Booking travel always carries some degree of uncertainty. Travel insurance provides a safety net so you can step out with confidence. Insurance is designed to cover the big financial risks you do not want to bear alone. You may not need travel insurance for inexpensive trips, but it can provide a sense of security when you prepay for pricey reservations or a big international trip.
What Does Travel Insurance Cover?
Depending on the coverage you choose, travel insurance can cover a broad array of possible damages and losses:
I. Trip Cancellation/Interruption:
Trip cancellation coverage would cover non-refundable expenses, including penalties, that you are charged with because of the cancellation. However, for the coverage to be valid, you would need a valid reason as to why the trip was cancelled. Generally accepted cases for cancellation could be, sickness of the insured or travel companions, emergencies from home that prevents you from leaving, and even the bankruptcy of the tour agency or airlines.
Trip interruption coverage would be beneficial in the case that you have to cut your trip short. For example, you were involved in an accident or you get sick and cannot complete your stay, you would be reimbursed for any lost expenses due to cutting your trip short.
II. Emergency Medical Assistance
Travel insurance can help protect you from medical expenses abroad that your normal health insurance does not cover. Most health insurance plans do not 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.
This type of insurance coverage focuses on medical emergencies such as emergency evacuations and medical expenses. Some plans can even provide coverage for pre-existing conditions, long-term travel, multi-trip renewable protection and much more. Having medical expense coverage is absolutely essential during long trips and is one of the most popular benefits of travel insurance.
III. Baggage and Personal Belongings
Most travel insurance policies can cover delayed, damaged, lost, or stolen luggage (which happens quite often). Usually, airlines offer a form of baggage protection but the limits are rather low. Some plans also reimburse you for extra expenses if you experience a baggage delay for more than a certain period (e.g., 12 hours). This insurance coverage is essential, especially if you are travelling with cherished, expensive, or valuable items.
IV. Accidental Death
In the case that a person with travel insurance dies during a trip, accidental death and dismemberment coverage pays a substantial benefit to another individual. Most policyholders leave this payment to immediate family members and most benefits will supplement any life insurance payments that a family receives.
Does Travel Insurance Cover the Coronavirus?
The Coronavirus is declared to have the “characteristics of a pandemic” as of March 11, 2020 and this affects travel insurance coverages previously purchased.
Given the fine print and complexities around insurance, the answer is not straightforward, but the bottom line is that US consumers can expect more benefits out of their travel insurance going forward than they did before. (CNN, How much Covid-19 protection does travel insurance offer in 2021?)
Keep in mind that travel insurance policies help to cover policyholders in unexpected times. Just like weather events, once an event is declared as a “known” event, it may not be a covered cause for cancellation if travelers purchase insurance after the date of the event.
It is worth the effort to be educated and well informed about policies now. “Read the language and ask a lot of questions. I think that people are becoming better insurance consumers in the last 12 months.” Said Brian O’Connel, an analyst at InsuranceQuotes.
What is Cancel for Any Reason (CFAR) Travel Insurance?
Cancel for Any Reason travel insurance allows you to cancel your trip for any reason and you will receive a percentage of your out-of-pocket expenses. CFAR usually costs around 25% – 50% more than traditional travel insurance and must be purchased at or near the time you first purchase your trip. Purchase of CFAR after booking a trip will render it invalid in relation to the previously booked trip.
Tips for Purchasing Travel Insurance
It is a common misconception that travel insurance are packaged policies that combine coverage options into a single plan covering everything that can go wrong in a trip. Yes, it is the common type of travel insurance sold and it can become costly. You can avoid the extra expense that comes with a package plan by determining what type of travel insurance you would require.
- Package Plans
Package plans are best if the travel is an expensive, once-in-a-lifetime trip, or on a budget. This is because travel insurance plans cover a wide range of travel risks that includes emergency medical care, baggage loss, trip cancellations, travel interruption and emergency evacuations.
- Travel Medical Plan
This policy covers emergency medical care when you are travelling outside your health insurance network. A lot of U.S based health insurance policies will not cover their members outside the United States and applies out-of-network charges for travelling outside the network area. This would mean that you, as the traveler, would pay a higher portion of the bill in case you need emergency medical care.
This is best when your travel is domestic, relatively affordable, or when it is outside of your health insurance network.
- Specialty Plans
Specialty travel insurance provides coverage for certain aspects of a trip, such as car rentals and term life, to supplement the benefits that you already receive. This type of plan is ideal when you are concerned about a specific risk.
Many travelers do not consider travel insurance because they do not think it is necessary or that it is worth the cost. Spending a few more dollars for the peace-of-mind knowing that you are covered in the event that the trip goes sideways is worth it. Safe travels!
Corey Elsasser
