The Ins and Outs of Travel Insurance

Travel insurance – do you really need it?

The short answer is maybe. Travel insurance is intended to reduce the impact of unforeseen events while you travel. Things like accidents, theft, natural disasters, missed flights, and other emergencies (both minor and monumental) can cause significant issues when you are on the road.

Digging in a little deeper, let’s look at some insurance basics. Most insurance offerings cover one the following five things:

  • Baggage loss/theft
  • Flight insurance
  • Trip interruption/cancellations
  • Medical issues (including evacuation and transport of body, in the event of death)
  • Evacuations (due to natural disasters, large-scale accidents, or terrorist-related incidents)

After those situations, you can choose to purchase supplemental coverage for things like political evacuation (coup, anyone?). Supplemental options are usually included in a comprehensive policy (more on coverage types below).

Pricing of travel insurance policies fluctuates widely. According the valuepenguin.com, the average cost of comprehensive travel insurance is $165. Experts state that most insurances cost between 5% and 11% of the total trip cost. Age also factors into the cost, just like health insurance.

Every travel policy is different so it pays to read the fine print (I know, BORING, but necessary). Policies may have different types of coverage depending on where you are going, what you want to cover, your age, and other factors. Now, let’s break down the types of travel insurance policies available:

  • Baggage Insurance This covers luggage that is lost, delayed, or damaged.
    • Included by airlines when you check your bag but be sure ton research the liability limits for your airline.
      • If you have invested thousands in some gorgeous luggage, look into buying a supplemental “excess valuation” policy directly from your airline.
    • Almost always has a cap on reimbursement for things like camera equipment, jewelry, and electronics.
    • Check your home or renter’s insurance policy, since most offer coverage of your possessions anywhere you travel.
    • If you plan to travel by train, consider a specific rail protection insurance policy purchased from the rail line.
    • ALWAYS take the following photos of your luggage before your trip:
      1. Exterior of the bag next to you for scale/size reference
      2. All the contents you plan to pack in the bag. Just lay them out on your bed or the floor and snap a photo. Then, once they are packed….
      3. Take a shot of the interior of your bag after it’s packed before you close/lock it.
      4. I go one step further and list all items in an Excel document, then email it to myself and print a copy that goes into my bag. I use it to pack quickly and efficiently AND to have back-up in case of loss. This may sound like overkill, but on the rare occasions (twice) my bag has been lost, the photos and list made short work of any push back from the airline and expedited my claims <mic drop>!
        IMG_2623
  • Flight insurance Essentially, life insurance that covers you for plane crashes.
    • Most experts agree that this is an unwise investment.
    • Usually, any life insurance policy you have will pay out to your heirs after a plane crash.
      IMG_2620
  • Trip-Cancellation or Interruption Insurance – Cancellation means you don’t start your travel at all whereas, interruption means you’ve started your travel but have to cut it short.
    • Best for trip where you’ve paid a LOT upfront for scheduled things like tours, safaris, cruises. It’s also really useful if you or your traveling companion have chronic or recurring medical issues and may be ill by the time the trip comes around.
    • Limited coverage of this type may be automatically included as a perk of the credit card you use to purchase your trip elements (flights, hotels, cruises, etc.). Again, read the fine print.
      IMG_2619
  • Medical Insurance – Covers medical treatment abroad.
    • You can buy a primary travel medical policy to cover emergency costs or supplemental policy to cover the expenses that your primary healthcare doesn’t cover.
    • If you have health insurance, be sure to check if you are covered for overseas travel BEFORE you buy an external policy.
  • Evacuation Insurance – This is a policy to cover the expenses involved in getting you out of an emergency situation.
    • Evacuation is typically not covered by regular medical-insurance plan.
    • If you are traveling to a remote area or dangerous location, this is a good policy to buy.
    • Always ask if the policy “medical repatriation” which means it covers expenses to get you all the way home when medically necessary.
    • It is likely that this insurance will not cover adventure or extreme sports, so when you break your leg doing a backside 1260 off the heels or a cab 1260 shifty roast beef, don’t even try to claim evacuation.
      IMG_2622

Other Policy Types:

  • Collision coverage for car rental/car hire. Your personal auto insurance policy may provide international coverage, so be sure to check before you buy the upgrade.
  • CFAR (Cancel For Any Reason) policy. As the name implies, this expensive option allows you to cancel your trip for any reason with, at least, partial reimbursement

IMPORTANT TO NOTE: When the State Department issues a travel warning or evacuation notices for non-essential personnel from high-risk countries, your trip cancellation and medical insurance policies will probably not cover your losses, so look into supplemental coverage when planning to visit an area of political instability.

What Company Should I Use?
There are a lot of companies that offer travel insurance policies. The three I have heard good things about are (alphabetically) listed below but I advise that you do your own research and really dig in to find the policy that works best for you.

  • BHTP – This is who I plan to use in the future. It seems like they’ve upped the level of client-care with a concierge-like approach to service and claims. I also love the website, which makes it easy to get a quote for your destination. High-touch care, easy-to-understand benefits and fast claim submission? What more could you want?
  • Travel Guard – An AIG company, this is a good choice for comprehensive coverage but they seem to have very mixed reviews. Rick Steves does give them a mention, so take that as you will.
  • Travelex – This is who I have used in the past and, while I didn’t have to submit any claims, I liked the policy options available and the cost was good. These are the same folks that do currency exchange worldwide.

Final thought – Travel insurance may be a necessity for some travelers and pointless for others. It all comes down to understanding what you have, what you need, and your tolerance for risk.

What do you think? Is travel insurance worth it? Let me know in the comments.

As always, this is an unsponsored post and my opinions are free from recompense or affiliation.

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