Travel Insurance – Do You Feel Lucky?
Well, Do Ya??
While most people think they are healthy, properly covered and can’t imagine anything bad happening to them while on vacation, travel insurance is an important consideration. It’s really not that unusual to get sick, lose your bags, break your camera, have your purse or wallet stolen or have a flight cancelled or delayed.
Who wants to ruin a wonderful vacation due to an unforeseen and possibly very expensive event? You’ll appreciate the coverage if you break a leg climbing around Angkor Wat in Cambodia, fall off a dhow boat or camel in Dubai or the airline loses your luggage for several days right before your sister’s wedding in Barcelona!
If you’ve ever searched the Internet for advice on whether travel insurance is a necessity or a waste of money, you know that the camp is split. On the one hand, some travelers swear by it and recite all the times it’s saved their bacon. Others liken it to buying lottery tickets.
The range of potential coverages is broad. Travel insurance typically provides financial reimbursement for cancelled, delayed or shortened trips due to a personal or an immediate family member’s illness or death, weather-related delays or cancellations, lost luggage and for the reimbursement of medical expenses and limited medical evacuation benefits while traveling.
If you purchase travel insurance, it is very important to consider a policy underwritten by a reputable and financially secure insurance company. Travel insurance can be purchased from airlines, hotels, cruise lines, tour operators, online or through an agent. And, as with almost everything in the travel business these days, it is always very important to read the fine print.
A tour operator or cruise line cancellation waiver typically only covers the operator’s own cancellation penalty and often provides a future travel credit instead of a cash refund. And insurance provided by the airlines, vacation sites and hotels is often more expensive and less extensive than an independent policy.
We recommend exploring the options on one of many independent online agencies specializing in travel insurance. These services provide a robust search and comparison platform and two we like are Square Mouth and InsureMyTrip. We also really like the simplicity of Berkshire Hathaway’s affordable AirCare for flight coverage and ExactCare for more extensive travel coverage.
First, Do You Even Need Travel Insurance? Maybe Not…
Maybe you’re already insured. Know what your medical insurance, homeowners insurance and credit cards cover in the case of a trip delay or cancellation and never pay to insure items or events you will be reimbursed for with coverages you already have. Travel insurance is almost always secondary, paying out only after you’ve claimed all medical and home owner insurance and credit card reimbursements.
Maybe your credit cards provide coverage. Many credit cards have good coverage for certain travel-related expenses paid for with that credit card. If you don’t have a credit card with good travel-related coverage, you may want to consider applying for one that waives foreign transaction fees and provides extensive travel benefits and coverage before you travel and use that card for all covered travel-related expenses.
How risk-tolerant are you? Trip insurance should be considered any time your non-recoverable, travel-related expenses add up to more than you can comfortably afford if you have to delay or cancel your trip or hurt yourself while traveling. For example, will your medical insurance or credit card benefits cover you if you are injured while traveling outside the US? If your bags are delayed, lost or stolen while traveling, will your homeowners insurance or credit card benefits pay for the items you need to comfortably complete your trip and how long will you have to wait for coverage? If your trip is delayed due to weather, an illness or accident before or during your trip, will the airline or your credit card provide coverage for the extra lodging costs associated with the delay?
Ok, Let’s Assume You Need It – Now What? The Nitty-Gritty, That’s What…
- Travel insurance will typically cost about 4%-8% of your prepaid non-refundable travel costs and if you travel often you may want to consider an annual policy. Cost is generally based on the extent of the coverage, length of trip, destination and age of the traveler.
- Travel insurance only pays out what is specifically listed in the policy so read the policy fine print very carefully. The covered reasons and named perils of policies can differ substantially. So when comparing companies, coverage, benefits and prices, it’s as critical to also know what is included as well as what is excluded.
Here are seven good questions to ask when comparing policies:
- Are pre-existing medical conditions covered?
- What type of sports or adventure activities are not covered?
- Are strikes, protest or terrorist acts that cause voluntary (e.g. you opt not to make the trip or want to cut it short due to safety concerns) or involuntarily delays and cancellations covered?
- Does the carrier offer a 24-hour assistance line to help arrange transportation, accommodations, medical care, contact your family or provide other assistance in the case of an emergency?
- What is the wait period before you can purchase replacement items related to baggage that is delayed, lost or stolen?
- Is coverage primary or secondary? Secondary coverage means that you must file a claim with your homeowners insurance, medical insurance or credit card company first before the travel insurance will pay out whatever you are entitled to that hasn’t already been reimbursed.
- What are the specific requirements and processes to submit a claim? What type of documentation is required (e.g. receipts, paperwork, travel document, specific reports, etc.) and how long will it take to be reimbursed?
Some special considerations related to medical evacuation and medical emergency insurance:
- If faced with an illness while traveling, it is important to know what your primary insurance will cover related to doctor visits, hospitalization, and emergency transport to a medical facility and then home. Medicare doesn’t cover any medical expenses outside the US. If your primary insurance does not provide robust medical coverage you may want to consider medical emergency and/or evacuation services (a medevac policy) to pay for these expenses while traveling outside of the US.
- If medical evacuation is bundled as part of a general travel insurance product, it’s critical to dig into what it really covers. It often means the insured is taken to the nearest medical facility, not necessarily their preferred facility and often does not provide transport back to the US. Without proper insurance, if a traveler is transported from a foreign country back to the US on a dedicated air-ambulance staffed with medical personnel, the cost could be well over $100,000.
- Insurance carriers provide both short-term and annual medevac memberships that range from $100 to a few hundred dollars depending on the extent of coverage, duration of coverage and age, and most policies will generally exclude preexisting conditions.
Know Your Existing Coverages. Know what your medical insurance, homeowners insurance and credit cards will cover in the case of a trip delay or cancellation and never pay to insure items or events you will be reimbursed for with coverages you already have.
Know Your Risk Tolerance. Travel insurance should be a considered any time your non-recoverable, travel-related expenses add up to more than you can comfortably afford if you have to delay or cancel your trip or hurt yourself while traveling.
Pay Special Attention to Medical Evaluation Scenarios. If your primary insurance does not provide robust medical coverage you may want to consider medical emergency and/or evacuation services (a medevac policy) to pay for those expenses while traveling outside of the US. While the risk of needing it is generally very low, the expense of being uncovered or not properly cared for is often financially devastating.
Choose Wisely. We recommend exploring the travel insurance options on one of many independent online agencies specializing in travel insurance. These services provide a robust search and comparison platform and two we like are Square Mouth and InsureMyTrip. Both include a variety of packaged and a la carte insurance services and emergency medical and evacuation services. And we really like the simplicity of Berkshire Hathaway’s affordable AirCare for flight coverage and ExactCare for more extensive travel coverage.
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Let’s all be careful and covered out there!
Happy Loyalty, Happy Travels!
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