Trip Insurance 101: What You Need to Know
With the disaster in Japan and the temporary closure of several Hawaii hotels, it's a reminder than even the most well-planned trips can benefit from insurance. What kind of coverage do you honestly need—comprehensive, medical-only, or financial default? Do you even need trip insurance at all?
Know What Kind of Insurance is Right for You
Comprehensive trip insurance is valuable if you're booking an expensive or complicated trip (particularly to an isolated region) or if you're booking far in advance. Such policies typically cover trip-cancellation and interruption, letting you cancel or cut your trip short because of a personal emergency, illness, or, in some cases, acts of terrorism in your destination. Such policies also cover evacuation and medical care. Some also cover trip delays because of bad weather or mechanical problems, as well as lost or delayed baggage. Insurers include:
Another type of coverage to look for is financial default—that is, when your trip is disrupted because a tour operator, airline, or cruise line goes out of business. Generally you must buy this when you book your trip or shortly thereafter, and it's only available to you if your operator isn't on a list of excluded companies.
Medicare, Medigap, or some private insurers do not cover medical expenses outside the United States (including aboard a cruise ship, even if it leaves from a U.S. port). Medical-only policies typically reimburse you for medical care (excluding that related to preexisting conditions) and hospitalization, and provide for evacuation. You still have to pay the bills and await reimbursement from the insurer, though. Some companies that offer medical-only coverage:
Some online booking sites also have insurance. Expedia.com offers Package Protection Plus plans, which start at $40 per person, on air-hotel vacation packages it sells. If you cancel or change—for any reason—you’re entitled to a refund on trip deposits, airline-change fees, and booking fees. The plan also includes travel- and baggage-delay reimbursements, travel-accident protection, and other things. Airfare refunds are contingent upon whether the fare was a published one or an Expedia-negotiated one. If you want coverage for airfare alone, you can buy a separate, more restrictive plan.
Read the fine print.
When investigating policies, press for details. With trip-cancellation insurance, for instance, be sure to ask whether you’re covered should you back out because of terrorist attacks, civil unrest, or natural disasters in the destination, you’re laid off from a full-time job at home, or you have an unforeseen conflict at work. With medical insurance, inquire about preexisting condition issues and coverage if you’re injured participating in risky sports (mountain climbing or skiing, say). If the things that concern you aren’t covered, you may need to look into add-ons like "any reason" cancellation coverage or adventure-sports coverage.
Expect comprehensive travel-insurance policies to cost about 4% to 7% or 8% of the total price of your trip (it's more like 8%–12% if you're over age 70). A medical-only policy may or may not be cheaper than a comprehensive policy. Always read the fine print to make sure that you’re covered for the risks that are of most concern to you. The easiest way to compare policies is online:
- InsureMyTrip.com and TotalTravelInsurance.com have information from 17 insurers.
- Squaremouth.com has lists prices and policies for 15 insurers.
- QuoteMyTrip.com has prices and policies for more than 40 insurers.
To get the most of your coverage, buy insurance when you book your trip. And, before you do buy, go over not only your personal insurance coverage but also coverage that may be provided by a credit card used to purchase travel services. It’s a waste of money to be covered for the same things twice.
Photo Credit: alexskopje / iStockPhoto
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Member Comments (7) Post a Comment
Concerning my upcoming trip to Japan, I called my trip ins. co. re: their natural disaster clause and was told it only goes into effect if my HOTEL was uninhabitable....since I haven't incurred any costs yet I didn't pursue this but it sounds like trip ins. is pretty useless....
We were planning to leave this Sat. March 19 for two weeks to Japan. We have canceled our trip. Didn't have travel insurance. United extended their travel through March 31 so was able to cancel and get all our FF miles deposited back into our account. Had no problem canceling hotels because they had a 24 hr. cancellation policy and even our ryokan had a 7 day cancellation policy which we met. Looks like JR passes may have a 10% cancellation fee which would be about $100. If $100 is all we lose from this I'll be fine.
Funny...not sure who wrote this article but it is so high level that it doesn't provide any value. First, when looking for medical insurance there are really two types of coverage -- primary and secondary. Primary will generally pay directly to the care provider or will provide information to be billed (when it can) while secondary only pays after all other insurance you may have has kicked in (which means they pay much later and you pay up front). Primary is always the way to go. Secondary could mean arguing between insurance companies for who is actually paying for the bill or how much of each bill.
i was on a Continental flight from Newark to Almaty Kazakhstan, connecting in London in Dec 2010 when a major snow storm closed Heathrow. I had to complete the trip on Ukraine Air, BMI could not be reached for rebooking. I had travel insurance which paid the entire cost of my second ticket and approved payment 10 days after filing the claim. I am still waiting for my refund from Continental. To date I have talked to 5 different Continental refund reps who each assure me they can take care of it. Travel Insurance is definitely the way to go. Don't leave home without it.
As I recently posted in one of the forums:
Believing that insurance is a good deal because some people say that they've collected a big payout is like believing that lottery tickets are a good deal because some people say that they hit the jackpot. Well, it was a good deal for the people who hit the lottery jackpot or collected a big payout, but it most assuredly wasn't a good deal for the thousands of other people who bought lottery tickets/insurance policies and who didn't collect. Because it's that latter group who paid for (1)the money paid to jackpot winners/insurance payouts plus the overhead (salaries, profit, advertising, office buildings) of the lottery/insurance companies.
TRIP INSURANCE is something we will not travel without. We've had to use it over and over again, delayed luggage, delayed flights...and we've had good and bad policies. Asking questions and reading the fine print is key. Many carriers will not cover due to weather related expenses, but some will cover almost everything. We've always foudn Travelex to be good, and now they offer special packages for students, business related issues, etc... The one time we didn't use them, we got stuck in London with the snowstorm and had no coverage because the policy we had didn't cover weather related issues. That was an expensive lesson to learn!
Any advice for which insurance company would be the best for medical only policy ?
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