Travel Insurance

Vacation InsuranceWhat would ever happen if you suddenly contracted appendicitis while on vacation in Mexico? Or if you made travel plans to visit relatives in Indonesia and, a week before you were scheduled to leave, a tsunami completely wiped out the hotel you had booked? What if you had a family emergency and needed to delay a trip to Paris, but had already paid for your flight? Any number of incidents could occur which could affect your travel plans and end up costing you a serious amount of money. That’s why you should consider travel insurance.

In an article on Travel + Leisure Magazine, writer Katrina Brown Hunt tells the tale of Katherine Walls and her boyfriend, who planned a trip to Peru. Katherine worried that traveling to a remote area of a foreign country might put them at risk to diseases that weren’t common back in the U.S. So, she invested just 6 percent more into their trip to have “cancel for any reason” coverage. It’s a good thing they did. Adventure seekers and family road trip travelers that invest a little bit extra in insurance could end up saving thousands should the worst happen. Katherine expected exposure to disease, but instead they were faced with civil unrest.

According to Katherine, “’A week before the trip, we saw on CNN that severe civil unrest had broken out in Peru, literally on the road that we needed to travel.’ They were reimbursed about 80 percent of their sunk costs. ‘It turned a disappointing event,’ she says now, ‘into one that was a little easier to swallow.’”

As stated by “Nomadic Matt”, “Travel insurance is something you will need on the road. You never know what could happen, and most health plans won’t cover you overseas. I never thought I would pop my eardrum while I was scuba diving or break my camera in Italy. My friend never thought he would break his leg hiking or that another friend’s father would die and she would have to fly back home.”

Traveling should be an exciting, memorable experience. Whether you’re headed to Peru, Italy, or back to your hometown for a visit. A small vacation that consists simply of exploring your favorite restaurants may seem like a worry-free way to spend your time. However, you should consider travel insurance no matter the trip.

In the last decade, this under-utilized sector of the insurance market has grown tremendously. There are now many options for you to choose from when planning your vacation. This was due in part to the September 11 attacks, which proved that anything could happen when you’re away from home.

As stated by Nancy Cutter of Court Travel in Charlotte, North Carolina, “We had people stuck in Europe when all U.S. flights were grounded,” she says. “Insurers looked at that and decided to make sure people were covered for out-of-pocket expenses. So a lot of the per diems increased, and they lengthened the time you could claim them if you got delayed.”

Types of Coverage

USA Today states, “A basic package generally covers the non-refundable costs of a trip up to the particular policy’s limits, has medical coverage and offers assistance for various emergencies.

It most often kicks in for matters beyond the traveler’s control: from illness, to the airline canceling a flight because of a storm, to your missing a flight because you got in an accident on the way to the airport.” In January 2016, thousands of flights were cancelled on the east coast due to the heavy snowstorm. Certain airlines are also more prone to cancellations than others.

Travel Insurance CoveragesGenerally, there are many different types of coverage that fall under a Home Insurance plan that you can purchase before traveling:

  1. Trip Cancellation
  2. Travel Medical
  3. Major Medical
  4. Emergency Medical Evacuation
  5. Accidental Death/Flight Accident
  6. Luggage Protection
  7. Car Rental Protection
  8. Specialized Coverage

Trip Cancellation Insurance

There may be various reasons why you need to cancel or postpone your vacation. Insurance companies have various terms for this type of coverage, such as trip interruption insurance and trip delay insurance. According to the U.S. Travel Insurance Association (USTIA), this is the most common type of insurance that travelers purchase. It is often sold within a comprehensive plan. The reasons why your need to alter the dates of your trip could be endless. The following are typically covered:

  • Business conflicts
  • Changing your mind
  • Delay in processing your visa or passport
  • Illness
  • Injury

This may also include weather-related issues. If a storm delays your trip and you have unexpected expenses, like a hotel room stay or additional meals, this may also be covered.

Depending upon your coverage options, you may also be able to protect yourself against:

  • Acts of terrorism
  • Vendor going out of business
  • Accident while traveling to the airport
  • Fire or flood at your house
  • Jury duty

How it works: If you need to cancel a trip, first contact your airline, hotel, etc. that you booked with. Hopefully they can refund you some or all of your payments. If they don’t, your travel insurance will cover the difference. On Investopedia, the author notes that it is important to make sure you do not get your travel insurance from the same company you purchased your trip from. That way, if the company goes out of business unexpectedly before you are planning to travel, you will still be protected.

Travel Medical and Major Medical Insurance

Both of these types of coverage are similar in that they both protect you in case you fall ill or are injured while traveling. They differ on length of coverage. Travel insurance is much shorter, and can range between five days and one year. Major medical insurance is for those who will be traveling for six months or more. Both may cover the following:

  • Medical expenses
  • Dental expenses
  • Assistance in locating a doctor, hospital, healthcare facility, foreign language service

Beware: Make sure your medical insurance covers you if you are outside of the United States.

Emergency Medical Evacuation Insurance

Any sort of emergency travel insurance is one of the most important policies to invest in. This type of coverage can help to pay to transport you to the nearest medical facility in case of an emergency. Especially if you’re traveling to a remote area, this may be a necessity as the costs can quickly skyrocket. Imagine having to pay for a helicopter ride from an isolated village to the nearest town. This can be extremely expensive, especially if you have to pay for it all out of pocket.

TravelGuard’s Dan McGinnity states, “You might be evacuated to what the insurer deems to be the nearest appropriate facility…or you could be evacuated to your choice of hospitals, or home.”

Accidental Death and Flight Accident Insurance

This type of coverage works like life insurance. If your death (or serious injury) is ruled an accident, they your surviving family serve as your beneficiaries. Be sure to check the coverage rules for pre-existing conditions and age limits. These factors will influence the price of this type of insurance.

Luggage Protection

It is very possible that you or someone you know has had their luggage lost, damaged, or stolen before. Sometimes, you’re lucky and the airline is able to locate your baggage. In other instances, you’re not so fortunate. Having your personal items covered could make the difference between an enjoyable vacation and one where you’re on the phone with the airline or airport for most of the time. Keep in mind that this type of insurance won’t cover you in the event that your luggage is lost or damaged during the flight, or if you have very expensive personal items. Be sure to read the fine print of your policy.

Car Rental Protection

The last thing you want to have happen is to rent a car and then get into an accident. Or, have your personal items stolen from the car. Your personal auto insurance or credit card company may cover you if such an event occurs, but you may want to purchase additional protection.

Specialized Coverage

You may not be the average jet-setter and need special coverage to suit your various needs. These may include:

  • Business travellers
  • Athletes
  • Expatriates
  • High-risk adventurers

If you fit into one of these categories, you may want to consider specialized coverage to suit your specific needs.

To purchase

There are a variety of companies that sell travel insurance.  Talk with your personal insurance company, credit card company, travel insurance specialist, or travel agent for a quote. Some aspects of your travel may already be covered by other means; your credit card may already be protected if lost or stolen. Also, you may have limited health insurance coverage if you’re traveling outside of the country. Such details can be explained to you by your insurance agent.

Costs

First, check all of your current policies (health, life, auto) and credit card policies. This will help you to determine your insurance needs when traveling. Call your local agent and ask what they recommend.

Depending upon the type of protection you seek while on vacation, your costs of insurance can vary greatly. For example, it may only cost you $10 for flight insurance, which would cover you in the event of a plane crash. If you want more comprehensive coverage, it may cost between 3 and 8 percent of your overall trip total.

You can also buy an annual plan which will protect you for any trip that you take within the year. Prices for this coverage can range from $9 to $99.

Most travel insurance options are a la carte, so you can pick and choose the coverage you want, depending upon how much you want to spend. “Travel insurance has gone from a one-size-fits-all type product to plans that are really customized for specific types of travelers and needs,” states Dan McGinnity of TravelGuard.

Other questions to keep in mind when determining your costs out-of-pocket:

  • Do you have to pay your expenses and then get reimbursed after filing a claim, or will your insurance pay up front?
  • What is your deductible and coverage limit?
  • Can you purchase a plan in your destination’s national health plan?
  • Can you add a rider to your personal items coverage to protect your more expensive items?
  • Will the coverage be primary or secondary insurance?
  • Are there travel destination restrictions?
  • What high-risk activities are covered?
  • Will the coverage cost less if you purchase it well in advance?
  • Does bundling travel insurance with your other coverage cost more or less than purchasing it separately?

Do I need travel insurance coverage?

It may be worth it in the end to purchase travel insurance. In a 2012 USTIA survey, 96% of those who had travel insurance and were affected by “natural catastrophes” were satisfied with their purchase.

If you are planning a trip that is unique in some way, you may want to consider purchasing insurance. For example, if you trip is overseas or involves high-risk activities. Ask yourself if you could afford covering the expenses of medical care or an emergency flight back home if a situation arises.

Remember

  1. Always contact the U.S. State Department before you travel. In case of an emergency, the nearest embassy or consulate will be able to contact you. They have a travel registration website at: https://step.state.gov/step/
  2. Try to find insurance that includes a 24-hour phone number in case you need travel assistance. They might be able to help you in case you need to locate a doctor or a translator, help you if you lost your passport, or need legal representation.
  3. No two travel insurance policies are the same! Each company needs to comply with state regulations, so be sure what is included and excluded on their policies.
  4. The U.S. Travel Insurance Association lists all travel insurance companies in good standing. See: http://www.ustia.org/
  5. Let the insurance company know where you intend to travel and the activities you plan to do once there. Make a list of the items you’re taking with you. Both of these steps will help you when filing a claim.
  6. File the claim as soon as you are able:

According to Travel + Leisure Magazine, traveler Dorothy Leland was relieved to have coverage, even though the claim process took longer than expected.

“Because of stiff cancellation policies, she bought travel insurance for her family of four to go to Alaska in 2005. When their daughter ended up in the hospital with Lyme disease on the day of their departure, the Sacramento mother filed a claim. It involved paperwork, doctor signatures, and about a month of processing time, but they were reimbursed for everything—roughly $8,000. ‘Boy, was I glad I’d bought the insurance,’ she says now. ‘This past summer, we finally got to take that family trip to Alaska, and we had a wonderful time. And you can be sure I bought travel insurance. Blessedly, we didn’t have to use it this time.’”

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