You have left behind the office stress and are finally setting off on the perfect vacation. The weather is fine and your flight is on time. But then your baggage goes missing. Worse still, all your travellers’ cheques were in your suitcase or you fall ill & need to be hospitalized in a foreign country. That is certainly a nightmare. It is why a international travel insurance policy is important. You could be on a domestic or an international holiday. Picking the best travel insurance plan will ensure nothing spoils your perfect vacation.
- 1 What is travel insurance?
- 2 What does travel insurance cover?
- 3 #1 travel insurance is a must: Medical emergencies overseas can be really expensive.
- 4 Do I Need Travel Insurance If I Have Health Insurance?
- 5 Do I Need Travel Insurance If My Credit Card Has Built-in Travel Protection?
- 6 Is Travel Insurance the Same as Cancellation Insurance?
- 7 Does Travel Insurance Protect My Possessions?
- 8 How Can I Save Money on Travel Insurance?
- 9 The Bottom Line
What is travel insurance?
Travel insurance is coverage designed to protect against risks and financial losses that could happen while traveling. The risks range from minor inconveniences such as missed airline connections and delayed luggage all the way to more serious issues including injuries or major illness.
What does travel insurance cover?
Depending on the coverage you choose, travel insurance can cover a broad array of possible damages and losses:
#1 travel insurance is a must: Medical emergencies overseas can be really expensive.
Consider this scenario: On a driving tour through Argentina, a truck slams into your rental car, leaving you with a broken leg and other serious injuries. When you arrive at the hospital, you summon the strength to pull out your health insurance card. The staff just shake their heads. You’ll need to pay up front for treatment — and your medical bills rapidly climb into the tens of thousands. If you require medical evacuation, that cost can hit $200,000 or more, depending on the country you’re in and the proximity to the nearest hospital.
As the U.S. State Department notes, “many foreign medical facilities and providers require cash payment up front and do not accept U.S. insurance plans. Medicare does not provide coverage outside of the United States.”1
When you have travel insurance with emergency medical benefits, it can pay for losses due to covered medical and dental emergencies that occur during your trip. Emergency medical transportation benefits can pay for medically necessary transportation to the nearest appropriate medical facility, as well as the cost of getting you home following a covered injury or illness. The Allianz Global Assistance hotline staff may even be able to arrange payment in advance for covered emergency medical care. The upshot: When you’re wondering “is travel insurance worth it?”, weigh the small cost of buying insurance against the massive costs of a medical emergency overseas.
Travel insurance can help cover expenses stemming from lost or stolen luggage. This is especially useful if an airline loses your bags, as it can be very difficult to get them to pay for lost luggage. In the United States, the Department of Transportation (DOT) requires airlines to compensate fliers up to $3,300 for lost baggage. In foreign countries that amount is a maximum of $1,750. But to receive those maximum amounts, passengers must provide receipts proving the value of the lost bags and their contents. And some airlines require that the claim be filed within 21 days.
To make matter worse, DOT doesn’t define when baggage is officially lost (as opposed to just “delayed”). Overseas, a bag is only considered “lost” after 21 days. For delayed bags, DOT only requires airlines to provide victims with enough money to buy necessities like clothing, medicine and toiletries.
Travel insurance can help cover costs stemming from trip cancellations. Most resorts or cruise lines won’t give you a full refund in the event of a cancellation. If you cancel two weeks or more before your trip, most resorts will at least charge a cancellation fee; many cruise lines might only give you a 25% refund or will give you partial credit on another cruise. If you cancel within two weeks of a trip, with most companies you won’t give any refund whatsoever. Unforeseen circumstances happen, and you want to be covered just in case.
Coverage beyond your credit card
Some credit cards provide limited coverage, with annual limits and restrictions for cancellations and interruptions (if they offer cancellation/interruption coverage at all). However, few credit cards offer coverage for the most expensive travel risks: medical expenses or emergency evacuations, which travel insurance can cover.
Do I Need Travel Insurance If I Have Health Insurance?
Your existing health insurance may cover emergency care during international travel. However, only some health insurance plans kick in when traveling abroad. Before buying extra travel insurance, check with your health insurance company about on-the-go coverage; ask if you must seek preauthorization and which exclusions apply.
Do I Need Travel Insurance If My Credit Card Has Built-in Travel Protection?
Built-in travel protection from one of your credit cards may be all you need for your trip. For instance, if your primary goal is to obtain trip cancellation coverage, then your credit card benefits might be adequate. However, you may want to buy travel insurance if your credit card lacks sufficient medical coverage—or offers no medical coverage.
Is Travel Insurance the Same as Cancellation Insurance?
Travel insurance is not the same as cancellation insurance. However, cancellation insurance is often one component of travel insurance. So, your travel insurance policy may offer reimbursement for a cancellation due to specific circumstances, such as a death. But travel insurance can also cover medical expenses, lost baggage, and auto rental damage.
Does Travel Insurance Protect My Possessions?
Homeowners and renters insurance can cover your possessions when you’re traveling.12 However, that coverage might not be enough to protect valuable items such as jewelry or may not cover the total cost for replacement. Furthermore, filing a homeowners or renters insurance claim might increase your premium.
How Can I Save Money on Travel Insurance?
Don’t go with the first travel insurance policy you come across. Instead, shop around to make sure you’re getting the most coverage at the best price. Also, if you’re booking a trip through a travel agency or tour operator, ask for a package deal, including travel insurance.
The Bottom Line
Buying travel insurance might not be necessary if you’re traveling domestically or going on a refundable trip, or if you carry adequate coverage through a credit card. “We would always recommend getting travel insurance. But if you are extremely elderly or in very poor health, your travel insurance premiums may be expensive,” Puri said.
Travel insurance generally provides “invaluable peace of mind,” Puri said. For instance, travel insurance can be a smart investment if you’re traveling internationally and purchased a high-cost, nonrefundable trip.