You have probably heard the question “Would you like to add travel insurance” when booking a flight, reserving a car or purchasing a cruise on Expedia or from your travel agent. You might think you never need travel insurance or you might just buy it anyways for the piece of mind. Before you decide one way or the other look at the travel insurance considerations and tips we have collected for you. This will hopefully help you to make an informed decision so you don’t spend money on unnecessary insurance coverage or leave without adequate protection which could result in a significant financial loss.
You may think travel insurance is just another form of health insurance but it is usually more than that. Travel insurance can minimize financial risks of a wide variety of things that can go wrong on a trip:
- You need to cancel or interrupt your trip because of illness, death, hurricane and weather, terrorism, employment layoff, travel company bankruptcy
- Evacuation to the nearest hospital or back home for medical and non-medical emergencies
- Your baggage is lost or stolen
- You missed your connecting flight and need accommodation or meals
Considerations Whether to get Travel Insurance
If you are traveling abroad and your health insurance doesn’t cover you outside of your country or your trip is very expensive and non-refundable it is an obvious decision to get travel insurance. In this case look no further and start comparing travel insurance. For any other situation it is not as clear cut on whether to get trip insurance.
Coverage Through Existing Insurance
There is a good chance you already have insurance that covers certain risks. Make sure you are familiar with your existing insurance coverage so you don't pay for redundant coverage.
- Homeowners Insurance
If you have homeowners insurance your baggage and personal items are often covered even if you aren’t at home.
- Car Insurance
Your existing car insurance policy might already cover rental cars domestically. International coverage is almost always excluded. Check your policy and don’t forget to bring proof of insurance to show at the rental car counter as this is needed sometimes.
- Health Insurance
Your health insurance plan usually covers you domestically. Some insurance companies also cover you while traveling abroad but often have certain exclusions. Carefully review your coverage since medical treatment or emergency evacuations can be extremely expensive in the country you are visiting. If you are insured by Medicaid or Medicare for example your medical and hospital bills might not be covered overseas.
- Credit Card Insurance
Some credit cards offer basic travel insurance for medical expenses, trip cancellation and lost or stolen items. Even the best travel credit cards usually only offer limited protection and might leave you with gaps in coverage. Make sure you are using the credit card for your trip booking and payments to get coverage as you are usually not covered otherwise.
Domestic vs International Travel
When traveling domestically your existing health insurance probably covers emergency medical situations and you rarely need additional medical coverage. When traveling abroad your insurance carrier is less likely to provide coverage or you might be required to pay for treatments in advance. Other countries don't always offer the same level of medical treatments and your existing health insurance most likely doesn't cover medical transport to your home country to get proper treatment. The cost for such medical transports can be $100,000 and more. Always verify with your insurance carrier whether you are covered abroad. If you are on Medicaid or Medicare insurance you are usually not covered overseas.
Amount of People Traveling
If you are traveling with your whole family your risk of someone getting sick will increase. Assuming you don’t want to take a trip leaving someone behind, travel insurance can provide you with cancellation and interruption protection to reimburse any non-refundable trip costs.
If you already have an illness before you buy a travel insurance policy it might not be covered while you are traveling. Make sure you get travel insurance that specifically covers pre-existing conditions.
Cost of your Trip
If the cost of your trip is very little and you are only traveling domestically it often isn’t worthwhile to get travel insurance to cover the financial risk of trip cancellations since you don’t have much money at risk in the first place. If your pre-paid and non-refundable expenses are higher than what you are willing to lose you should consider getting travel insurance. Even if your trip cost is low for international travel, make sure you have proper medical insurance coverage as mentioned earlier.
Traveling to Remote and Rural Areas
If you are visiting remote or rural places without adequate medical facilities travel insurance can protect you from the cost of medical evacuation by plane or helicopter. The cost of medical evacuation can easily be in the 10s or even 100s of thousands of dollars. Keep in mind that a helicopter transport might not be covered by your existing health insurance even in your home country.
Travel Insurance Cost
You may be wondering how much travel insurance costs. This obviously depends on a variety of different factors like age, trip cost and length, destination. According to the U. S. Travel Insurance Association comprehensive travel insurance typically costs about 4% to 8% of the cost of a trip. If you only need certain emergency medical coverage you might be able to get a plan for less than $6 per week. A few great sites to compare different travel insurance plans are Squaremouth and World Nomads.
- Purchase travel insurance from a reputable insurance company Allianz, Travelex and Travel Guard. Don't get fooled by a no-name company offering "travel protection" only. You can compare many plans at Squaremouth.
- Usually you get a better deal if you don't buy travel insurance from your tour operator.
- Hazardous sports are usually not covered (mountain climbing, hang gliding, bungee jumping, caving and other extreme sports activities). Make sure to specifically add this coverage if you are going to do any of these activities.
- Buy travel insurance as soon as possible to maximize your benefits. Even if a policy allows weather related cancellation you usually will not be able to benefit from it if you purchase the policy after the Hurricane has been named.
- Know how what’s needed to file a claim. You need detailed receipts, police reports, airline confirmations to get reimbursed by the insurance company.
Travel Insurance Basics
Below a more detailed explanation of coverage types usually offered by different travel insurance plans. We briefly mentioned most of them earlier in this article.
Trip Cancellation and Interruption
Cancellation and Interruption usually covers all the cost of the trip if you can't start or continue your trip for some reason. Typical reasons covered are hurricane and weather, terrorism, financial default, employment layoff and medical problems. Some policies even offer the ability to cancel for any reason (policies offering this benefit are usually significantly more expensive). If you have to interrupt your trip and require a more expensive return flight your insurance might have your back. When traveling with family you also run a greater risk of one person getting sick and you having to cancel the trip completely. Trip cancellation and interruption is usually very useful coverage for expensive trips that have high cancellation fees.
You might have coverage through your existing health insurance plan already but even if you do there might be some limitations. You should check with your insurance carrier to find out what you are covered for. Some of the more common limitations might be:
- only 60% is covered
- certain countries are excluded
- Medicare doesn't cover international travel
- None life or limb threatening problems are not covered most of the time (e. g. mild cases of the flu)
Medical treatment can be very expensive depending on the country you are visiting, so make sure you have the right amount of coverage.
Medical and Non Medical Evacuation
In case of an emergency, evacuation insurance typically covers the cost of getting you to a hospital to get the right treatment or to get you to a place that allows you safe return back home. Usually this cost isn't covered by your regular health insurance. Having to airlift you out somewhere can cost tens of thousand of dollars. Even on trips to less exotic destination you might need an air rescue. Every year people have to be airlifted out of the Grand Canyon because of medical problems. Besides Medical Evacuation there is also coverage for Non Medical Evacuation. For example if you are cut off because of a big earthquake, Non-Medical Evacuation coverage would probably allow you to be evacuated within days. We find evacuation insurance very useful as it protects you from a huge bill that often exceeds all of your other trip cost combined and might even wipe out all your savings.
Baggage Loss or Delay
Very often this coverage is part of a travel insurance policy and you can't purchase this separately. When you are flying chances are the airline already covers baggage loss and delay. If you have homeowners or renters insurance you might have coverage as well as this coverage usually extends beyond your home. Either way you should check the fine print for this coverage in the policy as there are specific limits per item (e. g. a $2,000 baggage loss policy can have a maximum limit of $400 per item which might not be enough to cover your laptop). We usually consider this insurance more of a nice to have coverage.
Some policies cover death and loss due to air travel. Even though you might have heard about more fatal airline accidents recently, statistically it is very unlikely to happen so choose carefully if you really want to pay for this coverage.
We hope these tips about deciding on whether you should get travel insurance have been useful. If you know of any other tips or you liked this article please leave a comment!