Whether you’re planning a dream vacation or a trip for a family wedding, you might be wondering if you should buy travel insurance. The answer isn’t straightforward—it depends on what you can afford to lose. Travel insurance can provide peace of mind by covering unexpected expenses, such as medical emergencies, trip cancellations, or lost luggage. By understanding the specifics of what travel insurance is and what it covers, you’ll be better equipped to decide if it’s a worthwhile investment for your trip. Ultimately, the decision hinges on your circumstances and the level of risk you’re comfortable with.
What is travel insurance?
Travel insurance is a type of coverage designed to protect travelers against various risks and financial losses that can occur before or during their trips. It serves as a safety net, providing peace of mind and financial protection in the face of unexpected events. These risks can range from minor inconveniences to significant emergencies, and travel insurance helps mitigate their impact.
What does travel insurance cover?
Depending on the coverage you choose, travel insurance can cover a wide range of possible damages and losses:
Injury or sickness
Travel insurance can help protect you from medical expenses abroad that your regular health insurance doesn’t cover. Most health insurance plans don’t provide full coverage in foreign countries, and some, like Medicare, provide no coverage at all. Travel insurance supplements your everyday health insurance, covering medical costs if you get sick or injured before or during your vacation.
Lost luggage
Travel insurance can also cover expenses related to lost or stolen luggage. This is particularly helpful if an airline loses your bags, as getting them to pay for lost luggage can be challenging. In the United States, the Department of Transportation (DOT) requires airlines to compensate passengers up to $3,300 for lost baggage. In foreign countries, the maximum amount is $1,750. However, to receive these maximum amounts, passengers must provide receipts proving the value of the lost bags and their contents, and some airlines require that the claim be filed within 21 days.
To make matters worse, the DOT doesn’t specify when baggage is officially lost as opposed to just “delayed.” Overseas, a bag is only considered “lost” after 21 days. For delayed bags, the DOT only requires airlines to provide victims with enough money to buy necessities like clothing, medicine, and toiletries.
Last-minute cancellations
Travel insurance can help cover costs if you need to cancel your trip at the last minute. Most resorts or cruise lines won’t give you a full refund if you cancel. If you cancel two weeks or more before your trip, most resorts will charge a cancellation fee, and many cruise lines might only give you a 25% refund or partial credit for another cruise. If you cancel within two weeks of your trip, most companies won’t give you any refund at all. Unforeseen circumstances can happen, and having travel insurance can ensure you’re covered just in case you need to cancel unexpectedly.
Coverage beyond your credit card
While some credit cards offer limited travel coverage, they often come with annual limits and restrictions, particularly for trip cancellations and interruptions, if they offer this coverage at all. However, few credit cards cover the most expensive travel risks, such as medical expenses or emergency evacuations. Travel insurance can provide comprehensive coverage for these costly risks, protecting you beyond the basic benefits your credit card might offer.
What travel insurance might not cover
While there are many reasons to buy travel insurance, it’s important to understand that certain things may not be covered. For example, if you have a preexisting condition, you’ll need a plan that includes a preexisting condition waiver. If you’re visiting an area with political unrest, check if the policy covers cancellations due to problems in the area. Additionally, some travel insurance policies cover tour operator defaults due to financial issues, but it’s crucial to understand how this is handled before booking your trip. Knowing these details can help you choose the right coverage for your needs.
How much does travel insurance cost?
The cost of travel insurance mainly depends on the price of your trip and your age. For example, a 35-year-old might expect to pay an additional 3% to 5% of the trip’s cost for insurance, while a 60-year-old might pay around 10%, according to Jonathan Harty, owner of a Massachusetts-based travel agency. Despite this, it can be a small price to pay to protect your investment in a honeymoon or the trip of a lifetime.
What travel insurance coverage should you get?
Before looking into travel insurance, think about the reasons you might cancel.
Consider how different scenarios might affect your plans. Will a weather delay significantly impact your vacation? Could your school year be extended, or might you need to take a work-related trip instead? Are there acts of war in the country you’re visiting? Are you worried the CDC might issue a travel warning for your destination?
These are all valid reasons to cancel a trip or want insurance coverage. However, not all travel insurance policies cover these concerns. It’s essential to check the specifics of a policy to ensure it meets your needs.
Cancel for any reason insurance
When you buy this coverage, if you want to cancel because you have a hangnail, go ahead. The insurance company usually doesn’t need a reason. They just need you to cancel within the specified time frame, typically at least 48 to 72 hours before you depart.
You’ll trade convenience for a lower reimbursement level. With cancel for any reason insurance, you’ll get a percentage of your pre-paid, nonrefundable trip costs back, around 70%, without giving a reason. You can sometimes purchase this as a standalone policy or as a rider on a comprehensive policy.
Comprehensive travel insurance
This is the type of policy most people think of when they consider trip insurance. A comprehensive policy usually covers a wide range of situations, including trip delays, cancellations due to sickness or death lost luggage, and some emergency medical costs. However, it’s important to read the fine print to understand exactly what is covered and any limitations that might apply.
Changing your travel insurance coverage
If you find that the travel insurance policy you purchased doesn’t meet your needs, you can typically get a full refund, possibly minus a small administrative fee, within a specified period. This period is usually 10 to 15 days and allows you to thoroughly read the coverage details and ensure it provides what you want. It’s always best to understand exactly what the policy covers and how to file claims beforehand in case you need to use it.
When booking a pricey trip, investigate insurance at the same time. Some policies require you to buy travel insurance within a specific period after making your initial trip payment, usually within 10 to 30 days. Ideally, buying travel insurance well before your trip is better so you can plan adequately. Traveling should be an exciting experience, and while cancellations and other issues can cause stress, you can alleviate financial worries by getting your trip insured.
Here is the overview of the types of Coverage Provided by Travel Insurance:
- Trip Cancellation and Interruption:
- Trip Cancellation: Reimburses nonrefundable trip costs if you need to cancel your trip before departure due to covered reasons, such as illness, injury, death of a family member, natural disasters, or other unforeseen events.
- Trip Interruption: This covers the unused portion of your trip and additional expenses incurred if you need to cut your trip short and return home early due to a covered reason.
- Medical Emergencies and Evacuation:
- Medical Expenses: Covers the cost of medical treatment if you get sick or injured while traveling, which can be crucial if your regular health insurance doesn’t provide coverage abroad.
- Emergency Evacuation: Covers the cost of transportation to the nearest adequate medical facility or back home in case of a medical emergency that requires immediate attention.
- Baggage and Personal Belongings:
- Lost, Stolen, or Damaged Baggage: Reimburses the cost of your belongings if your luggage is lost, stolen, or damaged during your trip.
- Delayed Baggage: Provides funds to purchase essential items if your baggage is delayed for a certain period, typically 12 hours or more.
- Travel Delays:
- Trip Delay: Reimburses additional expenses incurred due to significant travel delays, such as accommodation, meals, and transportation.
- Accidental Death and Dismemberment:
- Provides a benefit to your beneficiaries in case of accidental death or serious injury resulting in dismemberment during your trip.
- Rental Car Coverage:
- Covers damage to a rental car due to collision, theft, or other covered events, potentially saving you from high repair costs.
Specialized Coverage Options:
- Preexisting Condition Waivers: Some policies offer waivers for preexisting medical conditions if the policy is purchased within a certain time frame after the initial trip deposit.
- Cancel for Any Reason (CFAR): Allows you to cancel your trip for reasons not covered by standard policies and receive partial reimbursement of your nonrefundable trip costs.
- Adventure and Sports Coverage: Provides additional coverage for high-risk activities and sports that are typically excluded from standard policies.
- Business and Corporate Travel: Tailored coverage for business travelers, including protection for business equipment and trip interruptions due to work-related issues.
What’s Not Covered by Travel Insurance?
When it comes to travel insurance, several things typically aren’t covered. Here’s an in-depth look at what you need to know:
Excluded Pre-Existing Conditions: Any medical conditions that existed before purchasing the insurance and weren’t disclosed to the insurer are not covered. It’s important to be upfront about your health history when buying a policy.
Missed Flights: If you miss your flight because of long security lines or because the flight is overbooked, your insurance won’t cover the costs. It’s crucial to allow plenty of time for check-in and security procedures.
Negligence: Items like phones, cameras, clothes, or jewelry that are lost because they were left in an unsecured location are not covered. Always ensure your valuable items are kept safe and secure.
Dangerous Activities: Engaging in extreme or winter sports and other dangerous activities typically voids coverage. Make sure to check if your planned activities are covered or if additional coverage is needed.
Traveling Against Government Advice: If you travel to destinations that the government of your country advises against, your insurance won’t cover any incidents that occur. Make sure to review travel advisories before planning your trip.
Alcohol-Related Claims: Claims resulting from excessive alcohol or drug consumption are excluded. Moderation and responsible behavior are key when traveling.
Natural Disasters: Unforeseen weather events like thunderstorms or earthquakes that disrupt your travel plans are usually not covered. It’s wise to have a backup plan in place.
Terrorism: Losses incurred due to a terrorist attack are not covered by most travel insurance policies. Staying informed about the political climate and potential risks of your destination is essential.
Being aware of these exclusions can help you plan better for your trip and avoid any unexpected issues. Always read your policy details thoroughly to know what is and isn’t covered.
Importance of Reading the Fine Print
When buying travel insurance, it’s important to read the policy details carefully. Each policy has specific terms, conditions, and exclusions that determine what is and isn’t covered. Understanding these details helps ensure you choose the right coverage for your needs and avoid unpleasant surprises when you need to file a claim.
Conclusion
Whether to buy travel insurance for your dream vacation or something else depends on your potential financial risks and what you’re willing to lose. Travel insurance provides peace of mind by covering unexpected expenses like medical emergencies, trip cancellations, or lost luggage, offering protection beyond what some credit cards provide. However, not all scenarios are covered, such as preexisting conditions or political unrest, and the cost typically ranges from 3% to 10% of the trip’s price. Options like “Cancel for Any Reason” insurance offer flexibility but with lower reimbursement. Investigate insurance options when booking your trip, ideally purchasing well in advance to ensure adequate protection. You can choose the right policy to safeguard your investment and enjoy a worry-free travel experience by understanding coverage specifics.
