Travel Insurance: What You Need to Know Before You Go

Nothing ruins a vacation faster than lost luggage, a medical emergency, or last-minute cancellations. To make matters worse, these travel calamities can result in financial losses as well, sometimes in the thousands of dollars. Although it may not protect you in all instances, having travel insurance can help protect not only your monetary investment but also provide much-needed assistance with purchasing clothes due to lost luggage, replacing a lost passport, or receiving medical treatment.

What is travel insurance?

Similar to other types of insurance products, travel insurance protects your financial investment for upcoming trips due to unforeseen circumstances. For instance, if you get sick days before you are scheduled to leave and your doctor advises you not to travel, you can file a claim for any non-refundable trip costs due to trip cancellation. It also may be able to provide coverage for expenses related to delayed luggage or if you have a medical emergency while traveling.
The exact coverage you have depends on your individual trip insurance policy. These insurance options provide different benefits, so it’s important to review them to determine which one offers the best coverage that fits your needs. Keep in mind most coverage is limited to reimbursement or coverage of actual expenses, and usually doesn’t include a deductible as you have with other types of insurance.

What does travel insurance cover?

Not all travel insurance policies are the same. Different plans offer different benefits, so be sure to review the coverage of each one to make sure you get the policy you want.

Trip cancellation

Trip cancellation coverage relates to cancellations due to illness, flight cancellations due to bad weather, the death of a family member or other covered reasons. For instance, if you get sick days before your trip and your doctor advises you not to travel, it may be too late to get a refund for your cruise from the cruise line. With this policy, you can file a claim for reimbursement of any prepaid, non-refundable travel expenses.
However, not every reason for cancellation qualifies for reimbursement. For example, if you are monitoring a hurricane before your cruise and wait to purchase trip cancellation until after the storm is named, you likely won’t be covered if you cancel the trip just days before you are set to leave.

Medical insurance

Although your personal health insurance may cover you while traveling throughout the United States, it likely does not cover you during international trips. A medical travel insurance policy provides medical coverage for emergency care, injuries due to accidents, emergency medical evacuations and repatriation (returning you home). Although it may not pay all of your medical expenses, it can help offset what you have to pay out of pocket.
If you plan to participate in any high-risk activities—think skydiving, heli-skiing, scuba diving, extreme rock climbing, etc.—ask your travel insurer about special coverage in the event you get hurt as medical expenses due to these activities may not be covered under the regular medical coverage.

Trip interruption

Trip interruption coverage picks up where trip cancellation insurance leaves off. So, if you are able to depart for your vacation on time, but, once you start traveling, you are injured, forced to evacuate due to a hurricane or a family member passes away and you need to return home right away, trip interruption coverage will help cover travel expenses for activities and accommodations you already paid for before the trip but are unable to use due to your shortened trip.

Rental car

For many travelers, renting a car is a routine part of travel. As such, it’s important to have insurance to protect you in the event of an accident. Many car rental companies will try to get you to sign up for their rental car coverage, but that can be expensive.
As an alternative, your personal car insurance policy may cover a collision in a rental car. However, you should check with your car insurance company before traveling to find out exactly what rental car coverage you have, particularly if you are renting a car outside the United States.
Also, if you use a specific credit card to pay for your rental car, your credit card company may offer rental car coverage in the event of a collision. However, this coverage usually requires you to pay for the collision upfront and file for reimbursement. In addition, international rental car companies may not accept insurance from credit card companies.
A third option is to purchase rental car coverage from a third-party provider such as Allianz. You may be able to purchase this coverage as an add-on to your regular travel insurance policy.

Natural disasters/evacuation coverage

If you need to leave a destination quickly due to a natural disaster such as an earthquake or return home from a foreign country due to security reasons (i.e., such as a terrorist attack), evacuation coverage can help pay for a flight or other transportation.

Travel protection plans

Although it may seem the same as travel insurance, travel protection plans actually work a bit differently. Usually offered by a travel company or agency instead of an insurance company, travel protection plans typically waive any cancellation fees related to your trip. In some cases, it also may offer you credit — not reimbursement — for the full value of your trip. Travel protection plans often may be less expensive than travel insurance. However, it may not offer the range of benefits you want from a travel insurance policy.

“Cancel for any reason” coverage

Because there are numerous circumstances not included as covered losses in most travel insurance plans, many insurers offer the option to purchase “cancel for any reason” coverage. Under this plan, you can cancel your trip up to two days before you leave regardless of the reason and still receive reimbursement for all or most of any prepaid, non-refundable travel expenses.

How has COVID affected travel insurance?

Although the effects of coronavirus continue to change and evolve with relation to the travel insurance industry, at this time, travel insurance likely does not cover trip cancellations or interruptions related to COVID-19 if you are worried about contracting COVID-19 during your travels.
That being said, if you contract COVID-19 before your trip and cancel due to illness, then your trip cancellation likely will be covered under the policy’s coverage. It’s a bit murkier if you contract COVID-19 while traveling. Even if you have medical coverage, your insurer may see the possibility of contracting COVID-19 as a “foreseeable” event, which means it won’t be covered.
Before purchasing any travel insurance, talk with the insurer to find out exactly what is and is not covered related to COVID-19. You don’t want to find out after the fact that your travel insurance offers no benefits or pandemic exclusions.

What isn't covered by travel insurance?

While a lot of circumstances are covered by travel insurance policies, there’s an equally long list of circumstances that are not covered, leaving you with no recourse if you cancel a trip unless you have “cancel for any reason” coverage. For instance, if you change your mind at the last minute, you could be out thousands of dollars if your trip is non-refundable.
If you have a pre-existing condition that flares up and you have to cancel, it may not be covered under the “illness” component of your travel insurance. Also, if a normally covered loss occurs while you are legally drunk or under the influence of drugs, your loss could be denied.
Talk with your travel insurance provider to find out exactly what is excluded from your travel insurance coverage before making a purchase.

How much coverage do you need?

The amount of travel insurance coverage you need depends on two factors: how much your trip costs and your age. Many single-trip travel insurance plans offer coverage on trips that cost between $10,000 and $100,000. You will need to total up the cost of your prepaid, non-refundable travel costs to get a starting point of how much coverage you need. Then, you should consider any add-ons such as medical insurance, luggage insurance, rental car coverage, and “cancel for any reason” coverage.
Although it won’t affect your trip cancellation or interruption coverage, where you plan to travel could affect how much medical coverage you purchase given it may be more difficult to access emergency medical treatment. For instance, if you are injured in a major metropolitan area, you’re likely to find a nearby hospital. As such, basic medical coverage of $10,000 in emergency medical care and $50,000 in emergency medical transportation likely will cover your medical expenses.
However, if you are on a cruise that’s out to sea or you are hiking in a remote area and require a medevac helicopter to reach the nearest hospital, you would need much more medical coverage, say $50,000 in emergency medical care and $1 million in emergency medical transportation.
Talk with your travel insurance company regarding the exact coverage you want, and then see how you can tailor your plan to fit your budget. Also, check with your credit card companies and your banks to see what, if any, travel insurance coverage they offer if you pay for your trip using their card. This may offset how much coverage you might need in a traditional travel insurance policy.

Best travel insurance companies

Insuremytrip

Insuremytrip is not a travel insurance provider, but rather a travel insurance comparison website. You can shop around and get quotes from more than 20 insurers using one form for easy review and comparison. However, it doesn’t include some of the more popular travel insurance companies, so you could be missing out on a better policy if you use this as your only research source.

Allianz

Unlike many other travel insurers, Allianz offers a wide range of plans so you can find the one that best fits your needs and budget. These include single-trip plans for that annual vacation as well as multi-trip plans if you often are on the go. However, Allianz plans max out at $250,000 for emergency medical transportation coverage, which may leave you with a hefty bill if you need medical evacuation from a very remote area.

Travelex

Offering two plans, Travel Basic and Travel Select, Travelex’s coverage includes a variety of coverages with the option to add on additional coverage, such as “cancel for any reason.” Unlike many other insurers, you don’t have to submit receipts to qualify for the policy’s trip delay and baggage delay benefits. While the Travel Basic plan covers trips no more than 30 days, the Travel Select plan covers trips up to 364 days long.

World Nomads

Many travelers love World Nomads because the company offers a lot of flexibility in its coverage. However, the company differs from most other insurers in two key areas. First, you won’t need to know your estimated trip costs to buy trip interruption and cancellation coverage. Second, the company doesn’t offer a pre-existing condition waiver, so it won’t cover any medical loss incurred due to a pre-existing condition that you had within 90 days of the start of your travel insurance coverage. It will cover emergency evacuation and repatriation of remains.

AIG Travel Guard

AIG Travel Guard offers three plans online ranging from Silver to Platinum, but you can get information on additional coverage when calling the company. These are comprehensive plans that include trip cancellation and interruption coverage, medical coverage (limits vary by plan), trip delay coverage, and, for the Gold and Silver plans, free coverage on single-trip plans for children under age 18.

Frequently asked questions

It can be confusing trying to figure out what travel insurance does and does not cover. These are some of the frequently asked questions travelers ask regarding travel insurance.
Does my medical insurance cover me when I travel?
Although many health insurance companies do cover you during travel within the United States, most do not provide any coverage during international travel. Before purchasing any medical travel insurance, call your primary health insurance company and find out what coverage you have for both domestic and international travel.
What if I need to cancel my trip due to COVID?
If you contract COVID prior to your trip, you likely will be covered under your travel insurance’s covered loss provisions related to illness. However, if you cancel your trip because you are worried you will contract COVID while traveling, are under a stay-at-home order (not a mandate), or are following government warnings not to travel, your trip cancellation likely will not be covered. Check with your travel insurance provider for its exact coverage provisions related to COVID.
Do all carriers cover COVID?
Coverage related to COVID varies from travel insurance carrier to travel insurance carrier. Some will provide travel assistance and help with healthcare costs if you get sick while traveling. Some may reimburse you for cancelations caused by a lockdown that occurs after you have booked a trip. But insurance services for COVID vary highly. Check with each company to find out its specific coverage as it relates to COVID before making a purchase. One word of caution: Many foreign countries are now requiring proof of travel insurance that includes COVID coverage should you want to enter. If you want to travel abroad, you many need to buy travel insurance.
What if I have a pre-existing condition?
If you are traveling with a pre-existing condition, you can still get travel insurance. However, you will need to apply for and receive a pre-existing medical conditions waiver from your travel insurance company. This waiver prevents your travel insurance company from denying a medical claim based on your medical history.
Do I even need travel insurance?
Most travelers don’t think about buying travel insurance if they are traveling within the United States, because often that only entails roundtrip flights, accommodations, and rental cars. Other than the flights, these expenses may not have prepayment or nonrefundable requirements, so if you have to cancel, it’s not a total loss. However, travel insurance could still be beneficial for domestic travel if you are booking such trips as a group tour, a river cruise, or a whitewater expedition in the Rocky Mountains that require prepayment and may be nonrefundable. If you are traveling overseas, travel insurance is a good option to protect your investment given you prepay for many of the related travel expenses—flights alone could be in the thousands of dollars—and your primary health insurance often won’t cover medical treatment during international travel.

The bottom line

Things happen all the time that could disrupt or force the cancellation of travel plans. And, if you have already paid for your trip and it’s nonrefundable, you could be out of a lot of money unless you have travel insurance. Travel insurance can provide reimbursement of those expenses along with additional coverage for medical expenses, lost or delayed luggage, evacuations, and more — not to mention provide peace of mind when you travel. How much coverage you need depends on the cost of your trip as well as the specific coverage you want in your travel insurance policy.
To find the best travel insurance for you, shop around with at least three different companies. Make sure to compare not only the types of coverage but also coverage limits as well as the policy cost for a fair comparison. Doing your research before making a purchase ensures you have the best policy for both your individual needs and your budget.

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