Whether you’re planning a once-in-a-lifetime vacation or a cross-country journey to attend a cousin’s wedding, you may be wondering when or if it’s necessary to purchase travel insurance. The best response is probably that it depends on how much you can afford to lose. You can make an informed decision about whether or not to buy travel insurance if you know what it is and what it pays for.
How does travel insurance work?
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Travel insurance is a type of insurance that is designed to protect you against dangers and financial losses that may occur while you are traveling. The risks range from little inconveniences like missed airplane connections and delayed luggage to more serious problems like injury or serious sickness.
What is covered by travel insurance?
Travel insurance can cover a wide range of possible damages and losses, depending on how much coverage you choose.
Injuries or illnesses
Travel insurance can help protect you against medical bills incurred while traveling that are not covered by your standard health insurance. Most health insurance policies do not provide full coverage in foreign countries, and some plans, including Medicare, do not provide any coverage at all. Travel insurance supplements standard health insurance and can help cover medical expenses if you become ill or injured before or during your vacation.
Lost luggage that has gone missing
Travel insurance can assist in covering the costs associated with lost or stolen luggage. This is especially advantageous if an airline misplaces your luggage, as it can be quite difficult to obtain compensation for missing luggage. The Department of Transportation (DOT) mandates airlines to compensate passengers up to $3,300 for misplaced baggage in the United States. In international countries, this amount is limited to $1,750.However, passengers must submit receipts attesting to the value of the lost luggage and their contents in order to obtain those maximum amounts. Additionally, some airlines require a claim to be submitted within 21 days.
To compound matters, the Department of Transportation does not define when baggage is officially lost (as opposed to simply “delayed”). Overseas, a bag is not deemed “lost” until it has been missing for 21 days. Airlines must give people who lose their luggage enough money to buy clothes, medicine, and toiletries if their bag isn’t there on time.
Cancellations at the last minute:
Travel insurance can assist in covering the costs associated with trip cancellations. The majority of resorts and cruise lines will not provide a complete refund in the event of a cancellation. If you cancel two weeks or more before your vacation, most resorts will charge you a cancellation fee; many cruise lines will only reimburse you 25% or provide you with half credit toward another cruise. If you cancel within two weeks of your vacation, you will receive no reimbursement from the majority of providers. Unforeseen events occur, and you want to be prepared.
Protection that goes beyond the terms of your credit card
Certain credit cards offer limited cancellation and interruption coverage, with annual limits and restrictions (if they offer cancellation and interruption coverage at all). However, few credit cards cover the most costly travel risks, such as medical expenses or evacuations, which can be covered by travel insurance, but not all credit cards do this.
What may or may not be covered by your travel insurance coverage?
It’s critical to understand that, while there are numerous reasons to purchase travel insurance, certain items may be excluded from coverage. If you have a pre-existing condition, seek a plan that offers a waiver for pre-existing conditions. If you’re visiting a region prone to political instability, inquire about the coverage provided by your insurance if you decide to cancel due to the area’s troubles. Certain instances of tour operator default due to financial difficulties are covered by travel insurance coverage. Before planning your vacation, inquire about how that is handled.
What is the cost of travel insurance?
The cost of travel insurance is mostly determined by the expense of the trip and the traveler’s age. A 35-year-old should expect a policy to add between 3% and 5% to the cost of a vacation, while a 60-year-old can expect to pay roughly 10%, according to Jonathan Harty, owner of a travel business in Massachusetts. It may be a modest fee to pay to protect your investment in a honeymoon or a once-in-a-lifetime vacation.
Which type of travel insurance should you purchase?
Consider the reasons you might need to cancel your trip before looking into travel insurance. Is a trip delay caused by inclement weather going to significantly alter your vacation? Is it feasible that your school year may be prolonged or that you will be required to travel for work instead? Is the country you’re visiting a conflict zone? Are you worried that the Centers for Disease Control and Prevention will put out a travel alert for your vacation spot?
All of these are legitimate reasons to cancel a vacation or seek insurance coverage. However, not all travel insurance policies cover these risks.
insurance that is subject to cancellation for any reason.
If you purchase this coverage and wish to cancel it due to a hangnail, you may do so. Generally, the insurance company does not require an explanation. They only need you to cancel within a defined time window, often 48 to 72 hours prior to your departure.
You’ll give up convenience in exchange for a reduced reimbursement rate. With “cancel for any reason” insurance, you’ll receive a percentage of your non-refundable, pre-paid trip expenditures, often around 70%, without providing a justification. This is occasionally available as a stand-alone policy or as a rider to comprehensive coverage.
Travel insurance that is comprehensive
This is the standard policy that most people envision when they consider trip insurance. Generally, the complete package covers delays, cancellations due to illness or death, lost luggage, and certain emergency medical bills. Simply read the fine print to ensure you understand what it covers.
