Whether it’s a vacation of a lifetime or a cross-country trip for a cousin’s wedding, you may be wondering when or if it’s worthwhile to buy travel insurance. Probably the best answer is that it depends on what you can afford to lose. By understanding what travel insurance is and what it covers, you’ll be able to make the best decision on whether to buy it.
What is travel insurance?
Travel
insurance is coverage designed to protect against risks and financial losses
that could happen while traveling. The risks range from minor inconveniences
such as missed airline connections and delayed luggage all the way to more
serious issues including injuries or major illness.
What does travel insurance cover?
Depending
on the coverage you choose, travel insurance can cover a broad array of
possible damages and losses:
Injury or sickness
Travel
insurance can help protect you from medical expenses abroad that your normal
health insurance doesn’t cover. Most health insurance plans don’t provide full
coverage in foreign countries and some health plans provide no coverage at all,
including Medicare. Travel insurance works in addition to your everyday health
insurance and can help supplement medical costs if you get sick or injured
before or during your vacation.
Lost luggage
Travel
insurance can help cover expenses stemming from lost or stolen luggage. This is
especially useful if an airline loses your bags, as it can be very difficult to
get them to pay for lost luggage. In the United States, the Department of
Transportation (DOT) requires airlines to compensate fliers up to $3,300 for
lost baggage. In foreign countries that amount is a maximum of $1,750. But to
receive those 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 matter worse, DOT doesn’t define when baggage is officially lost (as
opposed to just “delayed”). Overseas, a bag is only considered “lost” after 21
days. For delayed bags, 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 stemming from trip cancellations. Most resorts
or cruise lines won’t give you a full refund in the event of a cancellation. If
you cancel two weeks or more before your trip, most resorts will at least
charge a cancellation fee; many cruise lines might only give you a 25% refund
or will give you partial credit on another cruise. If you cancel within two
weeks of a trip, with most companies you won’t give any refund whatsoever.
Unforeseen circumstances happen, and you want to be covered just in case.
Coverage beyond your credit card
Some
credit cards provide limited coverage, with annual limits and restrictions for
cancellations and interruptions (if they offer cancellation/interruption
coverage at all). However, few credit cards offer coverage for the most
expensive travel risks: medical expenses or emergency evacuations, which travel
insurance can cover.
What travel insurance might not cover
It’s
important to know that while there are many reasons to buy travel
insurance, certain things may not be covered under travel insurance. If you
have a preexisting condition, look for a plan that provides a preexisting
condition waiver. If you’re visiting an area with political unrest, check into
what coverage a policy provides if you wish to cancel due to problems in the
area. Travel insurance policies cover some incidences of tour operator defaults
due to financial issues. Look into how that’s handled before booking your trip.
How much does travel insurance cost?
Travel
insurance cost is primarily based on the price of the trip and the age of the
traveler. A 35-year-old might expect a policy to add 3% to 5% to the cost of a
trip while a 60-year-old might pay around 10%, says Jonathan Harty, owner of a
MA-based travel agency. It can be a small price to pay to safeguard 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. Is a
trip delay due to weather going to dramatically change your vacation? Is it
possible your school year will be extended, or you will need to take a
work-related trip instead? Are there acts of war in the country you’re going to
visit? Are you nervous about the CDC issuing a travel warning for your vacation
destination?
These
are all valid reasons for cancelling a trip or wanting insurance coverage. But
not all travel insurance covers these concerns.
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 having to give a reason. You can sometimes purchase
this as a standalone policy or as a rider on a comprehensive policy.
This
is the typical policy that people imagine when they think of trip insurance.
The comprehensive policy usually covers delays, cancellation due to sickness or
death, lost luggage and some emergency medical costs. Just read the fine print
so you know exactly what it covers.
Changing your travel insurance coverage
If
you decide shortly after you purchase the policy that it doesn’t meet your
needs, you can get a full refund (perhaps minus a small administrative fee)
within a specified time period. This gives you time to fully read the coverage
and make sure it provides what you want. Usually that time frame for 10 to 15
days. When possible, it’s best to understand exactly what the policy covers and
how claims work ahead of time, in case you need to file a claim.
When
booking a pricey trip, investigate insurance at the same time. Some policies
require you buy travel insurance within a certain amount of time after making
your initial trip payment, such as within 10 to 30 days. With Travel Insurance
from Nationwide you can purchase up to the day before you leave. Ideally,
of course, it’s better to buy travel insurance well in advance of your trip so
you can plan adequately. Going on a trip should be an exciting experience.
While cancellation and other problems cause stress, you can take the financial
worry out of it by getting your trip insured.
