Not to mention that any medical evacuations can be really expensive. A travel insurance policy will pay the doctors and hospitals and probably determine how to safely return home.
If your itinerary is long. What happens in case you have a cruise but the connecting flight to the ship is delayed? This could ruin the whole trip. Delayed or cancelled flights are common and a travel insurance can reimburse you or help you make a quick recovery so that you still arrive at your destination in another way.
Because delayed or lost luggage is a common case. A missing bag could ruin your vacation and the cases in which bags are misplaced or even lost are frequent. A travel insurance policy can reimburse you for the essential items you need in order to start enjoying your trip. This includes the actual price/value of your lost or damaged items; clothes, toothpaste, shoes, personal items etc.
If you’re on a cruise. This is one of the most important reasons for buying a travel insurance policy. The cancellation policies of cruise lines are particularly tough and they do not give refund for missed cruises even if the reason is really serious. Even if you cancel 15 days before sailing, most cruise lines will not give you the refund.For more information on cruises, read our article How to Plan a Cruise.
When NOT to buy a travel insurance
If your trip is in your country. If you’re going on a domestic trip, a travel insurance is totally unnecessary. Your domestic health insurance will cover you for any medical emergencies and any travel insurance for luggage will not be worth the cost.
If your trip is inexpensive. If you’re staying at a friend’s house or your tickets are cheap, a travel insurance would probably not be useful. Such expense is usually best when your pre-paid and non-refundable expenses are a lot. For advice on how to make your trip inexpensive, rad our article on How to Travel on Budget.
If your trip is short and last-minute. Since you probably don’t have any pre-paid costs, you don’t even have to think of buying a travel insurance.
If you have insurance through your credit card. If you purchase your travel services via Visa, MasterCard, American Express or Discover, you are probably insured. Check with your credit card company to see what it offers.
Types of Travel Insurance
There is a wide range of travel insurance plans and choosing one without knowing what it covers can be really confusing. Most travel insurance companies offer different types of “Package Plans” that are based on your destination and preferences. Below is an overview of the most popular coverage areas that a common policy usually includes. Once you understand what each plan covers, you can begin comparing prices between insurance companies and find the right insurance plan for your needs.
Accidental death or dismemberment
This insurance provides accidental death and dismemberment protection for you and your family. It covers unexpected and sudden loss of life or limb due to travel or flight accidents and will reimburse you for that. The benefits apply during the trip that is insured or during the coverage period. Any loss must be a direct result of the accident that occurred during the trip and must happen within a certain number of days after the accident. This coverage is sometimes referred to as “life insurance”.
Also known as “trip interruption”, this is the most common type of travel insurance bought by travelers. It covers you if you or your travel companions need to cancel, interrupt or delay your trip for one of the following reasons:
Sudden business conflicts
Weather or natural disaster (either at your destination or your own home)
Illness or injury of you, your travel companion, or a “close relative”
Traffic accidents (on your way to your scheduled departure)
A request by the police to stay at home or return from your trip
An act of terrorism or evacuations at your destination
Property damage or a fire, flood in your house
You are called up for jury service or called as a witness
Theft or loss of passport/visa
The travel supplier going out of business due to bankruptcy or financial default
These covered reasons are not the same for every policy so you have to make sure in which events you are actually protected. It’s important to note, however, that there is a “cancel for any reason” option in your travel insurance that will allow you to cancel a trip for almost every reason. It is preferred by those who worry that they may have to cancel their trip for a reason that is not covered by trip cancellation policy.
Tip: Be aware that a close relative is usually defined as children, mother/father, brother/sister, brother-in-law and sister-in-law, grandparents, but not aunts, uncles or cousins. Also, if a close relative gets sick, you will not be protected if they had a preexisting medical condition.
This is a post-departure coverage that pays you the cost of the unused and nonrefundable expenses that you will forfeit if your trip is interrupted and you have to return home. It also covers the additional tickets that you have to buy in order to return home, as long as your return transportation is reasonably economical or similar quality to the unused return travel ticket. The reasons for the trip interruption that are covered by the insurance could be death, injury, illness, or any other specific reason defined by the insurance policy.
This coverage pays for the cost of treatment related with a medical or dental emergency that occurs during your trip. If you get injured or become ill while traveling, this type of protection can pay for your medical expenses, help you locate doctors, hospitals and healthcare facilities. It usually covers:
An unexpected illness or injury that could be irreparable harmful or threatening for your life, or
A dental emergency that would require immediate treatment by a dentist.
However, the medical expenses are not covered if:
You have any preexisting medical conditions
You are suicidal or have any psychological disorders
Your injury or illness is related to alcohol or drugs
Dangerous activities such as extreme sports resulted in your injury or illness
It has to do with dental bridges, dental braces or orthodontic devices
Some policies may also cover the cost of evacuations and repatriation. If you are hospitalized while traveling, it may pay for bringing a family member or a friend to the patient. It can also cover bringing the patient home (by any means, including an air ambulance).
Preexisting Condition Coverage
As previously mentioned, the medical treatment policy doesn’t cover any illness or injury that occurs due to a preexisting medical condition. As a preexisting condition is considered any injury, illness, disease or any other medical condition that happens prior to the trip and for which you had symptoms that sought diagnosis or medical treatment. No travel insurance plan covers medical costs related to such cases unless you buy this coverage. This means that if, for example, you cancel or interrupt your trip due to this preexisting condition, the trip cancellation or trip interruption policy will not cover you.
Damaged, Stolen or Lost Baggage
This benefit will refund you in case your baggage or personal items get lost, stolen, damaged or delayed and it usually doesn’t apply only during your flight but the entire trip. This type of insurance can reimburse you for your personal belongings as well as give you extra money to buy clothing, toiletries, and other essentials if your baggage is delayed. However, if you have any valuables, such as laptop, camera, or jewelry, the refund is probably not going to be high enough for your needs. Insurance companies have a different definition of what a valuable is, so check beforehand if you’re covered for the expensive items you’re planning to take.
This coverage offers reimbursement in case you miss a flight that would take you to the place where your cruise would depart. It will pay for any additional costs in order to catch up to the cruise or will reimburse you for any pre-paid expenses only if:
A traffic accident happens en route to your point of departure on the scheduled departure day and as a result you are delayed,
You missed your connection to a cruise or a plane because you were delayed on one flight, or
Severe weather cancels a flight or delays it causing you to miss your next departure.
This insurance policy will not cover you if you miss a flight due to the fact that you overslept, for example. Also, any refunds from the travel supplier, whose flight or cruise you missed, should be deducted from the travel insurance company’s reimbursement.
Rental Car Damage
Car rental coverage will pay for the costs of damage to, or theft of, a rental car caused by:
theft or vandalism
natural disasters, like flood, windstorms, or hurricane
fire or explosion
You should know that this coverage will pay you for the personal items inside the vehicles. For more information about rental car insurance read our article on what to check before renting a car.
24/7 Worldwide Assistance
Most travel insurance companies provide help to their clients 24/7 in case of all types of emergency and needs. It is considered standard on travel insurance plans, however, the specifics may vary. In general, 24/7 assistance should include:
24-hour emergency assistance hotline
Multilingual interpreter services
Lost baggage search and replacement assistance
Lost/stolen passport, identity, credit cards or travel documents assistance
Arrangements for emergency medical evacuation
Location of the local hospitals and other medical providers
Tip: Make sure that you find the worldwide assistance hotline numbers and you print them before your departure. Keep them with you at least in two locations.
There are also some more specialized forms of travel insurance depending on the needs of the trip. Specifically, there are coverage waivers for adventure travelers whose trip includes extreme sports or hazardous activities, such as paragliding, mountain climbing, scuba diving, bungee jumping etc.
How much does travel insurance cost?
The price of a travel insurance plan varies and depends on many factors such as:
The age of the travelers
The number of the travelers
The duration of the trip
Type of coverage
The destination of your trip
The insurer you’ve chosen to buy a policy from
Based on this information, you realize that it is hard to say a fixed price for a specific insurance plan. However, what we can say is that you should expect a plan to cost anywhere between 4% and 10% of your trip’s prepaid, nonrefundable cost. For instance, if your trip costs $5,000 in total, the amount you will have to pay for a travel insurance plan will range from $250-$500, depending on the factors mentioned before. However, be suspicious; if a policy costs less than 4% of the cost of your trip, it is most probably too good to be true. First make sure that this policy is offered by a reputable travel insurance company.
Travel insurance plans can be purchased in three different ways depending mostly on the frequency that you travel:
1) Per-trip: This is the most popular type of insurance. You purchase an insurance per-trip and it is ideal for travelers who don’t travel that often.
2) Multi-trip: This coverage will protect you during many trips for one year, with the restriction that these trips will not last more than a month.
3) Annual: It is usually more cost-effective and ideal for frequent travelers that provides them full coverage for one year.
When should I purchase the insurance?
Before buying an insurance plan from an insurer, make sure that you compare the prices and plans from several different providers and that you choose the most economical and the one that offers the best protection.
You can get travel insurance up until the day before you start your trip, but it is better to avoid the last-minute insurance purchases. Always try to buy your travel insurance at the same time that you buy your tickets, book your hotel room, or in general, after your trip payment is made. This way you will be covered against cancellation costs and you will be protected against any mishaps that might happen while you’re away.
Tip: It is taken for granted that you read your policy THOROUGHLY before you buy it. Also, do not hesitate to call the agent if you have any questions.
How do I file a claim?
What happens when you actually have to use an insurance policy you’ve purchased? These are the steps you should follow in order to file a claim successfully:
1) Call your insurance. It is very important that you call your insurance company before you submit a claim. Ask how the claim is filed and what documents will be needed. Also, ask them if there are any restrictions in your insurance policy that would make your claim unsuccessful. Make sure that you call the insurance as soon as possible after the incident occurs. Some companies require that you report the event within 24 hours in order to cover it.
2) Read again the policy. Have a second look at the policy to make sure whether it covers the specific incident or not.
3) Keep proof. Report the incident to other local authorities as well, such as police, airports, hospitals, etc. so that you have proof of it. For example, if your baggage is lost you should get a report from the airline in order to support your claim. Receipts are also necessary in case the items you purchased are stolen or lost. The same applies to ticket and meals receipts. In general, do not throw away any scrap of paperwork.
4) Dates. Make sure that the papers you have are dated, from receipts to police reports.
What if my claim is denied?
Travel insurance claims typically need two to four weeks to process. However, some complicated claims might take more time due to the fact that they need to be researched but it shouldn’t be more than one month. If they don’t contact you within 5 weeks, do not hesitate to call them to find out about the status of your claim.
If the claim is denied, contact the insurer and ask the agent why it was denied and what the procedure for filing an appeal is. Don’t be disappointed, 50% of appeals are honored. The rejection of your first claim usually mean that the information that you submitted was not sufficient. A second, brief and more polite appeal with detailed information can reverse their decision. However, this process might take longer to evaluate.
Travel insurance can cost you a lot of money, but it can save you a lot more in case something goes wrong. However, it’s up to you to search for the right agency and most of all to check whether a travel insurance plan is necessary for your upcoming trip or not. Understanding the policy and how the system works will save you from a potential unpleasant situation.
Edited by Eleni Gkovedarou
Sign in to leave your comment