Travel insurance is a type of insurance that covers the costs and losses associated with travel. It is useful protection for those who travel domestically or abroad.
According to a 2020 NerdWallet survey of 2,000 Americans, only one in five Americans purchased travel insurance for vacations before COVID-19. But 45% say you’re likely to buy travel insurance for future vacations.
Many companies that sell travel packages also offer travel insurance.
Some travel policies cover damage to personal property, rented equipment, such as rental cars, and even ransom requests.
Major categories of travel insurance include trip cancellation or interruption coverage, baggage and personal insurance coverage, health insurance, and accident or flight accident insurance.
Coverage often includes 24/7 recovery services, such as replacing lost passports, cashless assistance, and rebooking canceled flights.
What Is Travel Insurance?
Many companies that sell tickets or travel packages give consumers the option to purchase travel insurance, also known as travel insurance. Some travel policies cover damage to personal property, rented equipment such as rental cars, or even the cost of paying a ransom. Often sold as a package, travel insurance can include different types of coverage. The main categories of travel insurance include trip cancellation or interruption coverage, baggage and personal effects coverage, medical expense coverage, and accidental death or aviation accident coverage.
Coverage often includes 24/7 rescue services, such as replacing lost passports, cashless assistance and rebooking canceled flights. In addition, some travel insurance policies may duplicate existing coverage from other providers or provide protection for expenses that may be reimbursed by other means.
Trip cancellation or interruption coverage.
Trip cancellation insurance, sometimes called travel interruption insurance or travel delay insurance, reimburses a traveler for prepaid, nonrefundable travel expenses. Providers vary on acceptable cancellation and interruption causes and the amount of reimbursement available. The most common acceptable reasons are illness, a death in the immediate family, sudden business conflicts and weather-related problems.
Trip cancellation is beneficial if you pay more up front than what you are comfortable losing. For example, if you pay $2,000 for a package tour and the tour’s cancellation policy states that all but $100 is refundable upon cancellation, travel insurance will only cover the non-refundable $100. In addition, there is no need to protect a refundable airline ticket.
Baggage and Personal Effects Coverage
Baggage and Personal Effects coverage protects lost, stolen or damaged items during a trip. It may include coverage while traveling to and from a destination. Most carriers, like airlines, will reimburse travelers if baggage is lost or destroyed due to your error. However, the amount of reimbursement may be limited. Therefore, baggage and personal effects coverage provides an additional layer of protection.
The possibility of luggage and personal effects being lost, stolen or damaged is a common travel concern. Many travel insurance policies will pay for belongings only after you have exhausted all other available claims. Your homeowners or rental car insurance may extend coverage outside your residence, and airlines and cruise lines are responsible for loss and damage to your luggage while in transit. Credit cards may also provide automatic protection for delays and baggage or rental car accidents when used for deposits or other travel expenses
Short-term Medical and Major Medical
The two main types of medical travel insurance policies are short-term medical and major medical coverage. Short-term policies cover a traveler from five days to a year, depending on the policy selected. Medical coverage is for travelers planning longer trips of six months to a year or more.
Medical coverage can help with medical expenses, finding doctors and health care facilities, and even obtaining foreign language services. As with other policies, coverage varies by price and provider. Some may cover air travel to a medical facility, extended stays in foreign hospitals, and medical evacuation to receive care.
The U.S. government urges Americans to consult your health insurers before traveling to determine if a policy will extend your coverage abroad. For example, a health insurance policy may cover those insured in the U.S. and Canada, but not in Europe. Some health insurers may also require prior authorization for coverage to remain valid.
Before purchasing a policy, it is imperative to read the policy provisions to see what EXCLUSIONS apply, such as pre-existing conditions, and not assume that the new coverage mirrors that of an existing plan.
Emergency medical care can be redundant. Most health plans pay” usual and reasonable ” hospital expenses if you get sick or injured while traveling, but few pay for medical evacuation. Note that Medicare does not cover expenses outside the United States.
Accidental death and aviation accident insurance.
If an accident results in the death, disability, or serious injury of the traveler or a family member accompanying the traveler, an accidental death and aviation accident policy pays benefits to surviving beneficiaries. The aviation accident policy covers accidents and deaths that occur while flying on a licensed commercial aircraft. General EXCLUSIONS apply, such as death caused by drug overdose, death due to illness, et al.
Accidental death coverage may not be required if you already have life insurance. However, the benefits paid by your travel insurance may be in addition to your life insurance benefits, leaving more money for your beneficiaries
Buying travel insurance
Travel insurance varies by provider in terms of cost, EXCLUSIONS and coverage. The buyer should be aware to read all disclosure statements before purchasing the insurance. Coverage is available for single, multiple and annual trips. Per-trip coverage protects a single trip and is ideal for individuals who travel occasionally. Multi-trip coverage protects numerous trips occurring in a year, but none of the trips can exceed 30 days. Annual coverage is for frequent travelers. It protects for an entire year.
In addition to the duration of travel insurance coverage, premiums are based on the type of coverage, the age of the traveler, the destination and the cost of your trip. Standard policies per trip cost between 5% and 7% of trip cost. Specialized policy riders focus on the needs of business travelers, athletes and expatriates.
Also, when traveling, it is suggested that a traveler register travel plans with the State Department through its free travel registration website. The nearest embassy or consulate can contact you if there is a family, state or national emergency.
In this post COVID-19 world, you should consider it now even if you have not yet purchased travel insurance. The main types of travel insurance include trip cancellation or interruption coverage, baggage and personal insurance coverage, medical expense coverage, and accidental death or aviation accident insurance.