It's the final countdown to your next vacation. You’ve got your passport and tickets, every bathing suit or pair of socks you own, and enough mosquito repellent to cover an elephant. But aren’t you forgetting something?
Whether exploring tropical beaches or cobblestone streets, travel wouldn’t be fun without a few surprises. But sometimes the unexpected can leave you whimpering in a hospital bed instead of exploring the unfamiliar. That’s why travel insurance, an important safety net if things go wrong, should be right at the top of your list.
Determining What Kind of Travel Insurance You Need
Most travel insurance premiums are based either on the length of your trip or a percentage of your trip's cost. They can also fluctuate depending on your age, general health, plans to participate in high-risk sports, and destination—with the world divided into different zones.
How Long Will You Be Gone?
There are hundreds of travel insurance policies available. Before you buy, you need to know what type of policy you want, and what you want it to cover you for. To do so, start by considering how long you’ll be away:
- Short-term or single trip covers trips up to 90 days
- Long-term or multi-trip covers trips up to one year
- Expatriate covers U.S. citizens living overseas
- Foreign National covers non-U.S. citizens
If you travel abroad more than twice a year, annual holiday insurance or multi-trip insurance is usually better value. You also have the benefit of being able to take trips at short notice without having to arrange insurance.
Most annual and single trip policies cover you for 90, 120 or even 180 days. If you’ll be away for longer, some providers offer a long-stay policy to provide up to 18 months of coverage.
Tip: It’s also a good idea to look for insurance that can be extended, should you decide to stay away longer than you originally planned.
Where Are You Going?
Policies are often segmented by geographic area, such as:
- Worldwide excluding the US
When shopping for travel insurance, be sure to watch out for the following:
- In travel insurance terms, the definition of “Europe” is different than what is technically defined as Europe, so you need to check that where you’re going counts as Europe for your travel insurance company. For example, Switzerland is not part of the EU but is part of Europe coverage.
- Make sure you’re covered for day trips over national boundaries – for example, Greece into Turkey or Gibraltar over to Morocco.
- If you visit a country after the State Department has warned against traveling there, your travel insurance may become invalid. To check for warnings, visit U.S Passports & International Travel.
What Can Travel Insurance Cover?
Choosing a suitable policy will give you peace of mind. At best, it could save your life. So when considering which policy is right for you, it pays to look at the coverage details:
Having to cancel or cut short a holiday is bad enough. Ending up out of pocket as a result is pure misery. As the name implies, trip cancellation insurance (sometimes known as trip interruption insurance or trip delay insurance) covers you in the event that you or your traveling companions need to cancel, interrupt or delay your trip.
Policies differ in terms of what reasons are acceptable for missing your flight, so be sure and check the details before buying. Additionally, coverage should include the cost of getting you home.
For most of us, this is probably the most essential part of any coverage. We all want to know we're going to be okay should some medical disaster befall us in a far-off land. Foremost, look at how much coverage a plan offers and under what circumstances the coverage applies.
Look for coverage that includes emergency evacuations and the return to your home country, should you need treatment there. Also, check the policy regarding existing medical conditions, as you’re unlikely to be covered for these while abroad, and it’s important to disclose them to your insurance provider.
Tip: The medical portion of travel insurance is more about emergency care than being a replacement for your normal health care. A lot of people purchase insurance thinking it is, then get disappointed when they find out they can’t go get an annual physical with it. Travel insurance is accident insurance. It is there to protect you in case of emergency and, if need be, get you home in a hurry.
Lost, Damaged or Stolen Property
You should never assume that any valuables will be automatically covered by your insurance policy. Common items like passports, phones, laptops, cameras, tablets, sunglasses and jewelry are often excluded from coverage, particularly when it comes to the lower-level/basic policies.
When shopping for travel insurance, confirm how your luggage is covered, particularly for theft or damage. Are there individual item limits? What are they? Are electronic devices included? Is theft from inside a car excluded? If anything is unclear, call the insurance provider—they are legally obligated to unravel the fine print in simple terms.
Other Important Coverages
You might think it’s ‘fine print’ but you really don’t need a magnifying glass to identify those few additional inclusions that can make all the difference in the quality of your coverage. Here’s a rough guide to travel insurance extras:
- Travel Delays: Terrified of spending your precious vacation days like Tom Hanks in The Terminal due to unforeseen delays? If you want coverage, count on at least $250 per day and keep an eye out for exclusions relating to strikes, natural disasters, war and terrorism. But don't expect to be showered with cash for a couple of hours spent sweating on a grounded aircraft: you are unlikely to be covered for delays less than 24 hours.
- Airline or End Supplier Insolvency: If the people who took your money go bust, this add-on should ensure that you're covered by at least $10,000. Airline or End Supplier Insolvency is a relatively new addition to some policies, so you might have to shop around to find it.
- Car Rental: Travel insurance usually won’t cover the full cost if you’re in an accident in a rental car, even if it’s not your fault. It can help with the excess (the amount you’re liable to pay), but you will need to take out the compulsory insurance provided by the car rental company too.
What Isn’t Covered by Travel Insurance
Understanding what isn’t covered is just as important as understanding what is. Most policies do not cover:
- Accidents sustained while participating in extreme adventure activities such as hang gliding, paragliding, or bungee jumping, unless you pay extra
- Car accidents or injuring someone on the road (called third-party liability)
- Alcohol or drug-related incidents
- Carelessness in handling your possessions and baggage
Bottom line, you won’t get reimbursed if the problem happened because you were reckless, although each company defines “reckless” differently.
Making a Travel Insurance Claim
Make sure you have all the necessary receipts and documentation. For example, if you required emergency dental treatment, you’ll need a note from the dentist that says it was indeed an emergency, along with a receipt for the treatment itself.
Be prepared to wait to receive your money, because even the best companies drag their feet. If the company gives you a hard time, be persistent and ask to speak to someone with more authority. It can take a while to get a claim authorized, but it’s worth it.
Bottom Line On Choosing the Best Travel Insurance
While there’s no surefire way to prevent illnesses or injuries from tearing up your perfect itinerary, travel insurance can save you from distress—or at least from some of the costs, depending on which policy you pick.
Make sure you compare insurance plans to get the right policy for you. Whether you’re a carefree student, trekking across Canada with your family or relaxing on a cruise, weigh your needs against the types of coverage offered. Remember to read all the fine print and consider:
- What's covered and what isn't
- For how long you’re covered
- Geographic limitations
- The overall cost
- The deductible
Travel insurance is a Plan B—not only about ensuring your health, but providing a backup if anything should go wrong. By using the above tips, you can make sure a travel mishap doesn’t cost the world or limit how far you go. Just shop around, keep your details close at hand, and hopefully you'll never need them.