We focus on the issue of travel insurance with information and advice about:
- The different types of travel insurance
- When travel insurance is unnecessary
- How much travel insurance premiums are
- Guidelines for shopping around for travel insurance
- Filing a travel insurance claim
According to the US Travel Insurance Association, 42.6 million Americans were protected by 32.3 million travel insurance policies in 2016 worth an estimated $2.8 billion. The Association also publicized the fact that the number of claims handled by its members has risen by 19.1% since 2014. There’s no doubt that travel insurance provides a safety net and protects you from financial loss in case something goes wrong on your trip. However, buying a policy when you’re already covered is as bad as not taking out coverage when you really need it. As a result of this confusion, we explain under which circumstances you should take out travel insurance and explain common loopholes and exclusions as well as advice about finding the right policy. Finally, are there any alternatives to this type of insurance?
What are the different types of travel insurance?
There are different types of policy according to your needs. You could take out a policy which covers you for the cancellation or interruption of your trip plus coverage in case of stolen, lost or delayed baggage. A more comprehensive travel insurance insurance package would also cover all medical costs plus optional emergency evacuation and repatriation.
Which one you choose would depend on your personal circumstances. If you’re traveling within the US and would be covered by your existing health insurance for emergencies outside your network, medical cover might be unnecessary. However, if you’re traveling abroad, your medical insurance policy is likely to provide no – or only the most basic – coverage. In this case, including medical costs in your travel insurance makes good financial sense. According to the State Department, the costs of repatriation alone can exceed $50,000 if you fall ill or get involved in an accident in another country. The comprehensive travel insurance policy gives you greater peace of mind, but it comes at a cost. Its premiums are on average 50% higher than a basic policy.
When is travel insurance unnecessary?
There are a number of other circumstances when you may decide that it isn’t worth paying travel insurance premiums. You must weigh up how much you’ve paid upfront for your non-refundable expenses. If you haven’t booked a hotel room because you’ll be staying with family or friends on a cheaper vacation, you don’t have much to lose and so travel insurance is unnecessary. Similarly, if you’ve booked a last-minute domestic flight, have no connecting flights and you only have carry-on luggage, then travel insurance is also superfluous.
Travelers on business trips (both within and beyond the US borders) are usually covered by their firm’s insurance policy. When traveling on business, always check with the company’s HR department so you can save your money.
How much are travel insurance premiums?
Unlike other coverage, travel insurance is a temporary policy, and you specify its term (the length of your trip.) As a result, there’s no underwriting period, and a medical examination isn’t carried out either.
The price of the premiums depend on a number of factors such as:
- your age
- your travel destination
- what activities you’ll be doing while away
- how much you’ve paid out in non-refundable costs
The general rule is the greater the risk you represent as a traveler, the higher the chances of you making a claim and therefore, the higher the premiums.
Guidelines for shopping around for travel insurance
The first thing is to make sure that you read the fine print of the policy extremely carefully before purchasing it. In this way, you know exactly what is covered, and equally importantly, what isn’t. All policies specify in which circumstances they will refund because of a cancellation. If you wish this cover to be more comprehensive, you should add a ‘cancel for any reason’ rider to the policy.
Online comparison engines are the easiest and most convenient way to see what is on the market and how much cover you’re offered.
You should also pay particular attention to the exclusions. For example, policies deliberately exclude pre-existing medical conditions. Therefore, if you wish to be covered for such a condition, you should ask for a waiver to be added to your policy. You should be careful of when you take out insurance too. You must take out cover as soon as you’ve paid the first deposit for your trip. If you wait and something happens, you won’t be covered.
Online comparison engines are the easiest and most convenient way to see what is on the market and how much cover you’re offered. There are tools to narrow down your search, and you can pay by credit card and take out the policy immediately. However, you must print off the confirmation email and carry at least 2 copies with you on your trip in case you need to file a claim. This insurance documentation will include the contact numbers of the insurer in case you need them, and customer service is usually available 24/7.
Filing a travel insurance claim
Like any insurance policy, the insurer will need to see proof before they will honor your claim. Therefore, you should keep evidence of your trip and all receipts. If you need to cancel because of ill health, insurance companies will only accept a doctor’s written recommendation while bad weather must be officially recognized by a state or federal warning about traveling to a specific area.
Are there alternatives to travel insurance?
You may find that your credit card issuer offers travel insurance as an extra perk. You should, however, check the limits. Many such policies aren’t comprehensive, and might limit claims to $1,500-$2,500 per year. However, this might be sufficient for most trips within US borders.
If you face difficulties because of a delayed or canceled flight, the airline is legally obliged to provide you with a seat on the next available flight. You may also be entitled to compensation in cases of significant delays over a certain length of time so you should check your rights as a passenger. This is also true of lost or delayed luggage.
Apart from your air travel, you could keep your accommodation options open by choosing hotel reservations with free cancellation up to the date of your stay. In this way, travel insurance won’t be necessary.
Conclusion – Enjoy a stress-free trip
There’s no denying that travel insurance can give you peace of mind and protect your money because of a canceled trip and/or natural disasters ruining your dream vacation. However, this doesn’t mean it’s necessary for every single trip you make. Check your existing cover and consider your personal circumstances before paying for additional coverage.