How To: Avoid Getting Tricked By Travel Insurance
Travel is inherently unpredictable. Sooner or later, everyone who takes to the skies gets confronted with delays caused by weather, computer outages, or airline mismanagement. Then there are issues like illnesses, schedule changes, and other unforeseen events that can impact your travel plans. And sometimes you simply miss a flight or make a mistake when choosing the dates for a hotel reservation.
Travel insurance can be useful in helping you confront these inevitable schedule setbacks and turning them from stressful ordeals into minor inconveniences.
Unfortunately, travel coverage is not as straightforward as other forms of insurance. Policies differ in fundamental ways, and fine-print details can leave you stranded in an airport or having to purchase another flight or hotel room without getting a refund for previously-booked tickets or accommodations.
On the other hand, you could also overprotect yourself by getting redundant coverage (so that you are covered for the same thing by two or more different policies).
Getting the right travel insurance without overspending takes research and a healthy dose of common sense.
What are the different types of coverage?
On the most basic level, there are three types of travel insurance: cancellation, interruption, and medical/accident.
One important distinction that insurance companies often make is between cancellation and interruption coverage. One is designed to protect you before you leave, while the other provides coverage while you travel.
Cancellation insurance can be especially useful for traveling internationally or heading to a place that recently experienced political instability. The possibility of unrest is not limited to war zones. Some of the world’s most popular tourist destinations, including Thailand, Egypt, and Turkey, have experienced protests, conflict, and infrastructure shutdowns in recent years. These events have resulted in significant delays for tourists.
Trip cancellation policies offer payouts when you cancel a trip before leaving. To get a payout, you need to cancel because of a provable reason that the policy covers. These reasons usually include illness, bereavement, job loss, or some sort of disaster or unrest in your destination. If you simply change your mind about going on the trip, the policy probably won’t cover you.
Trip interruption coverage
Trip interruption coverage focuses on providing accommodation and helping you book flights if a disaster occurs during your trip or if your flight is canceled. If you have connecting flights, then one cancellation could throw a proverbial “wrench” into your entire itinerary by causing you to miss subsequent flights and reservations.
In the event of such an interruption, coverage will kick in until you get back on your planned itinerary. For a small premium, you can get a policy that offers concierge service. If you purchase this service, the insurance company (or rather a contractor who works for the insurance company) takes care of booking the hotels and flights for you. These policies generally promise to reimburse you for basic expenses that you incur during a delay.
As with cancellations, a policy may not cover certain types of interruptions. Most policies will not offer payouts, for example, if you oversleep or if you are held up at the TSA checkpoint (this is a big catch for fliers at some airports). If you miss your flight for these reasons, you are often at the mercy of your airline. They will usually book you on the next available flight, but they may charge you a fee to change your ticket.
In general, both airlines and insurers expect you to make a reasonable effort to get to your flight on time. Neither cancellation nor interruption coverage buys you the right to oversleep or roll up to ticketing 15 minutes before your departure time.
A lot of policies offer both cancellation and interruption insurance, but not all do. You need to read the find print to make sure.
What about medical insurance?
The type of medical insurance coverage that you need depends on where you are traveling. If you travel internationally and you do not have coverage from your regular health insurance provider, you may want to get medical travel insurance.
Some policies cover medical emergencies and treatment in your destination, while others provide emergency evacuation. Many policies offer a combination of both emergency treatment and evacuation. The travel insurance comparison experts at Squaremouth suggest at least $50,000 in medical emergency coverage and $100,000 in emergency evacuation coverage.
You can double those amounts for travel to remote places. Emergency evacuation policies may not take you to your home hospital. Instead the policy may state that you (or other insured people on the policy) be taken to the closest hospital that can provide reasonable treatment.
If you travel often, you can get an annual travel medical/evacuation policy for cheaper than if you bought several shorter-term policies.
Also, large travel insurance providers such as Allianz offer package policies that provide cancellation, interruption, and medical benefits. These policies can be cheaper than purchasing coverage for different aspects of your trip. However, some of the coverage in these packaged policies can be redundant, so an a la carte approach might still be cheaper.
What about your credit card?
Some credit cards offer travel insurance if you purchase your tickets, make hotel reservations, or rent a car with the card.
The obvious step, which some people manage to forget in the excitement of finally pulling the trigger on their long-awaited travel plans, is that you have to make the reservations and purchases with the card that offers the insurance. If you use a different card, you won’t be covered.
To add to the confusion surrounding travel insurance, coverage varies tremendously from card to card. Some may cover weather-related cancellations, delays, or cancellations due to death of a family member or a serious illness. Most cards, however, do not offer refunds if you cancel a trip due to a preexisting condition or harder-to-prove situations such as a break-up with the boyfriend/girlfriend with whom you were planning to travel.
It’s usually pretty easy to find out what kind of coverage your card company provides. If you do not want to haul out a magnifying glass and read the fine print, you can simply call your card’s customer service line and get the details from a call center rep.
What kind of details should you ask about? If there is a danger of a specific type of event occurring, ask about coverage for that situation.
For example, if you are traveling to the Caribbean during hurricane season or flying to Chicago in the middle of winter, you may want to call your card to ensure that the specific type of weather that could affect your trip is covered.
Another thing to ask about is the benefits that your card offers in case of a delay. Some companies cover expenses if your flight is delayed overnight. They will pay for a hotel and cover food and other costs during the delay. Yes, airlines sometimes offer hotel and meal vouchers, but depending on the situation, they may not be required to do so.
Typically, but not always, the more comprehensive trip coverage is offered by cards that have significant annual fees. You need to check before you invest in such a card. The Chase Sapphire Reserve has a $450 annual fee, and it offers cancellation and interruption insurance, but the $450 American Express Platinum does not (though other AmEx cards such as the Blue Cash Preferred and Delta Reserve do). Second-tier premium cards, which typically have $95 annual fees, offer some travel coverage.
On final catch: some card issuers make the distinction between travel cancellation/delay insurance and travel accident insurance. You need to make sure that “travel insurance” that they advertise is for cancellation and delays NOT ONLY for travel accident insurance.
Paying for peace of mind
One final thing to consider is peace of mind. Having evacuation insurance could be a comfort if you are traveling to an unfamiliar place abroad. And what about that off-season vacation in the Caribbean? You’ll save money or fares and hotels, and insurance can put your mind at ease and protect you in case a storm hits the region.