Travel Insurance Buyer's Guide
A travel insurance plan is composed of a package of benefits intended to protect you, your travel investment and your belongings. At a minimum, a good plan will provide benefits for:
- Trip Cancellation to reimburse your non-refundable travel arrangements should you have to cancel your trip for a covered reason prior to departure.
- Trip Interruption to reimburse your unused travel arrangements should you have to interrupt or return home early from your trip for a covered reason.
- Medical Expense/Emergency Assistance to cover medical expenses and emergency transportation for a serious illness or injury that occurs while you are traveling.
- Missed Connection to cover additional expenses that you must pay to make alternate travel arrangements when a flight connection is missed due to reasons such as bad weather or mechanical issues.
- Travel Delay Benefits to cover your out-of-pocket expenses for meals and accommodations when you are unexpectedly delayed due to flight delays or cancellations or for other similar covered reasons. Generally, you must be delayed for a specified amount of time, such as 6 or 8 hours or more.
- Baggage and Baggage Delay to cover loss or damage to your baggage or personal items or the cost of buying toiletries or personal articles if your baggage is delayed for a specified amount of time, such as 8 or 12 hours or more.
The following benefits or coverage enhancements may be included in the "Better" or "Best" plans:
- Enhancements to provide more covered reasons if you have to cancel or interrupt your planned trip. Many of the "Best" plans also include a Cancel For Any Reason Benefit which allows you to cancel your trip, generally two days or more before scheduled departure, for any reason whatsoever and receive a benefit for most of your non-refundable trip cost.
- Higher levels of protection for most benefits
- Additional benefits for:
- Accidental Death and Dismemberment
- Rental Car Damage
To understand which one of our travel insurance plans (Good, Better or Best) is right for you, it is important that you understand the benefits offered and how they may help you. For example, if you will not be renting a car on your trip, you will not need to purchase a rental car damage benefit. If you are traveling within the United States, higher limits of medical protection may have less importance to you.
Travel insurance benefits are conditioned upon key concepts, terms and provisions which define not only what is covered, but items that may not be covered or are limited by definition. Understanding what these provisions are and how they work is key to understanding what you are buying.
Unforeseeable losses: travel insurance like all other insurance is designed to provide coverage for unforeseeable losses which occur after your purchase of the policy. If a circumstance or event has occurred prior to your purchase, generally, it will not be covered.
Example: you will not be covered for a loss due to a hurricane if you purchased your policy after the hurricane has been named, because once named and known, it is no longer unforeseeable that a loss may occur. Remember, you cannot insure your car for collision damage after the accident!
Definitions: the policy definitions detail the meaning of the important terms and conditions of the policy you purchase. Definitions are used to give specific meaning to what is covered and what may be excluded from coverage or otherwise limited. If you are canceling your trip due to a sickness, injury or death of a member of your family, to be covered, the individual must be a "Family Member", as defined.
Example: most "Family Member" definitions include a wide variety of relatives from grandparents to grandchildren, to Domestic Partners and to relatives of spouses and Traveling Companions, but generally do not include cousins.
Exclusions and Limitations: policy exclusions detail losses, events or circumstances that are specifically not covered. There are two types of exclusions. General exclusions apply to the policy in total, while specific exclusions may apply to a given benefit or circumstance.
Example: typically all policies have a general exclusion for war or acts of war. Some policies may exclude losses arising from an epidemic or pandemic. If you are purchasing a policy because of concern about an epidemic flu outbreak, you should not purchase a policy with this exclusion.
Since policy provisions, definitions and exclusions determine the scope of the coverages provided, take the time to review the policy/certificate before you buy, to better understand what you are purchasing.
When is the best time to buy travel insurance? For a variety of reasons, it is prudent to purchase travel insurance when you first book your trip (i.e. make your first payment for travel arrangements). Why? Most travel insurance policies contain one or more time sensitive provisions that broaden coverage. Time sensitive provisions which may be included in a policy are: waiving of Pre-Existing Conditions Exclusion; travel supplier Bankruptcy or Insolvency coverage and the Cancel For Any Reason Benefit.
Although there are many covered reasons for the Trip Cancellation Benefit, not every possible reason is covered. Travel insurance policies do not cover fear of traveling or a change of mind or other similar discretionary reasons. Cancel For Any Reason gives the traveler 100% freedom to cancel a trip for a non-covered reason, generally 2 days or more before the scheduled departure date, and be reimbursed for a percentage of the cancellation penalty amount (such as 75% or 80%). Of course, if a trip is cancelled for a covered reason, then reimbursement would be at 100% of the cancellation penalty amount under the Trip Cancellation Benefit.
Cancel For Any Reason is time sensitive and must be purchased within a specified period (such as within 15 days of the date of the initial deposit for the trip). Remember unlike covered reasons such as sickness or injury, you do not receive reimbursement for your entire cancellation penalty amount.
Medical benefits included in travel insurance policies are provided on either a primary or excess basis. What does this mean and which is better?
Primary coverage means that the policy will cover you from the very first dollar of expense without regard to any other insurance you may have. However, primary insurance only covers medical expenses for treatment during your trip and will not cover any additional expenses once you return home.
Advantage – you don't have to file a claim with any other insurer.
Disadvantage – continuing expenses after your trip are not covered and may be subject to deductible and co-insurance provisions of your personal medical policy.
Excess coverage means the policy will coordinate benefits with other medical insurance you have that may also cover your claim. With excess protection your coverage continues to cover your medical expenses for up to one year after your illness or injury.
Advantage – since coverage continues up to one year after your illness or injury, it is unlikely you will have any out of pocket expense.
Disadvantage – you will have to file a claim with your medical insurance carrier along with filing a claim under your travel health insurance policy.
While people don't like paperwork, excess coverage generally provides better financial protection. For example, if there is no other insurance available, excess policies pay first dollar and if there are continuing expenses after the trip (which is not uncommon) the additional excess coverage plugs the gap of deductibles and co-insurance.
Generally, the more coverage the better the plan. All plans that include a trip cancellation benefit provide coverage for sickness, injury or death, but may or may not cover a Pre-Existing medical condition. "Better" and "Best" policies may cover many of the following additional reasons:
- involuntary termination or transfer of employment
- air carrier delays or cancellations due to strike, bad weather or mechanical breakdown
- damage or destruction of your home or place of employment
- a terrorist act or incident
- revocation of military leave
- Bankruptcy or Insolvency of an airline or other travel supplier
- Cancel For Any Reason Benefit
Purchase the best coverage you can afford. While people often focus on one or two concerns such as elderly relatives or political unrest that might affect travel, it's the unexpected that happens: like Icelandic volcano eruptions, Tsunamis, earthquakes, hurricanes, winter storms, torrential rains and on and on… that can affect you or your travel investment.
Often younger individuals and families assume that travel insurance is not for them. Older persons better understand the need to purchase travel insurance for travel health insurance benefits. As we age we are more likely to suffer illness or injury, it's statistically a fact of life! But there are still many risks that younger families need to cover with travel insurance.
The reality is that many trip cancellations or interruptions are due to the sickness, injury or death of family members both young and old. Travelers in their 30's or 40's might have to cancel a trip due to an illness of a young child, an elderly parent, grandparent or other relative. And what about job termination, transfer of employment or a host of other reasons?
Don't think of just yourself and what might happen to you when purchasing travel insurance. Think about what might happen to your children, parents, grandparents, etc. Can you afford to lose your travel investment or the extra cost to return home if one of your children ends up in the emergency room? Check out our competitive rates on family travel insurance.
Most travel health insurance policies exclude losses resulting from "Pre-Existing Conditions". While the policy language may vary from company to company, generally, policies exclude any condition treated or recommended to be treated in a 60 to 180 day period prior to the purchase of the policy.
Some "Good" policies and all "Better" and "Best" policies available on TripInsurance.com include a provision to waive the Pre-Existing Condition Exclusion if you purchase the policy shortly after your first payment for your trip, generally within 15 to 21 days.
While there are many costs associated with travel, not all travel arrangements need to be insured. Travel Arrangements can be made for the following:
- Air Arrangements – prepaid airfare
- Land Arrangements – prepaid costs for tours, hotels, etc or for ground transportation such as trains, rental cars etc.
- Cruise Arrangements – prepaid costs for river or ocean cruises
Of course, most trips involve a combination of Air, land or cruise arrangements, and it is important to know which should be insured.
Fully refundable arrangements (i.e. without any penalties or restrictions) need not be insured. For example, many first class airline tickets, and some business class tickets are fully refundable. You should only buy travel insurance for prepaid and non-refundable travel arrangements. Non-cash transactions such as use of frequent traveler awards, early bird discounts etc, generally cannot be covered as these items have no cash value.
Generally, you should always insure the full cost of any prepaid, non-refundable travel arrangements, as there will be additional limitations and exclusions if you insure less than the full cost of your non-refundable travel arrangements.
What if you are unable to take your planned trip? Are some of your payments non-refundable? This benefit covers the non-refundable trip costs when you must cancel your travel plans. All plans cover cancellation for covered medical reasons (such as Sickness, Injury or death of you, a Family Member or Traveling Companion). Additionally, certain non-medical reasons will be covered as well, such as: air carrier delays or cancellations, theft of travel documents, damage or destruction of your home, etc. The more reasons that are covered, the better the plan. It is as simple as that!
When deciding to purchase travel insurance, many people consider only their own health. For example it is not uncommon for younger people to assume that because they are healthy, travel insurance is not needed. But what about parents, grandparents, children, grandchildren, aunts and uncles? Remember travel insurance covers you if something happens to you or to any of these people, causing you to cancel your trip.
Your child is sick at home and you need to return home early from your trip. How do you get your money back for the remaining time you will miss? This benefit covers the cost of your unused, non-refundable land or water travel arrangements and the additional air expense to either resume your trip or return home, if you interrupt your travel plans and/or return home early from your trip for the same types of reasons listed above for Pre-Departure Trip Cancellation.
You may have to interrupt your trip due to a sickness, injury, or death of a family member either on the trip with you or at home.
While travel insurance policies routinely cover canceling a trip for many reasons, what if your reason for not going just isn't covered? This benefit allows you to cancel your trip for any reason whatsoever and still be reimbursed for most of your non-refundable trip costs. To be eligible for this coverage, the plan must be purchased within a specified period of time (most often 15 days) after you have made your initial payment for your trip and you must cancel your trip prior to your scheduled departure (most often 2 days or more).
Non-covered medical conditions, divorces, canceled wedding plans, economic hardships, a change in plans, just a few of the types of reasons not typically covered under Trip Cancellation, but covered under Cancel For Any Reason.
While on your trip, you fall and injure yourself. Does your insurance back home cover these medical expenses? This benefit reimburses you for medical treatment during your trip if you become sick or are injured while traveling. Travel insurance typically covers the same types of expenses covered by personal health insurance plans. Additionally, air transport expenses (such as upgraded air arrangements, air ambulance, including doctor or nurse escort expenses) for medical evacuation are covered, if required to obtain the appropriate level of care needed for your condition.
Did you know that many employer provided health insurance plans and supplemental medical plans provide little or no coverage while traveling while outside the United States? And even those plans that do provide limited medical coverage often do not cover the medical evacuation transport expenses required in emergency medical situations. Government plans such as Medicare do not cover any expense incurred outside the United States.
This benefit covers you for reasonable expenses for transportation to the nearest place of safety if a formal recommendation from appropriate local authorities or the US State Department is issued to leave a country due to: 1) a natural disaster; 2) civil, military or political unrest; or 3) being expelled or declared a persona non-grata.
Strikes, bad weather, mechanical breakdown and other carrier delays can cause you to miss your connecting flight and force you to make alternate travel arrangements, sometimes with a different airline entirely. When the reason for your carrier delay or cancellation is considered an "Act of Nature" (such as bad weather or other situations outside of the airline's control), you may be forced to pay for the alternate arrangements to join your trip. The Missed Connection Benefit covers the cost of these additional arrangements when you miss your flight connection due to a carrier delay, generally of three hours or more.
Having travel insurance with the Missed Connection benefit gives you more choice when making your alternate travel arrangements, because you will not be limited by cost of flights available from your original carrier and may allow you to join your trip sooner.
What if you are stranded overnight in a connecting city due to bad weather? Who is going to pay for your hotel stay and what about meals? The Travel Delay benefit reimburses you for meal and hotel expense due to carrier and other covered delays of 8 or more hours.
Airlines don't pay these expenses unless they are responsible for your delay. Most delays are due to bad weather, which is beyond an airline's control, and the bad weather causing your flight delay could even be in a city not on your itinerary.
What happens if your bags are lost or delayed? While your personal articles are generally covered by homeowners insurance, most policies have significant deductibles and possibly coinsurance limitations. The baggage benefit provides coverage on your baggage and personal items without deductible or coinsurance requirements. If your bags are delayed for 12 hours or more for a covered reason, the baggage delay benefit reimburses you for the purchase of toiletries and personal articles during the delay.
Collecting reimbursement from an airline for lost baggage is difficult, at best. Each airline has different requirements and rules that also vary from country to country.
Renting a car on your trip? How do you cover your liability for damage to the rental vehicle? With the Rental Car Damage benefit, you are protected for covered losses to the vehicle.
Buying Collision Damage Waiver from a car rental company is the most expensive way to insure a rental vehicle.
Want to protect your family in the unlikely event of your death from an accidental injury while traveling? This benefit provides a payment to your estate if you die from an accidental injury. Generally coverage is provided on a 24-hour basis during your travels and additional coverage may be provided for commercial air travel.
Accidental Death and Dismemberment is an inexpensive way to provide protection in the event of death.