Types of Travel Insurance

When planning for a vacation there are several, often overlooked, aspects that travelers should be reminded of. Truth be told, the last thing on our minds –while preparing for the vacation of our dreams- is obtaining travel insurance, and this is why, in most situations, it becomes a last minute purchase. Before you start packing your bags, even before you begin writing your checklists, you should consider purchasing a good travel insurance policy.

The first thing you should know about travel insurance is the fact that it can significantly reduce financial and health risks associated with traveling abroad. Although chances of accidents are very low, you never know what may happen, and being prepared for unexpected situations is extremely important when you are on foreign soil. Travel insurance covers risks such as missed flights, canceled tours, lost baggage, accidents, illness, travel-company bankruptcies, emergency evacuations and even bringing a body home in case of fatal injuries.

The question on every traveler’s mind is if travel insurance is really worth it. Yes and No. Each traveler’s potential loss varies depending on the type of trip planned, destination, airline and already existent coverage. Today we would like to take a look at the basics of travel insurance as well as the most important plans.

Travel Insurance Basics

There are five major ‘courses’ that one should factor into a travel insurance policy:

  • Trip cancellation and interruption insurance
  • Medical insurance abroad
  • Evacuation insurance
  • Baggage insurance
  • Flight insurance
  • Supplemental policies: identity theft, political evacuation, specialty insurance (mountain climbing, SCUBA, motorcycle etc.)

Types of Travel InsuranceIn general, an agent will offer you a combination of these 5 elements, plus supplemental policies. At the moment, there are many companies that offer comprehensive packages without asking you about your primary coverage policies. This is great because it will save you from out-of-pocket expenses.

As far as prices are concerned, we can honestly not give you a real estimate because packages vary ever so slightly, depending on health condition, age etc. Age is probably the number one factor that will increase the price of your travel coverage. In most situations, the cost of a policy costs between 5 and 12 percent of the trip’s value.

Pay close attention to the type of reimbursement offered by your policy. For example, some trip cancellation policies are reimbursement only, which means that you will have to pay for your expenses yourself, and then submit specific paperwork to get your money back. If you have proper medical insurance for abroad, you will be able to arrange to have doctor and hospital bills covered by the insurance company. You should, however, contact your insurance company as soon as a problem occurs. Not doing so might result in the cancellation of your policy.

Most Important Types of Coverage

Below you can find brief descriptions of the most important types of coverage that you can get. Be warned – the following information can only serve as guideline, because policies can differ from one state to another, and from one company to the other. Each travel insurance agency has different levels of coverage based on parameters such as age, duration of trip etc. We urge you to ask a lot of questions and to read the conditions of coverage before signing on the dotted line. An informed decision is always the best one.

1. Medical Insurance for Traveling Abroad

First up on our checklist is medical insurance for traveling abroad. Do you really need it? In a previous article we have addressed this question. If you ever happen to fall into a sewer in Prague you will be happy you had medical insurance. The first thing you should know is that if you are young, and in good health, medical insurance isn’t very expensive.

Also, if you are older or have health problems that might lead to difficult situations, you might want to pay a little something extra to make sure you aren’t left defenseless in No-man’s land. Typical medical insurance for traveling abroad plans include medical and dental expenses associated with injury or illness.

2. Evacuation Insurance & Supplemental Plans

In addition to this, the medical evacuation coverage will ensure that you are transported to the hospital in case of injury (even if you are in a remote area). This type of coverage is extremely important. Let’s imagine that you have had an accident. You are currently located on the top of a mountain, or you require transportation to a specialized facility.

A helicopter or private jet would leave a whole through your pocket under normal circumstances, but with the evacuation insurance you can dodge these costs. As far as ‘medical repatriation’ (moving you all the way home) is concerned, it will only be considered if your medical situation is dire. Evacuation insurance might not cover you if you are deliberately exposing yourself to activities that the insurer considers dangerous (mountain climbing, scuba diving etc.). That’s what specialty insurance is for.

Another supplemental plan that is worth consideration is accidental death and dismemberment. Brutal as it may sound, it covers huge expenses in case of death.

3. Trip Cancellation & Interruption Insurance

As the name suggests, this type of policy will cover you in case of trip interruption or delay. This type of coverage is usually meant for illness, death or injury suffered by the individual insured. Some policies also cover expense for the insured’s travel companion.

Additional Cancellation reasons covered by this policy:

  • Weather-related problems
  • Change of mind
  • Delay in processing passport or visa
  • Medical problems
  • Unexpected business conflicts
  • Additional coverage: fire/floor, accidents on the way to the airport, jury duty, terrorist acts, vendor going out of business etc.

It is important to understand what exactly it is that your trip cancellation policy covers. For example, many companies don’t cover interruptions in case of war, civil disturbance, if the tour operator defaults, or in case of bad financial circumstances of the insured.

4. Luggage & Car Rental Protection

Luggage protection covers your loss of personal items if they are stolen or damaged and car rental protection will insure you in case of accident. We strongly recommend you to read the fine print, especially for luggage protection, because most insurance companies do not cover loss or damage during flight, or items that are too expensive. If you have personal car insurance, look through your coverage again to see if you have any protection extended to rented cars. You should also include collision insurance for rental cars in a comprehensive plan.

5. Specialty Insurance

If you feel that your life needs more adrenaline, you might be surprised to find out that dangerous hobbies such as mountain climbing, scuba diving or motorcycling are adding significant costs to your insurance plan. According to a recent study by AnnualMedicalReport, the costs for activities considered dangerous are the following:

  • Scuba diving: around 2.500$ per year
  • Motorcycling: approximately 1.000$ per year
  • Had gliding: roughly 1.500$ per year
  • Mountain climbing: 1.500$ per year

There are several travel insurance companies, granted very many, that offer specialty insurance, under specific conditions, for better prices. Read the fine print in order to learn the specifics.