This ‘Travel Insurance 101’ tutorial is a good starting point for most travelers.
Travel insurance can be confusing…this guide will walk you through the steps of understanding and buying the best travel insurance.
Over 124 million travelers in the US are covered by travel insurance or emergency services every year.
Travelers list 3 top reasons for buying travel insurance:
Let’s get started!
“What can really happen, right?”
Did you ask yourself this question when you started considering travel insurance coverage?
You face several risks when you travel. Some are small, like having a rainy beach day or leaving an umbrella in a cab.
Others are big, like a costly cancelled trip or getting sick abroad.
Planning a trip means pre-paid expenses like plane tickets, cruise fare, or tour packages.
These expenses are at risk if you need to cancel, but you also risk additional expenses from medical emergencies while traveling.
Someone gets sick and you need to cancel your trip… losing your entire vacation investment
The family cruise on Disney departs in a few days.
Disney offers no refund for cruise cancellations less than 14 days before the trip.
You lose the full cost of the trip, totalling almost $8,000 in pre-paid cash.
A hurricane damages your resort and you need to cancel
You’ve planned the perfect trip to Cancun.
Plane tickets, all-inclusive resort, a charter boat for fishing. You have invested over $4,000.
The day before you are supposed to leave a hurricane hits the island and renders your resort uninhabitable… the hotel has serious damage and the whole area is in shambles.
You lose your $4,000. How will you afford to re-book your vacation?
A family emergency cuts your vacation short and you lose the remaining travel arrangements
Your family just started a two week tour of Italy.
Two days into the trip, your father suffers a heart attack and is in critical condition.
You want to get home as soon as possible to see him, so you call off the rest of the trip and buy tickets on the first plane back home. Your father pulls through after two weeks in the hospital which is excellent news.
What happens to the Italy trip? You would have losses such as:
You lose almost $11,000… and it could be a while before you can afford to go again.
A visit to a foreign hospital leaves you with a big bill
Your family trip to Switzerland is finally underway.
Your husband is struck by a taxi while crossing the street. He needs immediate care and is taken to the closest hospital where he is treated for internal bleeding and spends 2 nights.
Upon checking out, you are given a bill for the hospital expenses.
Your health insurance from home doesn’t travel with you, so you are stuck with paying the bill.
A medical airlift leaves you with a crippling debt
A hiking trip to Chile has quickly turned for the worse.
You slip on a rock and suffer fractures in both legs and a punctured lung. The nearest hospital is completely inadequate to treat you properly so you need to be airlifted 200 miles.
Your injuries are not life threatening and you receive a week of treatment. You are ready to check out of the hospital and get back home.
The bill for the emergency helicopter airlift totals over $45,000, which you need to pay somehow.
Plus, you are in double casts and need a nurse to accompany you home on a special medical flight, which will cost another $12,000.
An emergency abroad leaves you looking for a ‘lifeline’
Who do you call if there’s an accident abroad?
How do you locate a hospital? How do you arrange an ambulance, medical payments, or transportation home after receiving care?
What if you don’t speak the language…how do you know you are getting the best care?
How do you replace a missing passport or lost credit cards?
Stolen luggage leaves you without your prescription medications
Airlines lose bags, bags get stolen, and bags get damaged.
What if you lose your baggage and all the contents? How much would it cost to replace it?
And what if your prescription medications were inside…how do you get a replacement?
The list above only mentioned the common risks travelers face, but there are many more that we will discuss in this tutorial.
Summary: Travel exposes you to the risk of losing money due to cancellation, losing personal possessions, and expensive emergency medical bills.
There are five basic types of coverage provided with trip insurance.
This is the #1 concern with most travelers.
Plane tickets, cruise fare, tour packages, hotel rooms, charter fishing boats, golf greens fees — these get expensive.
If the trip expenses are pre-paid and non-refundable, you risk losing the money you invested if something goes wrong.
Travel insurance covers expenses if you need to cancel your trip for a covered reason.
Need to cancel your trip before you depart? Trip Cancellation Coverage reimburses you for pre-paid, non-refundable expenses covered by the plan.
Insurance companies must provide a list of covered reasons for trip cancellation, and here’s an overview of typical covered reasons.
These are the covered reasons for canceling your trip:
This is only a partial list, but you can see it covers very common situations for cancelling.
The most common reason is the first one…someone gets sick or a family member passes away.
Tip: Cancel For Any Reason (CFAR) coverage will allow you to call off your trip for any reason, as long as you meet the plan criteria.
Need to cancel your trip after you depart? Trip Interruption Coverage is similar to cancellation coverage, and it covers you while you are traveling for the same list of covered reasons.
If something happens and you are required to return home, insurance will reimburse you for the lost portion of your trip…as well as any additional expenses for the last-minute changes in your travel plans (like flight change fees).
This is crucial, and often overlooked.
Travelers often think they are covered for medical emergencies abroad if they already have health care insurance. Within the United States, that will be true.
Outside the US, however, cover for medical mishaps is a big IF. Most domestic health insurance plans do not provide coverage. And Medicare never covers a traveler abroad.
Would you feel comfortable having a family member risk inadequate medical care in a foreign country? What if they don’t have enough money on hand to pay for the care they need?
For cruises, your health insurance from home may not cover you if you’re traveling on a foreign-flagged ship (which is true of most cruise ships).
Travel insurance covers emergency medical expenses when a traveler is outside their health insurance coverage.
Medical Expense Coverage will cover you for accidents, illnesses, injuries, and emergency medical and dental care when you travel abroad.
Even if you are covered for basic emergency care overseas (again, a big IF), your current health insurance provider will almost certainly NOT pay for evacuation or to repatriate your body back to the US.
Medical emergencies can be scary, and the travel medical coverage explained above helps you get care.
But how do you get to a hospital that can treat you? And how do you get home?
Emergency Evacuation Coverage will pay for emergency evacuation expenses such as airlifts and medically equipped flights back home, and oftentimes will transport you to the hospital of your choice for care.
Evacuation expenses can be devastating.
An ambulance to the hospital, an airlift to an adequately equipped hospital, getting you back home on board a medically-staffed flight afterwards…evacuation expenses can easily cost $50,000 for starters.
These coverage are the “smaller things” that are nice to have. Again, this list is not complete but it will give you an idea of some additional coverages found in trip insurance.
Baggage Coverage can reimburse you for your personal belongings if your luggage is lost, stolen or damaged.
Baggage Delay Coverage provides money to buy essential items until your delayed bags arrive, such as a toiletry kit, a swimsuit, or a change of clothes.
Travel Delay Coverage provides reimbursement for unexpected expenses, like an extra night in a hotel or a meal for your family, if your flight is delayed.
This is about having someone to call when things happen.
Medical emergencies, stolen baggage, lost passports, cancelled flights. Every travel insurance company provides 24/7 support for those needs.
And it’s most important when you have a medical issue.
24/7 Travel Assistance Services can help you:
In addition, non-medical assistance may include:
Additional coverage with travel insurance
Trip insurance can also provide:
Life Insurance coverage for accidental death or dismemberment.
Hazardous Sports medical coverage for activities like SCUBA.
Rental Car Collision to replace your personal insurance or rental company policy.
Identity Theft services to help if your identity is stolen while traveling.
Summary: Travel insurance covers cancellations, medical expenses, evacuations, losses or delays, and 24/7 assistance plus a few additional benefits.
There are only two types of travel insurance that most travelers buy.
(In fact, one type of plan is so common…it represents over 94% of travel insurance sales)
Even though there are specialty plans designed for unique needs, they are too specialized for the majority of travelers taking a vacation. The vast majority of travel insurance customers fit into these two areas.
The two basic types of travel insurance are:
Provides the most coverage (including trip cancellation)
When people think of ‘travel insurance’, they are thinking of a Trip Insurance.
Trip Insurance is also called a Package Plan, Travel Insurance, Trip Cancellation Insurance, or Vacation Insurance…but they are all referring to a Trip Insurance.
This type of plan provides the most coverage in a single package, including cancellations, medical emergencies, evacuations, loss or delays, luggage, assistance, and more.
Vacation plans are very popular with travelers because they provide a simple solution to their needs.
Over 94% of travel insurance sales is Trip Insurance
These plans are the top seller because they provide all the coverages that travelers tend to look for.
Trip insurance includes coverage for:
If you are looking for ‘travel insurance’ for your next vacation, you need trip insurance.
Medical coverage while traveling abroad
Regular health insurance plans provide partial or no coverage while you are traveling outside your home country. Travel Medical Insurance plans provide coverage above and beyond your regular health provider.
Travel medical plans are for travelers leaving their home country who are not concerned with cancellation
This type of plan focuses on medical emergencies, evacuation, and sometimes life insurance. A travel medical insurance plan are perfect if you are traveling outside your home country and are not concerned with cancellation, interruption, delays, and baggage.
Travel medical plans focus on coverage for:
Some types of travel medical plans provide benefits such as medical coverage for pre-existing conditions, multi-trip and renewable protection, emergency medical evacuation, and coverage for long-term travel abroad.
Beyond the two basic types, there are specialized plans to meet unique needs, and we want to at least mention them here.
Evacuation plans focus on emergency evacuations, and are often sold on an annual basis as a membership. With an evacuation plan, the company arranges transport, and you won’t lose your savings to a costly emergency medical evacuation
Accident plans provide life insurance style coverage for travelers. It pays benefits if you should have a serious injury that results in dismemberment or loss of life. Benefits paid by these accident plans are in addition to any benefits paid by separate life insurance plans.
Trip insurance plans are best because they combine the most coverage in a single plan
The vast majority of travelers choose a vacation plan because they provide the most coverage in a single plan.
We have discussed how the right travel insurance coverage can protect your vacation and give you peace of mind.
You’ve also learned about the 2 most popular types of travel insurance, and how trip insurance plans are by far the most popular choice for travelers.
The next step is to pick a plan, but first we need to get back to the topic of coverage.
Each travel insurance company has a variety of plans to choose from. These plans will each have varying coverage, which makes some plans more affordable and other plans higher priced.
When you start comparing plans, you will need some criteria to help you prioritize and narrow down your choices.
Use a list of coverages that you think are the most important for your trip. You might also factor in minimum coverage amounts on certain coverages like medical expenses.
For example: A family taking a Disney cruise in September might have the following coverage criteria:
This list of coverage criteria will help the family choose a plan that meets their needs. They will be able to filter out plans that do not have these minimum criteria, making the choice easier.
This is not a complete list of coverage, but simply a prioritized list of the most important coverages for their trip.
Loopholes and ‘small print’ drive people crazy.
An insurance policy is a legal contract. The coverage, exclusions, and ‘small print’ of the insurance plan are available to read in something called the policy, certificate, or description of coverage.
Many travelers buy insurance and assume ‘everything’ is covered, but as with all insurance plans that’s not the case.
Travelers get frustrated if a claim is delayed or denied, and assume that they have been cheated because of a ‘loophole’.
These frustrations could be avoided by understanding the policy, knowing what is covered, and what is not covered.
Here are the most common ‘loopholes’, and how to avoid them:
No insurance plan can cover ‘everything’.
When we discussed travel insurance coverage earlier, we mentioned a list of covered reasons for trip cancellation.
This list includes reasons like someone getting sick, a hurricane, being laid off, a terrorist incident, and more.
Companies list the covered reasons in the plan’s policy, certificate, or description of coverage. If it is not on the list, it will not be covered. If insurance companies covered ‘everything’, some people would take advantage by buying insurance for a trip they already know they need to cancel, and then make up a reason.
Want to be covered no matter what the reason?
Get the optional “Cancel for any reason” rider available with many plans, which costs more money but will let you cancel a trip for any reason including simply not wanting to go. Some plans include this coverage if the plan is purchased within a certain time frame.
The bottom line: Read and understand the list of covered reasons in the policy, and if in doubt select the optional “Cancel for any reason” rider or a plan that includes that coverage.
This one is complicated, but there is a simple solution.
A pre-existing condition is something that happened (or started to happen) before you were insured. Insurance is meant to cover sudden and unexpected events, which excludes any event that has already taken place.
Insurance companies need to exclude pre-existing conditions from coverage; otherwise you could buy insurance coverage after you know you cannot travel. That would be like a casino taking a bet after the cards are turned over.
Companies do provide a way to get coverage for pre-existing conditions.
A waiver to the pre-existing condition exclusion can be included with many plans.
The conditions are typically 1) you need to buy insurance soon after your first trip payment, 2) you need to be healthy when you buy insurance, and 3) you need to insure the full amount of your trip.
The bottom line: Only buy a plan that offers a waiver to the pre-existing condition exclusion, and make sure you meet the requirements for it to apply.
Every insurance plan has exclusions.
The plan’s policy, certificate, or description of coverage has a section entitled General Policy Exclusions (or something similar).
This section gives you a list of the situation in which they will not cover you, and they are very specific.
For example: You will not be covered for loss caused by ‘self-inflicted injury’, ‘driving in a motor competition’, ‘’bungee cord jumping’, ‘any criminal acts committed by you’…you get the idea.
Some exclusions are more common than others, for instance, pregnancy-related issues or loss resulting from intoxication.
The bottom line: Read and understand the list of exclusions in the policy, certificate, or description of coverage.
When a claim is filed, there is paperwork that needs to be submitted.
If a claim is delayed it is often because the company does not have the required paperwork from the insured, or from a doctor, a hospital, etc. The faster they get the required paperwork, the faster your claim can be reviewed.
Also, it’s vital to remember that cancellations must be recommended by a doctor in writing. Coverage for cancellation does not include a parent thinking their child’s cold will make the trip unpleasant for them.
The injury or sickness needs to result in a doctor recommending the trip be canceled. The policy certificate outlines the various documents that will be needed for coverage.
The bottom line: Contact the insurance company as soon as you have any issue, and start saving all receipts and documentation
If you are already sick, it’s too late to buy insurance.
If the hurricane is already named, it’s too late as well.
Insurance cannot be purchased after something has happened. Otherwise it couldn’t work for the company. Again, it’s like a casino taking a bet after the cards are turned over.
Also, certain coverage depends on you enrolling sooner rather than later.
Not only will you will have the longest period of coverage for cancellations, but you could also be eligible for benefits like a waiver for pre-existing conditions, ‘cancel for any reason’ coverage, hurricane coverage, and more.
The bottom line: Get your travel insurance as soon as you make a trip payment
These are the travel insurance questions that every traveler asks.
Travelers make assumptions about their coverage, or they completely misunderstand their coverage.
We have compiled a list of the questions most commonly asked by travelers looking for travel insurance.
Here they are:
No, not in the way most travelers want it to.
Credit cards that have ‘travel insurance’ provide little coverage, but nothing in comparison to a separate policy from a travel insurance company.
Some cards provide cancellation coverage, but with an annual limit ($1,500-$2,500 per 12 month period), and the list of covered reasons is limited. Interruption coverage is limited as well, as is travel delay coverage.
Most importantly though, is that almost no credit cards provide medical expense or evacuation coverage.
Not completely. Most regular health insurance plans provide partial or no coverage while you are traveling in another country. For Medicare, there is never coverage abroad.
Countries with ‘universal health care’ might assist with minor needs, but they are under no obligation to do so. In the event of major or ongoing medical expenses, they would cease to help, and they would never pay to evacuate you or help you return home.
A little. It depends on when you cancel, but generally you won’t get much back.
Most cruise companies have a declining refund schedule where they refund less and less the closer to the departure date, until they refund nothing at all. Generally within 2 weeks there is zero refund, and even canceling a month before will usually only get you a 25% refund.
We have a list of the best cruise travel insurance plans that compare all of the different coverage and pricing.
Yes, many plans cover hurricanes and weather under trip cancellation coverage.
To be covered you need to 1) make sure it is listed as a covered reason, 2) buy before the storm is named, 3) insure for the full trip cost, and 4) some plans require that you buy soon after your trip payment to avoid the waiting period.
Yes, many plans offer a waiver that removes the pre-existing condition exclusion.
To be covered you need to 1) buy your plan soon after your first trip payment, 2) insure for the full trip cost, 3) be medically cleared for travel at the time of purchase.
Insurance costs 4-8% of the trip cost (pre-paid, non-refundable expenses).
Basic plans can be very budget-minded at less than 4%, and premium vacation plans can be over 12%. Travel medical insurance is sold on a trip=length basis, and can be as little as dollars per day.
Within days of making your initial trip deposit.
There are many benefits to purchasing the plan sooner, including maximizing the period of cancellation coverage, and being eligible for pre-existing condition coverage and hurricane coverage.
The companies featured here are companies that have years of experience with solid AM Best ratings of financial stability, and they comply with a Zero Complaint Policy.
A 100% refund of premium within the Free Look Period is guaranteed by all companies. This allows travelers to review their policy and return it for any reason with the allowed time period (sometimes less a small administration fee $5-$8) as long as the traveler has not filed a claim or left on their trip.
Travel insurance can be quoted and purchased instantly online using a credit card.
Since travel insurance is a temporary insurance product, there is generally no underwriting period or medical examination required. You can get a quote online, buy with a credit card, print your email confirmation, and you’re all done.
What happens after you purchase travel insurance?
You have seen how to pick the right plan based on your needs, and discovered the common ‘loopholes’ of travel insurance and how to avoid them.
This is a continuation on that theme…making sure you have the coverage you need for your trip.
Here’s what to do after you purchase a plan:
You will receive an email confirmation after your purchase your travel insurance plan.
This is your confirmation of coverage, and will include general information about your plan including the policy number and effective dates.
Most importantly, it includes emergency contact numbers so you can call the insurance company with any issues during your trip.
Print it out and carry it with you, and it is a good idea to carry an extra copy in a different bag.
Keep another copy in the ‘cloud’ on your email server or Google Docs so you can access it from anywhere in the world.
All travel insurance companies provides a Free Look period, which is a set number of days after purchase where you can review your plan and return it for a full refund if you are not satisfied as long as you have not filed a claim or left on your trip.
Take advantage of this time to read the policy, certificate, or description of coverage and make sure you fully understand the coverage in the plan.
This is another part of using your Free Look period wisely. The policy, certificate, or description of coverage will have a section of Exclusions that lists cases in which coverage is not provided.
Read this section and make sure you understand the coverage fully.
This is very important.
If you have any situations where you think you will have a claim, contact the insurance company immediately.
Think you need to cancel? Call the company. Hurricane heading for your resort? Call the company. Get sick abroad and need a doctor? Call the company.
The insurer will be able to advise on your situation, answer coverage questions, and arrange support if necessary.
24/7 phone support is one of the best coverages provided with travel insurance…you should use it.
We have discussed how to select a plan based on your needs using your coverage criteria, and gone over some of the most commonly asked questions about travel insurance.
Now it is time to get travel insurance quotes and compare plans.
Here are 4 steps to get quotes, narrow your choices, compare plans, and buy:
The first step is to get quotes from all companies using a comparison tool.
You’ll enter a few trip details and get a list of quotes from all major companies at the same time.
The next step is to narrow your choices.
On the left side of the results screen, you will see a section for ‘Filters’. Using your coverage criteria, select the filters for coverages that are most important for your trip. There is a list of the most popular filters, as well as a complete list below.
Some selections will allow you to enter a minimum coverage amount (see Emergency Medical to the right for an example).
Checking these boxes will ‘filter out’ plans that do not meet your criteria. You can select as many as you like, but 2-3 is a good start.
You can also remove filters in the Filters Selected section at the top.
Now that we’re looking at plans with the right coverage, we can organize them.
On the top-right of the results screen, you will see a a ‘Sort’ drop-down box.
Click this drop-down to sort by price, company, or coverage. Many travelers like to sort by ‘Price Low to High’, but if you are looking for a particular coverage or company you can select that as well.
Finally, we’ll compare our final choices side-by-side.
Next to each plan company logo, you will see a ‘Compare’ check-box.
As you look through plans, check these boxes for plans you want to compare side-by-side. You can check as many boxes as you like, but 4-5 fit on a screen nicely.
Once you have selected more than one, a ‘Compare Now’ button will appear next to the check-box.
Click this when you are ready to compare plans. This will display the selected plans side-by-side.
You can compare prices, coverage, coverage amounts, and plan ratings.
See how the plans compare to each other. Look at coverage amounts, paying close attention to your coverage criteria.
At the top is a ‘Remove’ button. Click this as you eliminate plans based on your needs.
The plans will be removed from the comparison, leaving the remaining plans for comparison.
You can also click to see the plan Certificate, Email it, Print it, or add to your Favorites.
Finally, the ‘Buy Now’ button will take you to the product purchase screen.
Damian Tysdal is the founder of CoverTrip, and is a licensed agent for travel insurance (MA 1883287). He believes travel insurance should be easier to understand, and started the first travel insurance blog in 2006.