Deciding to take a trip comes with 3 obvious major decisions. Where to go, when to go and how to get there. But after reading this article, you may want to consider adding travel insurance to that list. True, it isn’t compulsory for your vacation, but unforeseen events may cost you a large amount in prepaid fees that you will not be able to claim back.
Starting With the Basics
You have medical coverage to pay for your visits to the hospital and home insurance to cover your belongings. You have made that investment and can sleep soundly knowing that you have that protection. We all hope we never have to use it, but it is there for a reason. Travel insurance should have the same priority.
Speaking of health insurance, it is often falsely believed that your domestic health insurance will cover you abroad. This is often not the case, but we’ll get back to this point later on.
Travel insurance is not limited to coverage of just medical emergencies with travel disruptions or even theft of personal belongings. The last thing you want to worry about is how you are going to afford all the potential mishaps that could arise while you’re abroad – so choosing a travel insurance policy is essential.
Finding the Travel Insurance Plan for You
There are multiple types of travel insurance policies for you to consider, and we’re here to remind you that you should always check the fine print of your policy to make sure it tailors to your needs. Let’s go over a few policy types, below.
A single trip policy is for those of us who aren’t lucky enough to travel the world on a regular basis – though just because we go on a vacation once a year, it doesn’t mean that we should skimp on our protection. This particular policy tends to be the cheapest of the options available; you can choose the start and end date for the policy, so you won’t be paying for days you won’t spend traveling.
Annual Trip Policy
An annual trip policy or a multi-trip policy is an annual plan designed for the people who don’t like to stay in one place and who take multiple trips. While it’s more expensive than a single trip policy, the benefits are clear as an annual trip policy covers you for as much travel as you want over a 12-month period. Whether you travel regularly for business or take many vacations, this is likely the policy for you.
Be advised, though: you can take unlimited trips on this policy but check the fine print of the policy as some might limit or cap the number of trips you can take. Trip interruption insurance should be part of the travel insurance comparison process when booking an annual trip plan.
Backpacker Travel Insurance
You are looking to find yourself in a faraway land but all you have found is an exotic infection, broken equipment and stolen money. It’s a good thing you took out a backpacker travel insurance policy. A backpacker policy should cover your travels in most countries and come with flexibility for the duration of your trip whilst offering the same benefits of the more standard travel policies.
Lucky enough to be heading out on a cruise? Though there are similarities to cruise travel insurance and the single/annual trip policies available, there are also some differences. The length of time that the policy covers is the biggest and main difference. A single trip policy usually lasts between 30 and 60 days, while the annual multi-trip policy again comes with the possibility of a cap on the time you can spend away. Some cruises can last months at a time hence special terms are required to ensure you have coverage for the duration of your trip. As with all the other types of insurance schemes mentioned above, check which countries your cruise will take you to and ensure that they are covered, as some countries that have concerns for terrorism or political unrest will not be part of your policy.
The required date to purchase travel insurance may vary per policy vendor, however, it shouldn’t be a last-minute thought. The standard deposit date for a travel insurance provider is usually 10-15 days before your planned trip but the usual case is, the earlier the better.
If you are planning a trip to a locale that has been issued a warning for a hurricane (or similar situation that may cause issues for your arrival and departure), your policy will most likely not cover cancellation if your vacation residence has been damaged by the predicted hurricane. However, if you have purchased coverage before the warning was issued, then the insurer cannot amend the agreed terms. The big takeaway here is that you should look to purchase insurance sooner rather than later.
It is possible to purchase last-minute travel insurance when taking a spontaneous trip but you may miss out on some of the benefits of purchasing coverage ahead of time, such as the cancellation insurance.
There is a lot of choice out there for insurance providers and policies. Some are great, some are good, and some are plain bad. Just because it is cheap it doesn’t mean it’s the worst, but then an expensive plan doesn’t mean it’s best. A good policy will offer medical treatment coverage, cancellation coverage, personal liability/legal fee coverage, 24-hour assistance and a high single item coverage limit.
What’s in the Fine Print?
At the end of the day, insurance companies are just another business out there to make money, so the policy offered on the surface may not be as comprehensive as it seems. It may seem like we are repeating ourselves but check that fine print.
Insurance coverage is not fully inclusive with all locations, and different situations call for different coverage all differing per provider.
Some things to watch out for on a policy include but are not limited to:
- Coverage for high-value items. Though your luggage is usually covered, more high-end possessions like laptops, phones and jewelry may not be. Check to see if your policy provider offers luggage insurance for these possessions.
- Alcohol and drug use. Many policies will become null and void if the incident you are claiming on has happened whilst you are under the influence of even the mildest of recreational drugs.
- Check your excess. Depending on the claim you are making you may be expected to pay an excess fee – this is known to be exceptionally high for the backpacker policy.
- Medical emergency evacuation terms. Most policies cover the expense of getting you out of a country in case of serious illness or injury, but not all will bring you home.
- Travel to dangerous locations. War, regular acts of terrorism and incoming severe weather conditions can all void an insurance claim. If you are planning to travel to a location that may fit that description, then do your research.
- Acts of God. The Icelandic volcano eruption of 2010 caused much disruption to passengers who were not covered due to the nature of the event and you may also not be covered if you suffer a similar fate.
How to Make a Claim
Though the process will differ per insurance provider, the principle for making a claim on your policy will remain the same. Always check with your policy provider on what they require before taking any steps, as there can be minor differences in the process of making a claim. If not done correctly, you may hinder your chances of getting your claim accepted. The below outlines some of the common procedures you should take:
- Keep your paperwork together. We know that packing up for a trip can be a pain, especially when it comes to small pieces of paperwork, but for your benefit you should make sure to have at least your policy number and the emergency contact number for your insurance provider with you.
- If relevant to your case, call the police. If you have fallen victim to a crime, then your first call should always be to the police. This is not only for your safety, but some insurers have been known to reject claims if you haven’t contacted the authorities within 24 hours of the crime taking place.
- Contact your insurer. Your insurer should provide an emergency contact number and possibly a medical emergency contact number. If dealing with a medical emergency, you should always call your insurance provider to ensure your medical treatment will be covered. Beware of emergencies led from pre-existing medical symptoms, as these might not be covered.
- Keep receipts. Whether they are related to lost luggage, medical treatment or theft, you should always keep any receipts. This is will be needed as evidence for your claim. If you don’t do this, you may affect your chances of having a successful claim.
- Know when to call. Calling up the insurance provider may not be your first thought. You may even consider leaving it until you have returned home. The time between the event of the incident and when you must make your claim will depend on the insurance provider and the type of claim. You guessed it: here’s where it pays to check the fine print.
Planning for the Unexpected
Last Minute Trip Cancellation
Consider this. You have finished your planning for a family trip abroad. Maybe you and your partner are getting ready to fly away for a romantic vacation. Perhaps you travel for work and have to take multiple trips on a regular basis.
Your flight is arranged, hotel is booked, luggage is packed but as you are nearly out the door, disaster strikes – an unexpected emergency, maybe the death of a family member or your flight was cancelled due to a labour strike. You’re unable to reach your departure point and are forced to cancel your plans. It’s often the case that you’ve already paid thousands of dollars upfront for your trip, and most of that is non-refundable.
In 2016, more then 72 million US citizens planned to travel abroad. Some of them never got a chance to leave for their destination or didn’t had the coverage for all those pre-paid costs. Luckily, trip cancellation is covered on your travel insurance policy and most insurers will cover 100% of your expenses (make sure you read over all the terms to make sure specific scenarios are covered). Some examples of what your policy may cover include:
- Death of yourself, an immediate relative or a travel companion. It’s a grim thought – but are all valid reasons for a last-minute cancellation and would be covered in your insurance policy, though you or your family member may be subject to report the cause of death as pre-existing medical conditions may not be covered. A need to be quarantined due to disease is also a valid reason for cancellation.
- A long wait. On the occasion that you have to cancel a trip due to a delay of more than 12 hours on your outbound flight that is caused by a labor strike, dangerous flying conditions or damage to an aircraft, then you will be eligible to make a claim.
- Public duty. A call to jury service or other forms of summons are mandatory by law and if the dates coincide with your planned trip then cancellation is necessary, and such a trip interruption should be insured.
- Property damage. If your personal property at home suffers damage, your home is subjected to fire/flooding or you experience a burglary and are forced to cancel your trip, then you are able to make a claim. Each insurer will have different terms for a valid claim of this sort; damage of a certain amount, incident occurrence within 48 hours of departure or a police presence could be some of the required terms.
If you’re one of the unfortunate ones that ends up with food poisoning (or worse) and sent to a foreign hospital on your vacation or business trip, we feel you. This is one of many examples of a medical emergency that can take you by surprise. Your own personal health plan may not cover the use of foreign medical facilities, and if this is the case, then investing in travel medical insurance can remove some of the strain on already stressful scenario.
One in three Americans are unsure as to whether their personal health coverage will be valid abroad. The best way to find out is to simply call up your health insurer and check the extent of your coverage outside of the US. The usual case is that your personal policy will cover minor medical costs, though not an emergency evacuation.
Always check what your policy will cover as policy coverage can cater to a wide range of unique situations including:
- Local ambulance fees
- Use of emergency room and facilities including medical treatment
- Cost of hospital room and board
- Medical emergency evacuation
- Accidental death
Being in an emergency situation in a foreign country is disorientating enough without the added pressure of worrying what your final unforeseen medical bill will come to.
It is worth taking note that the standard travel medical policy will not cover pre-existing medical conditions (including mental health) nor regular prescriptions. Your next question might be, “Do you have to declare each pre-existing condition for travel insurance?” Medical conditions such as high blood pressure, recent surgery etc., that might require further assistance services is a “must declare.” We don’t recommend hiding any conditions from your insurer. Any pre-existing condition such as a disease, injury or other condition that has occurred before your departure date should be declared. Travel accident insurance is extremely important to have.
If you were to suffer a medical emergency, whether it was due to an unreported condition or not, and the insurer became aware of it, then they might refuse to cover your claim. You would then have medical expenses to pay on top of the insurance you have paid already.
If You’re a Fan of Extreme Sports
If you are an extreme sports lover, then you may have to seek out a more specific coverage as the standard policies rarely cover for injuries you might get while, for example, water skiing in the Mediterranean or rock climbing in the Alps. Check your policy to see if a medical evacuation is included. Also, never assume that your sport of choice will be covered by your policy, both for your personal health and for protection of your equipment.
Though sports like skydiving and skiing both come with risks, your insurer may consider the risk of one higher than the other, so it is in your interest to check exactly which sports your policy does cover, and whether you have a valid medical evacuation insurance. If your sport of choice is covered, then also confirm the age cap. An insurer may not cover a 60-year-old with a passion for snowboarding, versus a 20-year-old.
Even less strenuous activities may not be covered on your standard policy, such as golf. It may sound ridiculous but medical treatment from a concussion due to a stray ball may not be covered. The best thing you can do is check with your insurer and ask for a sports travel policy, then ensure that policy covers exactly what you plan to do.
Loss of Items, Damaged Goods and a Vacation Ruined
Maybe it goes without saying that you’re likely to take care of your personal belongings as you would when at home, but we often get a bit more relaxed on vacation, which is perhaps when a theft or loss might occur. The insurance company will want to make sure that it wasn’t your fault in order to guarantee coverage. If you cannot prove that you took the necessary measures to properly secure your belongings, then the insurance provider may not pay out.
This may seem like common sense, but while on vacation, take extra care to watch your valuables or lock them away. Also, don’t carry loads of cash on you, and maybe risk looking a bit silly by carrying your backpack in front of you. Failing to take these precautions could render any damage or theft claim void or may minimize the ultimate pay out.
Let’s take the example of leaving your luggage visible in the rear seat of your car, or your wallet
with credit cards and cash in the car glovebox, while you make a pit stop. If stolen, these items may not be covered. Even if you happened to ask a seemingly friendly stranger to keep an eye on your luggage, the insurance company will not see this as a safety precaution, and your claim if something went missing would be denied. Even a simple honest mistake like leaving your phone in a restaurant will not be considered for a claim.
Despite the above, it is possible to make a successful claim when it comes to your personal belongings. If you have cash stolen from your wallet, this can be covered, though only up to a certain amount (coverage amount varies per policy). It’s also possible to claim additional unexpected expenses. If the airline loses your luggage and you need to buy food/clothes to make up for that, then an insurance policy will cover costs provided you have kept the receipts.
In addition, theft of luggage from a vehicle during daylight hours is typically covered provided that it is kept in a locked trunk of the car. A clear sign of forced entry will need to be proven for this claim to be considered.
Of the three types of insurance claims explained above, loss of items is the most difficult to prove. However, with some effort on your end you can ensure that the travel protection you’re paying for will apply. If you have previously experienced an unfortunate situation, it’s better to ask your insurer whether and up to what amount of coverage they offer.
Don’t Commit Travel Insurance Fraud
Though it’s not as widely discussed as drug smuggling or murder, travel insurance fraud is a crime that insurance companies are always on the lookout for. For example, perhaps the cheap purse you bought from a low-end store has been stolen and you want to make a claim for it, but you instead report it as a stolen Louis Vuitton bag. That’s insurance fraud.
You most likely will not go to jail (though there have been cases), however this can impede your ability to take out insurance in the future. Imagine losing the ability to insure your house or car due to your attempt to falsely claim a stolen purse. What’s more, you are not only burdening yourself, but you are also raising the insurance premiums for everyone else. The money for your fraudulent claim has to come from somewhere, right?
Know that it is also possible to commit travel insurance fraud by mistake. For example, if your purse is covered on your home insurance and travel insurance policies, you can only report it stolen on one. If you try to do otherwise, this may be considered attempted fraud.
To insure, or not to insure. That is the question.
We’re fairly confident that we’ve gone over the many benefits of getting travel insurance above, but let’s break down this choice a bit further. Here are the pros and cons of getting travel insurance.
Pros of Travel Insurance
The immediate and most obvious benefit that comes with getting travel insurance coverage is the peace of mind and security. You might have a well-thought-out plan for your trip, but it only takes one natural disaster, medical emergency or flight cancellation for things to go wrong.
As stated earlier, a lot of people do not realize that your domestic health insurance will not cover you outside of America. All it takes is a twisted ankle to require medical attention abroad, which can cost a fortune if you don’t have travel insurance coverage. In general, having any sort of travel accident without proper accident insurance can be extremely expensive – why take the risk? It’s easier to relax on vacation knowing that if something does go wrong, you took the necessary steps to get coverage. Travel insurance plans should be high up on your travel agenda.
Cons of Travel Insurance
It may seem like travel insurance is an all-round good idea – and we don’t disagree. However, there is always the chance that you may never actually use your insurance policy, which to some may seem like a waste of money.
There are also some policies out there that will not apply to your travel situation, but you might still be pushed to purchase them. Again, it’s up to you to check the fine print to make sure you’re only paying for what you need.
Also consider the excess when purchasing travel insurance. Travel insurance excess is what you will have to pay when you make a claim using your policy. For example, if medical treatment totals $1000 and you have an excess of $200, then your insurance provider will only pay $800 and you’ll need to cover the rest. Paying this excess amount might put you in financial trouble (check out our article on financial management if you need assistance). Though the excess amount you have to pay can be reduced by putting more money into your policy, doing so and then never making a claim may seem like a waste of money.
The biggest con with all insurance policies – home, medical and travel – is that in the end, the insurance company may refuse to pay out. It is up to you to gather evidence at the time of the incident to prove your claim as best you can.
Summing it Up
Travel insurance can be an added trip cost to an already expensive vacation, but it will certainly save you money if something were to go wrong along the journey. The best thing is to consider your destination and what exactly you plan to do. Backpacking in Asia will come with different risks than a spending time at a resort in Canada. If travel insurance is something you have decided to invest in, then consider multiple insurance policies and take the time to compare them. Ensure what they offer to you fits your specific needs.
Traveling should be a relaxing experience and you will be grateful for the extra protection. Hopefully you won’t need it but give yourself that peace of mind.
Now tell us: Have you ever had to use travel insurance? Can you imagine what it would have been like if you didn’t have that protection?