When you’re planning to travel or go on vacation, do you also account for mishaps? No one wants to think of the worst possible scenarios, but doing so can help prepare you mentally and financially. In case of an accident or emergency, travel insurance provides coverage during your trip. Before you research your options and contact an insurance agent, the underlying question to ask yourself is:
Is Travel Insurance Really Needed?
The answer: it depends.
Unlike car or home insurance, which are for tangible, daily necessities, travel insurance is not necessarily a required expense. Travel can be considered as a form of leisure, and even a privilege, for those who can afford it.
Is the additional cost worth it? Are you willing to take the risk without it, or would you rather have peace of mind knowing you’re covered? Let’s analyze different scenarios and explore several situations in which travel insurance would be a good investment.
THE BENEFITS OF TRAVEL INSURANCE
Just as other types of insurance, travel insurance covers unexpected expenses so that the insured doesn’t break the bank.
If you’re traveling, whether for your job, the holidays, or any other reason, there is always the possibility of trip cancellation or delay.
Sometimes those interruptions are due to medical or other types of emergencies, such as severe weather. If your health insurance only provides partial or no coverage outside of the country, and you’re injured overseas, travel insurance could take care of it.
For individuals who simply do not travel or only travel for special occasions, travel insurance doesn’t sound like a wise investment. Nevertheless, you don’t want to encounter a crisis while on a trip and discover that your regular health insurance doesn’t cover it.
WHAT ARE MY COVERAGE OPTIONS?
There are three major types of travel insurance:
1. Trip cancellation coverage to refund your trip purchase in case it is canceled or interrupted.
2. Medical coverage for emergency care while traveling
3. Theft coverage for stolen luggage or other personal belongings
Travelers can also opt for comprehensive travel insurance, a policy that combines all three types of coverages.
REASONS TO ACQUIRE TRAVEL INSURANCE
If you’re planning an international trip, especially one that will last for an extended period, you’ll most likely need to plan in advance and invest a lot more money than for a domestic trip.
In addition to covering non-refundable purchases, such as plane tickets, hotels, and excursions, your health and safety while away from home are important factors to consider.
A general rule of thumb for acquiring travel insurance is if you will be participating in any activity in which your health and wellbeing are likely to be at risk, even if it’s just walking around a city.
Medical Reasons
If you or anyone else traveling with you—spouse, child, or other family members—has a medical condition, it’s best to purchase travel insurance in case of a medical emergency.
Depending on your health insurance policy, coverage may be partial or unavailable while traveling, especially if you’re traveling internationally.
In the case that your health insurance doesn’t provide international coverage, or if the deductible is too much of a financial strain, travel insurance takes care of that out-of-pocket expense.
Overseas
As previously explained, health insurance coverage may not provide coverage while overseas. For those who have Medicare, coverage is limited outside of the United States and only accommodates rare exceptions.
If you plan to be out of the country long term or have a health insurance policy with limited coverage overseas, travel insurance is a wise backup plan.
Cruises
Unless provided by the cruise line for emergencies, individuals aboard cruises do not have access to internet or cell phone service.
While medical physicians and services are provided on cruise ships, life-threatening situations require emergency medical evacuation, such as helicopter transport, which may not be covered under general medical insurance.
Also, keeping storms and hurricanes in mind for cruise trips, travel insurance is a good way to protect your investment.
Travel As a Living
Nowadays, it’s common for people to use their excursions as a primary source of income. From travel bloggers to social media influencers, digital nomads can be abroad year around, working remotely.
Individuals who travel as a living heavily depend on their equipment for working, including cell phones, laptops, cameras, along with additional necessities such as car rentals.
Travel insurance will help cover lost or damaged personal items and car rental accidents, as well as medical emergencies, while abroad.
Need To Cancel a Trip
In the event that plane tickets, tours, or other prepaid excursions are non-refundable, they can become a financial strain if sickness or injury occurs before a trip and the traveler needs to cancel.
There are other reasons someone may need to cancel a prepaid trip last minutes, such as sudden death in the family, the loss of employment, or jury duty. When unforeseen circumstances leave you no choice but to cancel your travel plans, travel insurance can reimburse you for the loss.
Weather and Natural Disasters
We’d like to be optimistic about planned vacations, but hurricanes and other types of natural disasters can show up without warning and cause destruction beyond repair.
If your destination is a high-risk area for experiencing bad weather or natural disasters that can affect your travel plans, travel insurance would be a valuable asset.
Lost or Stolen Personal Items
Luggage, personal belongings, and even your passport are at risk of being lost or stolen, especially when traveling internationally and across different airlines.
While airlines do cover lost luggage within baggage claim, once you leave the area and claim lost luggage, it’s no longer the responsibility of the airline. With travel insurance, the cost to replace the lost or stolen belongings can provide peace of mind.
Travel Delays, Cancellations, and Overnight Stays
Sometimes flight delays happen without warning and travelers experience a prolonged layover. Airlines with non-refundable policies will generally compensate customers in these situations by finding new flights, offering vouchers, and booking hotel rooms for those with overnight layovers.
If the customer opts out of the airline’s offer and chooses to cancel the trip altogether, travel insurance can provide a refund of the expenses, enabling the traveler to purchase from a different airline without experiencing financial loss.
WHEN IT’S FINE TO AVOID TRAVEL INSURANCE
If you’re planning a road trip with friends or flying to a nearby state, you can probably opt out of travel insurance. Staying within the country is usually less expensive than traveling abroad, and health insurance will still be able to provide full coverage.
When airlines cancel flights, basic policies enable customers to receive compensation, which is generally that airline’s next available flight to the same destination. If you have no issue waiting for the delay, then travel insurance isn’t necessary.
Also, many credit cards offer travel insurance as a perk, such as trip cancellation protection. If your credit card provider will cover the cost of a new flight ticket or medical expenses, then it’s fine to forego travel insurance altogether.
HOW MUCH TRAVEL INSURANCE SHOULD I ACCOUNT FOR?
When weighing your options, it’s important to first analyze your travel plans and personal needs. Some people travel internationally for work, but only for a short time.
Others may travel as a lifestyle and therefore spend more time away from home and family.
Consider your current state of health, such as:
- Allergies
- Medications
- Physical Condition
Evaluate your budget and how much you’re willing to pay in addition to regular travel expenses. Travel insurance can range from five to ten percent of the total trip cost, the equivalent of $500 to $1000 for a $10,000 trip.
Lastly, compare your travel insurance options. You might be surprised that similarly priced plans offered by different companies may vary in the number of items they cover. If prices vary, understand that some factors—age, destination, length of travel, among others—influence insurance premiums.
Just like any other insurance policy, travel insurance serves to protect you financially against medical and unforeseen expenses incurred during your trip. Be sure to know your rights as an air passenger in advance of booking flights, as well as the coverage limits on your health insurance and credit card if applicable.
If travel insurance sounds like a good investment for you or your family during your next planned trip, check out our top travel insurance companies to find and compare policies that best meet your budget and personal needs.