Travel insurance can minimize the considerable financial risks of traveling: accidents, illness, missed flights, canceled tours, lost baggage, theft, terrorism, emergency evacuation, and getting your body home if you die. Each traveler’s potential loss varies, depending on how much of your trip is prepaid, the refundability of the air ticket you purchased, your state of health, the value of your luggage, where you’re traveling, the financial health of your tour company and airline, and what coverage you already have.
For some travelers, insurance is a good deal; for others, it’s not. What are the chances you will need it? How willing are you to take risks? How much is peace of mind worth to you? Take these considerations into account, understand your options, and make an informed decision for your trip.
The insurance menu includes five main courses: trip cancellation and interruption, medical, evacuation, baggage, and flight insurance. Supplemental policies can be added to cover specific concerns, such as identity theft or political evacuation. The various types are generally sold in some combination — rather than buying only baggage, medical, or cancellation insurance, you will usually purchase a package that includes most or all of them. “Comprehensive insurance” covers all of the above (plus expenses incurred if your trip is delayed, if you miss your flight, or if your tour company changes your itinerary).
Insurance prices can vary widely. The policies available vary as well. Note that some travel insurance, especially trip-cancellation coverage, is reimbursement-only: You’ll pay out-of-pocket for your expenses, then submit the paperwork to your insurer to recoup your money. With medical coverage, you may be able to arrange to have expensive hospital or doctor bills paid directly. Either way, if you have a problem, it’s wise to contact your insurance company immediately to ask them how to proceed. Many major insurance companies are accessible by phone 24 hours a day.
Types of Coverage
Policies can differ, even within the same company. Certain companies and policies have different levels of coverage based on whether you purchase the car rental, hotel, or flight directly on your own or through a travel agent. Ask a lot of questions, and always read the fine print to see what’s covered (e.g., how they define “travel partner” or “family member” — your great-aunt might not qualify).
Trip-Cancellation or Interruption Insurance
It’s expensive to cancel or interrupt any prepaid travel, and for a small fraction of the trip cost, you can alleviate the risk of losing money if something unforeseen gets in the way. Before purchasing trip-cancellation or interruption coverage, check with your credit-card issuer; yours may offer limited coverage for flights or tours purchased with the card. A standard trip-cancellation or interruption insurance policy covers the nonrefundable financial penalties or losses you incur when you cancel a prepaid tour or flight for an acceptable reason, such as:
- You, your travel partner, or a family member cannot travel because of sickness, death, layoff, or a list of other acceptable reasons
- Your tour company or airline goes out of business or can’t perform as promised
- A family member at home gets sick (check the fine print to see how a family member’s pre-existing condition might affect coverage)
- You miss a flight or need an emergency flight for a reason outside your control (such as a car accident, inclement weather, or a strike)
So, if you or your travel partner accidentally breaks a leg a few days before your trip, you can both bail out (if you both have this insurance) without losing all the money you paid for the trip. Or, if you’re on a tour and have an accident on your first day, you’ll be reimbursed for the portion of the tour you were unable to use.
This type of insurance can be used whether you’re on an organized tour or cruise, or traveling independently (in which case, only the prepaid expenses — such as your flight and any nonrefundable hotel reservations — are covered). Note the difference: Trip cancellation is when you don’t go on your trip at all. Trip interruption is when you begin a journey but have to cut it short; in this case, you’ll be reimbursed only for the portion of the trip that you didn’t complete. If you’re taking a tour, it may already come with some cancellation insurance — ask.
Some insurers won’t cover certain airlines. Many are obvious — such as companies under bankruptcy protection — but others can be surprising. Make sure your carrier is covered.
Buy your insurance policy within a week of the date you make the first payment on your trip. Policies purchased later than a designated cutoff date — generally 7 to 21 days, as determined by the insurance company — are less likely to cover tour company or air carrier bankruptcies, pre-existing medical conditions (yours or those of family members at home), or terrorist incidents. Mental-health concerns are generally not covered.
Jittery travelers are fretful about two big unknowns: terrorist attacks and natural disasters. Ask your company for details. A terrorist attack or natural disaster in your hometown may or may not be covered. You’ll likely be covered only if your departure city or a destination on your itinerary becomes the target of a terrorist incident within 30 days of your trip. Even then, if your tour operator offers a substitute itinerary, your coverage may become void. As for natural disasters, you’re covered only if your destination is uninhabitable (for example, your hotel is flooded or the airport is gone). War or outbreaks of disease generally aren’t covered.
You can avoid the question of what is and what isn’t covered by buying a costly “any reason” policy. These offer at least partial reimbursement (generally 75 percent) no matter why you cancel the trip. But the premiums are so hefty that these policies appeal mostly to deep-pocketed nervous Nellies.
Before buying a special medical insurance policy for your trip, check with your medical insurer — you might already be covered by your existing health plan.
Even if your health plan does cover you internationally, you may want to consider buying a special medical travel policy. Much of the additional coverage available is supplemental (or “secondary”), so it covers whatever expenses your health plan doesn’t, such as deductibles. But you can also purchase primary coverage, which will take care of your costs up to a certain amount. In emergency situations involving costly procedures or overnight stays, the hospital will typically work directly with your travel-insurance carrier on billing. For routine care, a visit to a doctor will likely be an out-of-pocket expense (you’ll bring home documentation to be reimbursed). Whatever the circumstances, it’s smart to contact your insurer from the road to let them know that you’ve sought medical help.
Theft is especially worrisome when you consider the value of the items you packed along: Laptops, tablets, cameras, smartphones, and e-book readers are all expensive to replace.
One way to protect your investment is to purchase travel insurance from a specialized company which offers a variety of options that include coverage for theft. Before buying a policy, ask how they determine the value of the stolen objects and about any maximum reimbursement limits for jewelry, electronics, or cameras.
It’s also smart to check with your homeowners or renters insurance company. Under most policies, your personal property is already protected against theft anywhere in the world — but your insurance deductible still applies.
Before you leave, it’s a good idea to take an inventory of all the high-value items you’re bringing. Make a list of serial numbers, makes, and models of your electronics, and take photos that can serve as records. If anything is stolen, this information is helpful to both your insurance company and the police.
Evacuation insurance– covers the cost of getting you to a place where you can receive appropriate medical treatment in the event of an emergency. (In a worst-case scenario, this can mean a medically equipped — and incredibly expensive — private jet.) This is usually not covered by your regular medical-insurance plan back home. Sometimes this coverage can get you home after an accident, but more often, it’ll just get you as far as the nearest major hospital.
Keep in mind that medical and evacuation insurance may not cover you if you’re participating in an activity your insurer considers to be dangerous (such as skydiving, mountain climbing, bungee jumping, scuba diving, or even skiing). Some companies sell supplementary adventure-sports coverage.
Baggage insurance — for luggage that is lost, delayed, or damaged — is included in most comprehensive policies, but it’s rare to buy it separately, and there’s a strict cap on reimbursement for such items as jewelry, eyewear, electronics, and camera equipment. If you check your baggage for a flight, it’s already covered by the airline (ask your airline about its luggage liability limit; if you have particularly valuable luggage, you can buy supplemental “excess valuation” insurance directly from the airline).
Flight insurance (“crash coverage”) is a statistical rip-off that heirs love. It’s basically a life insurance policy that covers you when you’re on the airplane. Since plane crashes are so rare, there’s little sense in spending money on this insurance.