4 minute read

Booking a trip, especially a trip of a lifetime, may have you questioning the value of travel insurance. While some people decline the option there are advantages to the extra expense. One never knows what the future holds and travel insurance in today’s current environment is a wise option when planning your next adventure.

Certain types of travel insurance are wise when you’re planning a trip. These include:

  • Trip interruption insurance (TII) which covers fares and fees should you need to return home unexpectedly and cut your trip short.
  • Trip cancellation insurance (TCI) which covers any money you’ve paid toward your trip in the event you must cancel.
  • Medical insurance specific to your trip is a sound investment as most medical insurers (Medicare included) don’t provide adequate coverage outside of the US.
  • Medical evacuation insurance, sometimes a part of your medical travel insurance, provides for you in the event you are injured or suffer an illness requiring you to be evacuated to a medical facility (by helicopter, private jet or special emergency transport) or back to your home.

But just what is travel insurance and what does it cover? Here we look at the ins-and-outs of travel insurance, what is covered and what is not, to help you make an educated decision the next time you plan a trip.

What is Travel Insurance Exactly?

Travel insurance is also known as named peril insurance. This means only those chance happenings and specific individuals (yourself, your spouse, for example) named in your contract are covered. Conventional policies (such as those listed above) typically have expensive lists of situations which are considered acceptable reasons for cancellation. While the lists vary slightly in content the rule doesn’t. If it isn’t specifically named it is not covered.

What is Commonly Covered by Travel Insurance?

The named perils (covered reasons) in travel insurance policies usually cover a wide range of accidents and illness. If you or your companion break your arm, injure your back, or develop a serious illness such as pneumonia, or if someone in your care at home becomes seriously ill or injured, you will be covered. Similarly if there is an emergency at home that prevents you from embarking on your trip such as hurricanes, flood, political uprising or travel suppliers default you are covered. Your travel insurance protects you even if you’re called for jury duty. You can opt for a “cancel for any reason” policy to minimize your risk but be aware even such broad coverage has limitations and the cost is higher.

Default Coverage

Almost all travel insurance policies will cover the default of a supplier. However, the term default must be used and it’s narrow in its definition of what is covered. For instance should your travel supplier shut down for good you may not be covered unless they file bankruptcy. Should the travel company decide to cut back on business but continue operations you may not be covered. Also, default policies don’t cover the default of the insurer from whom you purchased them. Select a policy that broadly defines “default”.

Problems With the Destination

Should your trip come under threat because of weather conditions at your destination, or should the airlines stop flying there or your accommodations be deemed “uninhabitable” you are usually covered. If you purchase your travel insurance after storm warnings go out for your destination you won’t be covered. And unless the State Department issues a warning regarding civil unrest at your destination you will not be protected.

A Pre-existing Medical Condition

If you received treatment two to six months prior to your travel date and you have a relapse while on vacation your standard travel insurance won’t cover interruption or cancellation. This may include situations when you experienced symptoms of an illness but chose not to receive treatment, ignored recommendation of your physician or refused to take prescriptions for your condition. You can opt for a waiver by purchasing the insurance a few days to two weeks from the time you make your first payment.

However an insurer can still deny your claim should a situation or condition exist at the time you purchase your policy. For instance should a close relative be in end-of-life care at that time you will not be able to cancel and be protected should your loved one succumb. Basically you must have no known encumbrances that would  interrupt travel at the time you purchase your travel insurance.

Other Considerations When Choosing Travel Insurance

Just as with any insurance there are special policies and provisions to consider when choosing your travel insurance. For instance the cancel for any reason policy mentioned above may not provide full coverage. They also only allow cancellation up to 48 hours prior to travel. Here are some other conditions to which you should pay heed:

  • Travel insurance is a secondary form of coverage. This means they openly pay for what is not reimbursed or provided for from your suppliers. It could involve a good amount of time before you see any compensation. For medical expenses you must first submit to your medical insurer and you may need to pay for any emergencies on the spot then be compensated later on. For damage or loss of personal possessions you will need to make a claim with the airlines, for instance, the your own insurer, then refer to your travel policy.
  • With travel insurance/medical insurance you will need to let the insurance provider make all of the arrangements for you in the event of evacuation or medical care. The insurer will assign the physician and arrange for transport. If you choose to do so on your own you may not be reimbursed.
  • Some policies invalidate coverage if you fail to cover the entire cost of your trip. You are required to cover any and all fees, nonrefundable payments you make and even, in some cases, the refundable payments required must be covered.
  • The rates for most travel insurance policies and medical/medevac go up along with your age. These rates really rise for those over the age of 70.

As Always, Caveat Emptor

The thing to remember when deciding on travel insurance is that not all policies are created equal. Consider your specific needs and choose wisely. Travel insurance is a prudent choice in today’s environment and can offer you a fair amount of peace of mind.

Disclaimer: We do not represent any travel insurance company. 

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