Travel Insurance Coverage Tips by Rick Steves
by rick steves
Travel insurance can minimize the considerable financial risks of travel: accidents, illnesses, missed flights, canceled tours, lost luggage, theft, terrorism, travel company bankruptcies, emergency evacuation, and getting your body home if dies.
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what are the odds you’ll need it? hard to say. How willing are you to take risks? that depends on you. Deciding whether to invest in travel insurance has always been a difficult decision, and of course the coronavirus pandemic has made that choice even more difficult.
Each traveler’s potential loss varies, depending on how much of your trip is prepaid, the refundable amount of the airline ticket you purchased, your health status, the value of your luggage, where you’re traveling, the financial health of your travel and airline insurance, and what coverage you already have (through your health insurance, homeowners or renters insurance, and/or credit cards). It’s important to note that most policies won’t cover you if you change your plans to reduce your risk of contracting COVID-19.
Keep these considerations in mind, understand your options, and make an informed decision for your trip.
insurance basics
The insurance menu includes five main courses: trip cancellation and interruption, medical, evacuation, baggage and flight insurance. Supplemental policies can be added to cover specific concerns, such as identity theft or political evacuation. the various types are usually sold in some combination: instead of buying just baggage, medical, or cancellation insurance, you’ll usually buy a package that includes most or all of them. When weighing your options, consider the relative importance of each type of coverage to you. Your main concern is getting your money back for a canceled trip or lost luggage? treatment or evacuation if you become ill during your travels? Is there a chance that your work or family situation will affect future plans?
“Comprehensive insurance” covers all of the above (plus expenses incurred if your trip is delayed, you miss your flight, or your travel company changes your itinerary). Companies like Travelex and Travel Guard offer comprehensive packages that serve as your primary coverage; they will pay for your expenses regardless of what other insurance you may have (for example, if you have health insurance through your job). that means they pay first and don’t ask questions about your other insurance. this can be a real advantage if you want to avoid out-of-pocket costs.
Insurance prices can vary widely. most standard insurance that covers emergency medical care and cancellations accounts for 5 to 10 percent of the total trip. a policy that covers non-emergency cancellations can cost 20 to 50 percent of the trip. Age is one of the biggest factors affecting price: Rates rise sharply every decade after age 50, while coverage is generally cheap or even free for children (under 18).
Travel agents recommend that you get travel insurance (because they get a commission when you buy it and because they may be liable for your losses if they don’t explain insurance options to you). Although travel agents can provide you with information and advice, they are not insurance agents; always direct any specific questions to the insurance provider.
Keep in mind that some travel insurance, especially trip cancellation coverage, is reimbursement only: you’ll pay your expenses out of pocket, then submit paperwork to your insurer to get your money back. (If your trip is cancelled, don’t expect insurers to refund your policy premiums.) With medical coverage, you can arrange to pay expensive hospital or doctor bills directly. Either way, if you have a problem, it’s wise to contact your insurance company right away to ask them how to proceed. Many major insurance companies can be reached by phone 24 hours a day, which is helpful if you’re having trouble in distant time zones.
types of coverage
For each type of insurance, I’ve outlined some of the key legal terms. but be warned: these are just guidelines. Policies may differ, even within the same company. Certain companies and policies have different levels of coverage depending on whether you book your car rental, hotel, or flight directly or through a travel agent. ask lots of questions, and always read the fine print to see what is covered (for example, how do they define “traveling companion” or “family member”; your great-aunt may not qualify).
The pandemic has caused widespread changes in the travel insurance landscape. travel insurance is in high demand and companies are adding new types of coverage to accommodate, so be sure to read the fine print before you buy.
trip cancellation or interruption insurance
For me, this is the most useful and valuable type of insurance. canceling or cutting short any prepaid trip is expensive, and for a small fraction of the cost of the trip, you can alleviate the risk of losing money if something unforeseen gets in the way.
the rugged, healthy, uncompromising, enthusiastic traveler will likely forego trip cancellation or interruption coverage. I’ve skipped it many times and my number still doesn’t show up. If it turns out I need to cancel or discontinue, I’ll just have to take my financial lumps – I played the odds and lost. but in some cases it’s probably a good idea to get this coverage, for example if you’re paying a lot of money up front for a package tour or short-term lodging rental (both of which are expensive to cancel), if you or your travel companion have health problems, or if you have a loved one at home with health problems.
A standard trip cancellation or interruption insurance policy covers non-refundable financial penalties or losses you incur when you cancel a prepaid trip or flight for an acceptable reason, such as:
- you, your travel companion or a member of your family cannot travel due to illness, death or dismissal
- your travel company or airline closes or is unable to function as promised
- a family member at home gets sick (check the fine print to see how a family member’s pre-existing condition could affect coverage)
- miss a flight or need an emergency flight for a reason beyond your control (such as a car accident, bad weather, or a strike)
- avoid illness: If you decide not to travel because it would increase your risk of contracting covid-19, your insurance policy will not cover it.
- Stay-at-home orders: Most travel insurance only covers cancellations made to accommodate mandatory isolation, not blanket stay-at-home orders.
- new outbreaks of covid-19: If the area you plan to visit experiences new closures after you have booked the trip, do not seek coverage in your travel insurance.
- go against government travel warnings: If you have coverage, your policy may be voided if you travel to a place your government has deemed unsafe, or if you violate your government’s general international travel restrictions.
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So, if you or your travel companion accidentally break your leg a few days before your trip, you can both bail out (if you both have this insurance) without losing all the money you paid for the trip. Or, if you’re on a tour and have an accident on the first day, you’ll be reimbursed for the portion of the tour you didn’t get to use.
This type of insurance can be used whether you are participating in an organized tour or cruise, or traveling independently (in which case, only expenses paid in advance, such as your flight and any hotel reservations, are covered non refundable). Note the difference: trip cancellation is when you don’t take your trip at all. trip interruption is when you start a trip but have to cut it short; in this case, you will be reimbursed only for the part of the trip that you did not complete. if you are going to take a tour, it is possible that it already comes with some cancellation insurance; question.
Some insurers will not cover certain airlines or tour operators. many are obvious, like companies under bankruptcy protection, but others may be surprising (including major airlines). make sure your provider is covered.
buy your insurance policy within a week from the date you make the first payment for your trip. Policies purchased after a designated deadline (usually 7 to 21 days, as determined by the insurance company) are less likely to cover travel company or airline bankruptcies, pre-existing medical conditions (yours or members’ of his family at home) ), or terrorist incidents. mental health problems are generally not covered.
Nervous travelers are worried about two big unknowns: terrorist attacks and natural disasters. ask your company for more details. a terrorist attack or natural disaster in your hometown may or may not be covered. You will likely be covered only if your departure city or a destination on your itinerary becomes the target of a terrorist incident within 30 days of your trip. even then, if your tour operator offers a substitute itinerary, your coverage may be void. As for natural disasters, you are covered only if your destination is uninhabitable (for example, your hotel is flooded or the airport is missing). warfare is generally not covered, nor are disease outbreaks (more on that below).
insurance and pandemics
With travel turned upside down by the coronavirus pandemic, it’s more important than ever to know what travel insurance covers and what it doesn’t.
While most standard policies provide coverage for flight cancellations and trip interruptions due to unforeseen events, most covid-19 related issues are excluded from coverage, including:
You may be able to avoid the question of what is and isn’t covered by purchasing an expensive “cancel for any reason” policy (described below).
medical insurance
Health emergencies are the leading cause of travel cancellations and interruptions, and can result in high medical bills as well as extended lodging bills for travel partners.
remember, before buying a special health insurance policy for your trip, check with your health insurer; it may already be covered by your existing health plan. While many US insurers cover you abroad, Medicare does not. Also, make sure you are aware of policy exclusions, such as prior authorization requirements.
Even if your health plan covers you internationally, you may want to consider purchasing a special medical travel policy. much of the extra coverage available is supplemental (or “secondary”), so it covers all the expenses your health plan doesn’t cover, like deductibles. but you can also buy primary coverage, which will pay your costs up to a certain amount. In emergency situations involving expensive procedures or overnight stays, the hospital will usually work directly with your travel insurance company on billing (but not your regular health insurance company; you may have to pay the hospital or clinic, then be reimbursed by your in-state insurer later). for routine care, a visit to a doctor will likely be an out-of-pocket expense (you’ll take the paperwork home to be reimbursed). Regardless of the circumstances, it’s smart to contact your insurer from the road to let them know you’ve sought medical help.
Many pre-existing conditions are covered by medical and trip cancellation coverage, depending on when you purchased the coverage and how recently you were treated for the condition. If you travel abroad frequently, annual multi-trip policies can save you money. check with your agent or insurer before committing.
The US Department of State periodically issues travel warnings for countries at risk. If you’re visiting one of these countries, your medical and cancellation insurance may not be honored unless you purchase supplemental coverage.
For travelers over the age of 70, purchasing travel medical insurance can be costly. compare the cost of a separate travel medical plan with comprehensive insurance, which comes with good medical and evacuation coverage. a travel insurance company can help you sort through the options. Certain Medigap plans cover some emergency care outside of the United States; call your supplemental policy issuer for details.
protection against theft
Theft is especially a concern when you consider the dollar value of the items we package. laptops, tablets, cameras, smartphones, and e-book readers are expensive to replace.
One way to protect your investment is to purchase travel insurance from a specialist company like Travel Guard, which offers a variety of options including coverage for theft. Before you buy a policy, ask how they determine the value of stolen items and about maximum reimbursement limits for jewelry, electronics, or cameras.
It’s also smart to check with your homeowners or renters insurance company. In most policies, your personal property is already protected from theft anywhere in the world, but your insurance deductible still applies. If you have a $1,000 deductible and your $700 tablet is stolen, you’ll have to pay to replace it. Instead of purchasing separate insurance, it may make more sense to add a rider to your current policy to cover expensive items while traveling.
Before you leave, it’s a good idea to take an inventory of all the high-value items you’re bringing. make a list of serial numbers, makes and models of your electronic devices and take photos that can serve as records. If something is stolen, this information is useful to both your insurance company and the police. If you plan to file an insurance claim, you will need to obtain a police report immediately. (You can ask your hotelier for help).
other insurance
evacuation insurance covers the cost of getting you to a place where you can receive proper medical treatment in an emergency. (At worst, this can mean an incredibly expensive, medically equipped private jet.) this is usually not covered by your regular health insurance plan in your home country. Sometimes this coverage can get you home after an accident, but more often it will only get you to the nearest major hospital, so it may be worth buying if you’re planning an adventure in a remote area. “Medical repatriation,” that is, taking you home, is likely to be covered only if it is deemed medically necessary. Before you buy a policy, ask your insurer to explain exactly what is covered before and after you get to the hospital.
Please note that medical and evacuation insurance may not cover you if you engage in an activity your insurer deems dangerous (such as skydiving, mountaineering, bungee jumping, scuba diving, or even skiing). some companies sell additional coverage for adventure sports.
baggage insurance, for lost, delayed or damaged luggage, is included in most comprehensive policies, but it’s rare to purchase separately and there is a strict limit on the reimbursement of items such as jewelry, glasses, electronics and photographic equipment. if you check your baggage for a flight, it’s already covered by the airline (ask your airline about its baggage liability limit; if you have particularly valuable baggage, you can purchase supplemental “excess valuation” insurance directly from the airline). Homeowners or renters insurance generally covers your possessions wherever you travel; baggage insurance covers deductibles and excluded items on your homeowners policy. check details with your agent.
flight insurance (“crash coverage”) is a statistical scam that heirs love. it’s basically a life insurance policy that covers you when you’re on the plane. Since airplane accidents are so rare, it doesn’t make much sense to spend money on this insurance.
Collision coverage, an important type of insurance for rental cars, may be included in some comprehensive travel insurance plans or available as an upgrade in others.
“cancel for any reason” (cfar) policies are the only way to ensure you’ll get a refund if you cancel a trip due to a pandemic. a cfar policy typically adds about 50 percent to the price of a basic policy. and cfar coverage is limited by strict requirements; for example, you must purchase it no more than 21 days after purchasing your trip, and to receive a refund you must cancel your trip no later than 48 hours before departure. You will also be reimbursed only a portion of the cost of your prepaid trip, usually only 50 to 75 percent. (And since some states, like new york, don’t allow the sale of cfar insurance, check your state’s regulations before you buy.)
further considerations
Before you buy a policy, make sure you also know the answers to the following questions: Read the fine print or, better yet, make a list of questions and call the insurer so you are very clear about how the policy really works.
Is the policy you want available in your state and is the insurance company licensed there?Available policies vary by state and not all insurance companies are licensed in all states. If you have a claim to file and you’re having trouble with a business that isn’t licensed in your state, you don’t have a case.
Do you already have coverage through other insurance and how much? Some categories of insurance may already be covered, to some extent, by policies you already have. For example, many credit cards come with travel benefits (some degree of flight insurance, rental car coverage, etc.). While your car insurance in the United States probably won’t cover you on European roads, your medical or homeowner’s insurance may be traveling with you. if so, don’t assume it’s completely covered. Do your homework carefully and be very clear about your policy limits. (For example, some credit card coverages are not always accepted by European rental agencies).
Is the policy premium refundable and, if so, for how long? Also, can you change the dates of your coverage if you decide to reschedule a trip, rather than cancel it altogether? ? (Note that the provider may charge a higher premium for your new date.)
How does the policy handle reservations added to a package? If you are insuring a tour or package, find out if the policy covers reservations before or after the tour, which may come with different conditions. (some reservations are non-refundable at all). check what reservations you make (flight, hotel, transportation, excursions, etc.) are covered by an insurance provider if you need to cancel them.
If you need to cancel a trip and also want to cancel your coverage, check your policy to see if you’re eligible for a refund of your premium. if you plan to rebook your trip rather than cancel it, check with your travel insurance provider to see if you can switch your policy to the new date (but be aware that you may have to pay more in premium for your new date).
Traveling always involves risks. And while insurance can help mitigate many of the expenses incurred if things go wrong, it won’t eliminate all risk and probably won’t fully reimburse all expenses. When choosing if travel insurance is right for you, do your homework, ask questions, and think about how much peace of mind is really worth to you.
