When Does It Pay to Buy Travel Insurance?

Posted by Doug Stallings on October 20, 2009 at 4:03:08 PM EDT | Post a Comment
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I have seen travel insurance described as everything from a Ponzi scheme to an essential travel tool. It seems that people who don't like travel insurance are often those who find out that their insurance doesn't cover them for the problem that they face. Conversely, those that swear by the policies are often the ones who have been reimbursed by their insurer. My mother's friend is in the latter camp. She fractured her hip during a bad fall on the last night of her Alaska cruise, and several weeks and 1 operation later she had to be taken back home in a wheelchair. Her travel insurance covered everything all the costs that Medicare didn't, including her first-class plane ticket.

I'm squarely behind the idea of travel insurance. Not everyone agrees with me, but I think on the whole there are many more positive stories than negative ones about how travel insurance has come in to save someone from financial ruin. But for the doubters, especially those who don't regularly buy insurance, here are some things to think about next time you consider whether or not to buy a policy.

Has travel insurance ever come in handy for you? Tell us your experience

5 Simple (and Important) Things to Remember about Travel Insurance

1. Understand what your policy covers

Like all insurers, travel insurance companies live and die by the fine print in their policies. It bears remembering that you should read that fine print before buying a policy to make sure you're covered for the problems you anticipate (or perhaps even for those that you don't). Are you concerned you might have to cancel your trip because your Great-Aunt Sue is in the hospital? Make sure a great-aunt is one of the close relatives for which you can cancel a trip. Do you have hurricane phobia? Make sure you can cancel easily if a hurricane warning is issued for your destination, not just when all travel there is suspended because of an imminent storm (in some cases a day or two difference either way determines whether or not you will be reimbursed for your cancellation).

2. Documentation is key

I read a sad story recently of someone who bought insurance and canceled a trip because of an illness, expecting to be reimbursed for the cost. Unfortunately, the person didn't bother to see a doctor because this was a long-standing medical condition that the person experienced from time to time. Sad to say, there was no reimbursement forthcoming because there was no doctor's record that the individual was sick. Fair? Well, why should an insurance company simply take your word that an illness has prevented you from traveling? If you're sick, you should see a doctor and get a note. If you have a car accident, you need to take pictures of the damage. If something is stolen from you, you must file a police report. Having this documentation may be the difference between a welcome reimbursement or a very unwelcome refusal from the insurer.

3. Don't pay for coverage you don't need (but do pay for coverage that you do need)

High reimbursement numbers may give you a feeling of security, but do you need $1 million in emergency evacuation coverage? Probably not, unless you're going to some remote jungle in the middle of nowhere. Do you really need a policy that allows you to cancel for any reason? Probably not, though you'll pay almost double for that privilege. And what about health care coverage? Someone asked in our forums recently whether it was worthwhile to pay extra to have a travel medical policy that acted as a primary health insurer rather than as a secondary insurer (the person already had health insurance). While this might be a valid question for a car-rental collision-damage waiver policy, it's not really relevant for health insurance. Travel health insurance pays for what your regular insurance doesn't, and your regular insurance doesn't go up just because you make a claim (unlike auto insurance). So there is no benefit in paying extra just to get "primary" coverage.

As with the case of the policy offering "primary" health insurance, be aware of things that sound as if they are a great benefit but actually add little value to your policy. A policy isn't better simply because it is labeled "gold" or "platinum." Instead, read the fine print to make sure the coverage levels are what you need. Don't pay extra for a car-rental policy that covers "exotic" vehicles such as $80,000 Mercedes convertibles and Cadillac Escalade SUVs unless you plan to rent one. Don't pay extra for a policy covering extreme sports activities such as bungee jumping or mountain climbing unless you plan to participate in these activities. But always get the narrowest policy that covers you adequately for the activities you plan to partake in; not all policies will cover you for injuries in white-water rafting, for instance, unless you buy a higher level of coverage.

4. Insure yourself when you put down a nonrefundable deposit far in advance—and when you do buy insurance for these trips, buy it immediately

The one time I tell people that travel insurance is an absolute must is when they are booking a nonrefundable trip far in advance. Who knows what may happen 6 to 12 months down the line? Will you be laid off from your job? Will your parents become incapacitated by an unexpected illness? Will you trip and fall down the stairs the week before you're expected to leave and have your ankle in a cast for 8 to 12 weeks? Will you injure yourself in the gym two days before your departure? Will your tour operator go bankrupt and be unable to refund your deposit? The future is unknowable, and the purpose of insurance is to give you peace of mind when you have to face the unexpected and unpleasant. It's certainly worth while to spend an extra 5% of your trip cost to buy insurance that will reimburse you for 95% to 100% of your out-of-pocket expenses in the case of an unforeseen occurrence.

Moreover, most travel insurance policies offer much broader coverage if you buy a policy within a few days of putting down your initial deposit. You may only be covered for pre-existing medical conditions in such a case. And you will certainly not be covered if your tour company goes out of business unless you have purchased a policy before the company declares that it's in financial dire straits. So-called "Cancel for any Reason" policies must usually be purchased within a few days of your initial trip deposit in order for you to receive the full benefits. I could go on, but the basic issue is this: you must purchase your travel insurance policy before something goes wrong, so the longer you wait, the more risk you must incur yourself.

5. Always buy medical coverage when you travel overseas, especially if you are a senior

If you are a senior on Medicare, your medical bills will not be covered if you get sick outside of the U.S. except in Mexico and Canada (and that includes any time you spend aboard a cruise ship, even if it leaves from a U.S. port). A Medi-Gap policy may also not cover your out-of-pocket costs if you are not covered by Medicare, so make sure you understand what your policy does and does not cover before you travel. Some HMOs have similar provisions, failing to cover you outside of the U.S. While medical care outside of the U.S. is often just as good as at home (and often quite a bit cheaper), it's still not free.

And if you trip on a quaint cobblestone street in Venice or slip on the stairs at Wat Po or have a car accident in Bolivia, you might sustain serious injuries that could require extensive care and rehabilitation; you might even have to end your trip suddenly and be brought home in a specially chartered plane. Regardless of how careful you are and how carefully you avoid germs, you might have appendicitis in Tanzania or suffer altitude sickness in the Swiss Alps. While quick care may save your life, it won't be free, and you might need to be moved to the nearest large hospital for surgery or immediate treatment, and that cost can be considerable.

And here's a sixth, "bonus" tip: A collision-damage waiver is almost always cheaper when you buy it from a travel insurance company rather than from the car-rental company. You'll pay about $9 per day as opposed to $14 to $25 per day.

Travel Insurance Resources

Compare costs of several plans

Several Web sites will allow you to compare the costs and fine print of similar policies (for similar coverage). InsureMyTrip.com and SquareMouth.com both allow you to do this.

Comprehensive Travel Insurance

There are several bit companies that offer comprehensive travel insurance, including (but not limited to) Access America, CSA Travel Protection, HTH Worldwide, Travelex Insurance, Travel Guard International, and Travel Insured International. These companies offer coverage for many different kinds of events, and most offer a "cancel for any reason" option (though you'll pay dearly for it). Otherwise, expect the cost of a comprehensive policy to be between 5% and 12% of the cost of your total trip (depending on your age).

If you want to purchase only medical coverage from a comprehensive travel insurer, enter a trip cost of $0; you won't be covered if you have to cancel your trip, but you will be covered for hospital and doctor's costs and for medical evacuation if you become ill along the way.

International Medical Plans

There are several companies that offer only international medical plans. While these are primarily useful if you are doing an extensive trip, these plans might be useful to you if you travel a lot (most are aimed at frequent international travelers). Some of the major insurers include Wallach & Company, International Medical Group, and International SOS. One other company that can be helpful is not really an insurance company; MedjetAssist is a members-only medical evacuation company. When you pay to become a member, you are entitled to medical evacuation to your hospital of choice from anywhere in the world regardless of the reason for your hospitalization.

More by , Fodor's Editor

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Member Comments (20)  Post a Comment

  • javi on Sep 15, 10 at 10:03 PM

    I wanted to ask about Lyon's comment. If you purchase the policies separate, what happens if one of the travelers gets sick or has to cancel? Will they pay for the companion as well? Or they'll pay for both ONLY if it was bought under one policy? I also wanted to ask if you recommend global travel shield with american express?

  • ISAclients on Nov 6, 09 at 11:46 AM

    I would recommend buying a policy from an authorized insurance agent who has experience and who will take the time to listen to what you are wanting to insure i.e. from illness, H1N1 quarantine, medical, lost luggage etc... and offer you the options so you can choose which plan best meet your needs. We spend quite an investment of time and finances so it pays to find an agent who will provide you the best service, not just 20 or 30 different plans. I would recommend calling the friendly people at www.insurancefortrips.com

  • dchal09 on Oct 26, 09 at 08:35 PM

    When I put a deposit on a trip to China and paid for a flight to get to our China connection, I decided on Travel insurance with Travelex. Shortly after, the dr.detected cancer in my husband and I cancelled the trip. My claim was denied because they claim it was a pre-existing condition. I explained that he showed no symptoms prior to the diagnosis and we were all surprised. However they denied my appeal. I would not recommend Travelex as an insurance company. I feel they are deceptive and not only have I lost my deposit and the cost of a flight, I lost money on worthless travel insurance.

  • dchal09 on Oct 26, 09 at 08:30 PM

    I purchased travel insurance with Travelex when I paid a deposit on a trip to China and the airfare to get to NYC. Shortly after in a routine exam, the doctor detected cancer in my husband, and I cancelled the trip. The claim was denied because they consider it a pre-existing condition. No matter how I explain that we did not know of any pre-existing condition, that during a routine exam,the doctor detected cancer. I appealed and they denied it again. Not only was I out the deposit and the flight but I was out the expense of the travel insurance.

  • Doug_Stallings Fodor's editor on Oct 26, 09 at 09:01 AM

    Yes, travel insurance generally does cover you if your travel companion falls ill, but the extent and type of coverage depends on the policy. Normally, however, the cruise line wouldn't charge a single supplement because you would have already paid for the second person in the cabin. Unless the person cancels early enough to get a refund, the single supplement wouldn't apply.

  • belwebonly on Oct 24, 09 at 10:01 AM

    In March of 2009, I purchased a non-refundable ticket to Italy for August 31, 2009. On August 24th, I did in fact fall down the basement stairs, facturing my right shoulder in 3 places. Unfortunately, I could not make the trip. Although, no medical bills were paid, Access America did refund the full price of the ticket. On another occaision, while in Italy, I received notice that my mother was taken seriously ill. They would not pay to have me flown home asap. The ticket change was very expensive. My mother died eight days later. I am sorry that I did not press later for reimbursement.

  • lovesitaly on Oct 23, 09 at 03:16 PM

    I have a questin I haven't seen posted. Does travel insurance cover you on a cruise if your cruisemate is taken ill? In other words, If you both have travel insurance and one of you falls sick, does the other have to pay the single supplement?

  • TheCastleLady on Oct 23, 09 at 01:54 AM

    All the points that Mr Stallings made about reading the policy and provisions are great to keep in mind. I never bought travel insurance until I went on my grand castles tour and it was certainly good timing because 9/11 happened during the trip and without that insurance I would've had to pay for an entire week of hotel rooms and may have lost my return flight without it. It was a great policy which covered every expense I incurred during the delay since the emphasis was on delays. I would say that any extensive trip to you take- tours or long term travel. Whatever the insurance company is you'll probably save money in the long run.

  • Eschew on Oct 22, 09 at 01:11 PM

    Re "bonus" tip: collision-damage waiver.

    The cheapest way is to have your own personal auto insurance policy covering it. Most persoanl auto insurance policy has a "rider" for "non-owned" vehicles, i.e. driving a friend's car, parent's car, or a rental.

    What you need to do is to call your auto insurance company and see if you have that specific coverage, and what does it coveres, and what are the limits. If you don't have it, add it to your personal policy and the cost is minimal. In my case, about $20 per year.

    If you have a premiunm credit card and uses it to pay for your rental, you will have additional coverage as well.

    Car rental company collision-damage waiver is a big money maker for them, and in a lot of cases, even more expensive than the car rental itself.

    One thing to remember: the personal car insurance rider will only cover you in the U.S. and Canada only. Never in Mexico and some may cover certain European countries.

  • dmrldr on Oct 21, 09 at 10:58 PM

    Our message is definately read the fine print and do your homework before purchase.

    My wife and I signed up for a River Cruise over Christmas '06 and booked the trip using our Visa card. We were advised by the Representative to purchase their Trip Insurance in case there might be unforeseen circumstances causing us to miss the cruise. We signed up for the insurance and went merrily on our way, arriving at Denver International Airport early the morning of Dec. 20. The wind was blowing slightly and there were snow flurries so we checked in our luggage and obtained boarding passes making our way to the concourse. At about 9am the weather turned in to a full blown blizzard and we were informed that the Airport would be closed until further notice. We immediately contacted the Cuuise Company to tell them we would be unable to make the departure. The Representative then told us we could not be issued a refund and should have purchased the cancellation insurance they had offered. We happily told them we did have the insurance and contacted the Company carrying the policy. The Insurance representative informed us they would not cover weather cancellations and we could send in a claim but it probably would be denied. After numerouse calls back and forth to the Cruise company and the Insurance carrier, a sympathetic representative of the Cruise company said to write a letter to their customer relations and we could probably get some compensation on a future trip. We did this immediately and after waiting 2 months had received no correspondence except an official denial from the Insurer.

    A friend suggested we contact Visa to see if they had any suggestions. The Visa dispute department representative was very sympathetic and when informed that we had no response from the Cruise Company for 2 months, they issued us a refund of the entire amount for non receipt of services. The cruise company had the option of appealing the decision but as of now we have heard nothing further from them.

    There are definate advantages to Travel insurance policies, such as medical emergencies etc. Be sure to check out the company and the policy. If anyone is interested, they can contact us (dmrldr@att.net)
    and we will provide the names of the Cruise Company and the Travel Insurance carrier that are the subject of our experience.

  • vglenn on Oct 21, 09 at 06:23 PM

    We usually purchase travel insurance when we travel internationally but have only had to use it once. And that one time was all I need to validate the need for the expense. We had signed up for an Alaska cruise/land package. The group traveling included me, my brother, husband and my then 93 yr. old father. My husband and I were on the plane with my dad (we were to meet my brother up there) and the plane was backing out from the gate when dad passed out - not the go-limp type of passing out - his eyes were open and he was shaking - I was sure he was having a stroke. The plane pulled back in and they got him off and we all went to the ER. Long story short - he was fine but we couldn't leave him behind to join up with my brother so we cancelled for the 3 of us. And the insurance folks were wonderful and we got all our money back (except for a small fee)! Definitely worth the cost just for the peace of mind we had during the ER time and dad's followup. We won't leave home (at least for an expensive trip) with out it - even if dad's not going with us!

  • lyon on Oct 21, 09 at 02:58 PM

    When we buy travel isurance I get a separate policy for myself and for my wife. The cost is exactly the same as it is for one policy for two people but I get twice the coverage limit.

  • patiricia on Oct 21, 09 at 02:57 PM

    I have had both good and bad experiences. Our good one was when we planned an extensive trip in New Zealand with private planes and luxury accomodations, mostly all prepaid. My husband's mother became ill part way thru our trip and we had to rush home. The insurance (Travel Insured) paid for all the changes and all the prepaid travel we couldn't go on. They did their homework and it took awhile, but our whole claim was paid. Our second experience was not so happy. We were delayed by an airline at the beginning of an african safari. The airline put us up for one night in a decidely un-luxurious accomodation. We lost our first night at a very nice safari lodge to the tune of about $1800. Travel insurance company pointed out their obscure provision that they do not pay for "common-carrier caused delays". i have since checked other companies, and most DO pay for that. I have since taken that company (TravelGuard) off my list.

  • stevedasseos on Oct 21, 09 at 12:36 PM

    "If you want to purchase only medical coverage from a comprehensive travel insurer, enter a trip cost of $0; you won't be covered if you have to cancel your trip, but you will be covered for hospital and doctor's costs and for medical evacuation if you become ill along the way."

    This isn't completely accurate. The risk of insuring a $0 trip cost is that there's no coverage for any pre-existing medical condition. Plus, in many plans, the lookback period starts on your departure date with a $0 trip cost.

    The reason I think insuring a $0 trip cost on a trip cancellation travel insurance plan is a bad idea may sound too picky and detailed, but all good contracts (insurance is no exception) are full of details.

    A $0 trip cost makes the policy effective date the later of 12:01 am of your departure date or 12:01 am of the day after your purchase date.

    Most people skip over this, but it’s an important detail. I’ll make this explanation as simple as possible:

    You buy a trip cancellation travel insurance plan with a $0 trip cost on July 15th for a trip leaving October 11th. You assume the policy’s effective date is July 16th (12:01 am of the day after your purchase date).

    You’re not worried about pre-existing conditions because you know that "a trip cancellation / trip interruption plan's Pre-Existing Condition Lookback Period is a period of 60, 90 or 180 days prior to the travel insurance policy’s effective date".

    Unfortunately, your travel insurance policy’s effective date is not July 16th (12:01 am of the day after your purchase date). Your travel insurance policy’s effective date is October 11th. Here’s why:

    * If you insure at least a $1 trip cost, many plans' effective dates will be 12:01 am of the day after your purchase date.
    * However, & this is really important: a $0 trip cost makes the policy effective date the later of 12:01 am of your departure date or 12:01 am of the day after your purchase date.

    So what?
    You have an angioplasty (never had this nor anything related before) and get a stent put in on August 29th. Your doctor says you’re fine to travel on Oct. 11th. But, on Oct. 13th, something happens with your arteries and you need emergency treatment on your trip, thinking your huge medical claim will be paid. You get back home and file your claim which gets turned down.

    Why your claim gets turned down
    Since your policy’s effective date was October 11th, your August 29th angioplasty causes your August 29th treatment to be defined as a pre-existing condition because it occured in the 60, 90 or 180 day Lookback Period prior to October 11th. Therefore, nothing that occurs after your effective date will be covered.

    But, if you had insured at least $1, your effective date would have been July 16th making anything related to the angioplasty an unknown event and therefore covered.

    I hope this makes sense.

  • NormaGold on Oct 21, 09 at 11:57 AM

    When I was going to Costa Rica for some plastic surgery I was disappointed to see that none of the insurance policies available to me covered complications resulting from elective surgery. I went with no insurance and fortunately didn't need any although my flight into Atlanta was late due to a rainstorm. Fortunately for me my connecting flight leaving Atlanta was equally late or I would have had to spend the night in Atlanta and worry about re booking the next morning .

  • nerosmama on Oct 21, 09 at 11:50 AM

    I purchase cancel-for-any-reason insurance for international travel as I have four beloved elderly pets who need me at home should they be diagnosed w/a serious ailment such as cancer. W/cancel-for-any-reason insurance, I won't have to forfeit my all trip costs.

  • sleds on Oct 21, 09 at 11:38 AM

    My husband and I are 60+ and travel extensively to far away places with strange sounding names. In other words, long ago we did Europe. I do not buy travel insurance for the lost baggage or trip interruption parts, although the policies I buy do have those features. I get the insurance for the really bad stuff that can happen. I always get us travel insurance BECAUSE WE HAVE PRIVATE HEALTH INSURANCE AND IT DOES NOT COVER US OUTSIDE OF THE UNITED STATES! A lot of people don't know if their heath insurance has a similar exclusion. Those that have similar exclusions are quite literally playing financial Russian roulette if they are seriously hurt while traveling. Have you ever been driven anywhere in India, where horns are typically used instead of brakes, been on a single lane road in the mountains of Bhutan when you car comes face to face with a large truck, or simply been driven from the airport to your hotel in Lima? High risk of injury for any of those activities. And then there was the poisonous snake in the tent in Africa!) Serious injury can happen anywhere. Also, at our age, we always get insurance which covers repatriation of remains. Face it, having a love one die is horrible enough, but again you are facing many tens of thousands of dollars if your loved one dies on a trip and you want to bring their remains home for burial. It happens and we should face it. I use the website Insuremytrip.com to compare policies. It takes time, but is worth the effort. Finally, my physician, who is forever giving me perscriptions to take along "just in case" told me to get SOS insurance. I looked into it and we now have yearly policies that cover the two of us. Why -- if you get into trouble, SOS will come and get you out of it, if that is humanly possible. Reading the story on their website about two guys who found themselves in the middle of a bunch of folks shooting at each other in Peru -- AFTER we had been to the same Peruvian town a few months earlier, convinced me that for the really serious traveler or for someone doing business in far away places with strange sounding names SOS insurance provides extra piece of mind.

  • Feronia on Oct 21, 09 at 10:07 AM

    I respectfully disagree on the author's stance on primary insurance. If I can buy primary coverage for a little extra, fill out one set of claim forms and have my trip refunded to me in days, why would I want to forego that to fill out multiple claim forms for my own insurance AND travel insurance only to receive the trip refund in 2+ months? For some of us time is money, and a small investment to make life easier later is well worth it. Sometimes no extra investment is required at all - Insuremytrip.com reveals that I can either pay Access America $170 to insure my trip ($4K to Belgium) with secondary coverage or Travelex $165 to insure my trip with primary coverage with double the medical benefits. Why would I not do that?

  • rbartizek on Oct 21, 09 at 10:04 AM

    I agree with pretty much all of this, particularly if you are traveling outside the U.S. where your domestic policies likely won't cover anything. Keep in mind, though, that many policies reimburse only half the trip cost, not all of it, unless you're buying one of those expensive "platinum" plans.
    The car insurance tip is right on; we recently rented in France and the add-on cost to our trip insurance was minimal; it would have been huge with the rental company.

  • artnuvo on Oct 21, 09 at 09:36 AM

    re pre-existing conditions it is well to remember t hat most policies will not cover such unless you buy the policy within 15 days of your first prepaid major travel expense such as your airline tickets or non-cancellable non-refundable hotel reservations and the like.

    and metnion should be made of discrete medical evacuation policies like med-jet assit, aarp discount available, if you want the flexibility and the option of being transported to the hospital of your chjoice, incuding your local hosptial at home and not simply to the nearest available hospital. You really don't want to linger too long in third world hospitals or places like russia where health care is dismal.

    lost in the shuffle of the fodors report is the fact that some don't carefully consider the danger of travel to exotic places and the frequent lack of health care choices-we are not talking of the amazon or jungle ares that the report alludes to-for example, machhu picchu has a doctor stationed at the small private clinic at the mountain top ruins-if someone needs to be medically evacuated by law that doctor must travel with that person, leaving no doctor in site for emergencies and the local doctors at the town at the base have no speciailized experience and can not treat something as simply as a nosebleed generated byt he altitude and requires cauterization. You need to be med evac'd 300 miles and a 2 h our train ride and 3 hour ambulance ride to cuzco for that. I speak from personal experience. So don't always assume that if soemthing happens there will be readily available medical care when you travel and/or think twice about that exotic location.

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