Whether you are traveling close to home or across continents, here are all the things you need to know about travel insurance!
Why You Need Travel Insurance
No one wants their expensive vacation to cost any more, but there are good reasons why you should consider purchasing travel insurance.
Unforeseen Medical Expenses
This is my #1 reason for recommending travelers purchase travel insurance. You never know what might happen when you are traveling. You can come down with a simple illness and need an antibiotic. Or you might break your leg. Worst case scenario, you could have a heart attack or stroke.
Your regular health insurance might not provide full coverage when you are outside of your home area. It might not cover you at all internationally. If you are really sick, you may need to be medically evacuated back home. This can cost an exorbitant amount of money. So it’s always a good idea to purchase a travel health insurance policy.
I always make sure I have a travel health insurance plan while traveling abroad or taking a cruise. While my U.S. based insurance will cover some of my expenses if I get sick abroad, I never want to leave this to chance! I usually do not get travel health insurance for my domestic trips. My regular insurance will cover me out-of-network, and I’m not as worried about needing medical emergency evacuation within the U.S.
Trip Cancellation & Interruption
In the past few years, the news is full of horror stories about cancelled and delayed flights, worldwide pandemics, and political unrest shutting down travel. Plus you never know what might happen at home. You or a family member could get sick or injured or there might be a natural disaster.
Now more than ever it’s important to protect your financial investment in travel by purchasing an insurance policy that includes trip cancellation, trip delay, and interruption insurance. The only exception is when you can book refundable flights, hotels, and activities. It might not be necessary to buy coverage in that circumstance.
I do not always purchase insurance specifically for trip cancellation and interruption. I do make sure the travel health insurance policy I purchase will provide coverage for trip expenses if I get sick or injured, or if a traveling companion or a family member is ill or injured. But I usually won’t purchase insurance to protect me from travel delays. This is because I pay for most of my travel with reward points and miles which are refundable. I also always try to book refundable hotels and activities. And I pay for travel on a credit card that has good travel insurance coverage, like my Chase Sapphire Preferred.
What to Look for In a Travel Insurance Policy
Here’s what you need to look for in a travel insurance policy:
- Medical expenses and emergency evacuation – most U.S. based health insurance does not provide coverage abroad and Medicare is not accepted. You should make sure your policy includes at least $50,000 in medical expenses coverage as well as $250,000 of emergency evacuation coverage.
- Trip delay – with the travel industry being in such a turmoil lately, it’s smart to insure against travel delays. This insurance typically reimburses for food, lodging, rebooking flights, and other expenses as a result of weather, airline maintenance issues, civil unrest, and illness. Look for a policy that covers COVID-19. Look for policies that cover at least $1,000 of expenses with delays starting at 6 hours.
- Trip interruption – sometimes you are delayed in departing for a planned trip, or you have to cut a trip short due to illness, injury, or a family emergency. Make sure your policy includes coverage for trip interruption in the amount you spent on the trip. Look for policies that cover 150% of your trip cost.
- Baggage loss – unfortunately, losing your luggage is a real problem these days. Make sure you have some sort of coverage in case you have to replace all of your clothes and toiletries if the airline loses your luggage. Yes, the airline will usually give you some money for this, but it’s a hassle to collect! And this coverage is in most insurance you will buy anyway. Look for policies that offer $500-1,000 of coverage.
- Trip cancellation – you want to make sure that you have a policy that will pay the costs of your trip if you cancel for a covered reason such as illness, injury, death of traveler or a close family member or traveling companion, military deployment, civil unrest, family emergencies, and jury duty. Read the fine print to make sure you understand what the policy covers and what it does not. Look for policies that cover 100% of your trip cost.
- Optional: Cancel for Any Reason (CFAR) – this coverage will increase the price of your insurance substantially and will only reimburse you 50-75% of trip costs (depending on the policy). But if you want the luxury of being able to back out of the trip at any time for any reason (not just covered reasons as stated above), this coverage is ideal.
How to Pick a Policy
If you only travel once or twice per year, you probably just want to purchase a single trip policy. You can purchase trip insurance through your travel agent. Or you can find policies through sites like SquareMouth or Insure My Trip.
If you travel often, it’s often more cost effective to purchase a yearly travel insurance policy. Since I travel internationally several times a year, I purchase World Trips Atlas MultiTrip Insurance. This policy focuses on medical coverage with a small amount of trip interruption, but does not cover trip cancellation. I also hear good things about the multi-trip plans offered by Allianz Travel.
For trips with a large investment, you definitely want coverage that protects you in the event of trip cancellation. Many travelers use a multi-trip/annual plan to cover multiple lower cost trips and trips paid for by their employer. These are also great for trips planned using points as most airlines and hotels can be cancelled without a penalty so you really just need the medical coverage. But, they purchase an individual policy when they plan a cruise or a trip with a larger investment. Talk to your travel agent to determine what options might be best for you.
No matter which type of insurance you purchase, you can opt for plans for a single individual or an entire family. You will save money if there are more people on a single policy, rather than buying individual policies for everyone. In fact, some plans include children for free if they are traveling with a parent or grandparent. And there are plans that cover you both internationally and domestically. Plans that include trips within the U.S. will usually be expensive due to the cost of healthcare in our country and the travel insurance becomes the primary coverage.
Read the Fine Print
Most importantly, make sure you read the policy documents closely. I know it’s not fun, but it’s incredibly important to know what the insurance covers and what it does not cover. Some other things you should look for in a policy include:
- Coverage for Pre-Existing Conditions – if you have a pre-existing illness or injury, make sure you are covered for any incidents related to the pre-existing condition while you are traveling. Most policies include a look-back period of 120 days.
- Healthcare Resources – information to help you find quality healthcare in your destination, usually an app or phone number to call.
- Emergency Assistance – look for policies that have a 24/7 helpline that you can call when you are faced with travel delays, cancellations, and emergencies.
- Liability Protection – covers you if you accidentally cause harm to someone or damage their property while traveling.
- Coverage for Adventure Activities – make sure all of the activities you plan to do during your trip are covered, including things like skiing, ziplining, and scuba diving. You may need to add an adventurous sports rider to your policy.
How Much Does It Cost?
It’s difficult to predict how much travel insurance will cost for travelers. It depends on a variety of factors such as age, gender, where you are traveling to, how long you are traveling, how much coverage you opt in to, and your medical history. A general rule of thumb is to budget 4-6% of your total trip cost for insurance. If you are a senior, bump that budget up to 7-17% of your trip cost. Opting for Cancel for Any Reason plans will raise the cost by about 50%. You can run a free Allianz quote here!
Bottom Line
It’s totally no fun to pay for something you hope you never use! But insurance is a part of life. If you want travel to be part of it too, then travel insurance is a necessary evil. But the good news is that you will rest easier knowing that your financial investment in your trip is protected and that you will have the resources you need in an emergency. That is priceless!
Plan your trip! And don’t forget to buy insurance! Tell us what you think below in the comments. You can also contact us and follow us on Facebook, Instagram and Pinterest so you never miss a post!
