Whether it’s for business or pleasure, by land, air, or sea, travel is fraught with perils. That may be a bit hyperbolic, but the fact of the matter is that travel introduces some risks that you wouldn’t normally have to be concerned with.
Regardless of whether you or a loved one plans to backpack across the Andes or the Alps or visit European capitals on a river cruise there will be insurance to consider. So before you sign any applications or agreements, it’s a good idea to know what you’re paying for and how it works.
Travel insurance doesn’t refer to a single type of policy, but a category of insurance that offers a variety of protections when you plan to be away from home. There are five basic kinds of travel insurance: trip cancellation, travel medical, major medical, evacuation, and flight insurance. Each of them offers specific protection for different aspects of any trip, particularly those that take you out of the country. Which, if any, of these policies is right for you is an entirely personal decision.
Trip Cancellation Insurance
Of the five types of travel insurance, trip cancellation or trip interruption insurance is by far the most commonly purchased.
As its name implies, this type of protection covers you in the event you need to cancel or postpone your trip. Personally, I have never purchased this insurance because, like many people, I never saw the value. My reasoning was that I carefully plan not only where and how I travel but when. I make allowances for delays, and so spending money for something that can be protected against with planning seemed pointless.
I like to go on a Caribbean Cruise in January as a way to break up the cold Northeast winter into manageable chunks. We usually cruise out of Florida or Puerto Rico so we can maximize our time away from the cold. Since weather can be a problem when flying from the Northeast in January, I always plan our outbound flight for a day in advance of the cruise departure so that if weather is an issue we have time to compensate for a delay without worrying about missing the boat (literally).
My safeguards worked perfectly until last January. The day before our scheduled sailing out of Miami — the day we were supposed to fly out — a major snowstorm hit. The airline cancelled all flights from our local airport, but reported our flight as being on time. We didn’t find out the full story until we arrived at the airport and were told that our connection out of Philadelphia was on time, but our flight to Philly was cancelled, and there would be no flights until after our ship sailed.
Fortunately, I was able race the two-plus hours to Philadelphia in time to catch the flight to Miami. But if I’d missed it, the next flight with any room wouldn’t have been until six hours after our ship had sailed.
Trip cancellation insurance protects against not just weather-related delays and cancellations. It also guards against:
- Sudden work or business conflicts
- Visa or passport processing delays
- Illness or injury
- Change of mind (with restrictions)
This type of insurance acts as a safeguard not only before you start your trip, but covers any portion of it until you return home. That means if you’re halfway through your vacation and something happens — whether it’s an act of terrorism, or you have an accident or get sick and have to return home prematurely — you are covered.
The same rule applies if something happens at home, such as a death in the family that causes you to end your trip early; you will be compensated.
The insurance will usually pay any difference between what you paid and refunds you may be eligible for from travel vendors.
As a rule, you should avoid buying trip cancellation or trip interruption insurance from the same company you are booking all or part of your trip with, since the insurance also protects you against cancellations caused by the company going out of business.
Major Medical and Travel Medical Insurance
There are lots of reasons not to purchase travel medical insurance before you travel outside of the United States, including:
- You already have very good health insurance.
- You won’t be gone that long.
- The countries you are traveling to all have socialized medicine.
- You won’t get sick or injured.
- The U.S. embassy or consulate will help.
While those are all excellent reasons for not even considering travel medical insurance, they all have one thing in common: None of them is true!
Most U.S. health insurance plans will not pay for any services outside of the United States. Some will offer at least some protection if you are traveling in Canada, but you should make it a point to contact your insurer rather than assuming.
Even policies that do offer some international benefits may need supplemental coverage in order for you to be fully protected. Seniors on Medicare should consider travel medical insurance since Medicare does not have any foreign coverage benefits.
Any doctor will tell you that illness and injury can happen very quickly and unexpectedly. You may even be incubating a nasty infection before you leave home that strikes with a vengeance the day after you arrive on foreign soil.
Most countries, even those with socialized medicine, only provide government provided health care for their own citizens. That means you will be expected to pay for your care with cold hard cash, and there is little or nothing U.S. diplomats can do to help you in those situations.
Both major medical and travel medical insurance protect you in the event you become sick or are injured outside of the U.S. This includes while you are on board a cruise ship in international waters.
These types of insurance cover everything from emergency care to acute injuries to hospital stays and surgery. Like your health insurance here at home, different policies will have different limits, deductibles, and co-pays. Many travel health insurance policies will also help you locate health care providers, including doctors, hospitals, and even translators to help you recover.
In many cases these policies will require that you get pre-approval for many procedures that are not emergencies and may even reserve the right to insist on a second opinion or reserve the option to pay for your immediate return to the United States for care. You should also check to make sure that pre-existing conditions such as heart disease or diabetes are covered, and whether a pre-travel physical is required.
The key difference between these two types of insurance is the period of time they are intended to cover. Travel medical insurance is usually sold in terms that last from a few days up to a year and can cover more than one trip. Major medical, on the other hand, is ideal for travelers who plan to spend an extended period of time overseas of a year or more.
Since not all travel destinations offer the same level of medical care, it may be necessary to transport you from where you become sick or are injured to another location where you can get the care you need.
Arranging and paying for medical transportation requires expertise that is beyond the realm of most travelers and can be prohibitively expensive, especially if you need to be evacuated by a medically equipped private jet. Even if your primary health care insurance provides coverage while you are out of the country, it most likely does not include medical evacuation protection.
Medical repatriation, which means transporting you back to the United States, is seldom included as part of this coverage.
Another important limitation can be the exclusion of injuries that result from certain activities that your insurer considers dangerous or risky, but are often vacation activities, such as mountain climbing or scuba diving. If you plan on undertaking any adventure activities on your trip, check your policy for exclusions and consult the company about riders that cover the activities you plan on participating in.
This insurance is a holdover from the early days of commercial aviation when life insurance benefits were excluded if you died in a plane crash. While many life insurance policies still include an aviation exclusion, it is limited to private planes.
Since commercial air travel is safer than driving a car or crossing a street, there is virtually no need for this type of insurance unless you are super scared and have a few extra dollars you would rather not spend somewhere else.
Each of the different types of travel insurance can be purchased a la carte online, through a travel agent, or through your regular insurance broker. Alternatively, you can choose to buy a comprehensive travel policy that includes all of the protections bundled into a single package.
Comprehensive travel insurance plans often include additional coverage for lost, damaged, delayed, or stolen baggage. If your primary concern is baggage insurance, a comprehensive policy may be your only means of getting it, since it’s rarely sold separately.
Your homeowners or renters insurance may already cover your personal belongings, including jewelry (up to strict policy limits) that is taken from your luggage, hotel, or stateroom. Baggage insurance may only cover any deductibles required by your homeowners or renters policy.
In any event, it is important to make sure you understand the limits of your coverage and ask that those limits be raised if you are traveling with expensive equipment or jewelry.