When you’re planning a trip, it can be hard to know if you need travel insurance or if it would just be a waste of money. If you’re interested in travel coverage, you need to understand the different types available to decide what’s right for you.
Travel insurance doesn’t have to be an overwhelming subject. We’ll walk you through everything you need to know to make an informed decision.
Read on to gain a basic understanding of the different types of travel insurance available from the most comprehensive type of travel insurance to standard travel insurance. We’ll also cover options like travel medical and baggage coverage.
If you’re interested in saving money, you won’t want to miss the alternative coverage options, like what may be available through your credit card and what your already-in-place homeowners coverage and health insurance might cover.
You may be surprised to find out that while one in six vacations experience a canceled event that would have been covered by travel insurance, only 22 percent of vacationers are covered by travel insurance.
Cancel for Any Reason Travel Insurance
Since this is the most comprehensive type of coverage, it should come as no surprise that it is also that most expensive. It could cost you up to 50 percent of your trip cost and it won’t cover 100 percent of your lost expenses.
It is the only coverage that will compensate you at all if you cancel for a non-emergent, personal reason, though. So, for that reason, it remains fairly popular.
If you want to cancel your trip, you can do it. You don’t even need a good reason. You’ll still be out money because you will have paid for your insurance policy, and you will not get 100 percent of your costs for the trip returned, but you’ll be better off than if you had no trip insurance.
Standard Travel Coverage
If you’ve ever bought a plane ticket online, you were probably prompted to accept or refuse travel insurance coverage.
Typically, the sort of coverage offered through airline affiliates is standard coverage. It can be tempting to purchase because when you buy your ticket, the insurance is offered at a discounted rate. It’s usually a decent policy offered, but you shouldn’t purchase it unless you read what it actually covers.
Imagine all the scenarios for why you might cancel a trip. Then check to see if those hypothetical situations are covered. Events that are typically covered include the following:
- Death of you or your traveling companion
- Serious illness of you or your traveling companion
- Adverse weather situations
- Lost or stolen luggage
Death of family members may or may not be covered. Many airlines, however, will offer a voucher to be used within a certain period of time if you cancel a flight based on a close family member’s death.
As far as the events that you have planned during your trip, like sports games, concerts, or other excursions, the standard policy will probably cover certain reasons for canceling. You will need to read the fine print to know, as each policy is different.
Lost or Stolen Luggage Coverage
You can purchase this protection as a stand-alone coverage if you’re not interested in purchasing standard travel insurance. It will reimburse you up to a certain dollar value per each piece of lost or stolen luggage.
Losing luggage can be a nightmare while you’re on a trip. You packed your bags because you needed and wanted the items you packed. Without them, you won’t have what you need for a trip and you’ll be forced to purchase the items you need to get by.
Luggage coverage will reimburse you so you don’t have to purchase clothes and other necessary items out of your own pocket.
If you’d prefer to forego luggage coverage, you might want to invest in anti-theft gear to help protect you from theft.
Travel Medical Coverage
This coverage is very important if you’re traveling out of the country. You would be in for a nightmare if your own health insurance coverage didn’t cover you out of the country and you needed medical care.
Hospitalizations cost a lot of money no matter where you travel. Some countries require that you pay upfront for medical care. That’s why it’s critical that you have some type of medical coverage when you’re traveling abroad.
Usually, travel medical coverage won’t cover pre-existing conditions, so if you have a pre-existing condition, you’ll need to make sure that in addition to naturally boosting your immune system, you prepare as much as you can with your pre-existing condition in mind so you won’t need professional health assistance while you’re on vacation.
Alternate Travel Coverage Options
Sure, you can always purchase coverage, but if you’re already covered, that would just be a waste of money. Look into your pre-existing coverage before you buy anything supplemental.
Credit Card Travel Coverage
If you have a credit card that you pay an annual fee for, there’s a pretty good chance it offers some kind of travel coverage.
Sometimes the coverage is automatically applied when you make your trip purchase using that card. Other times, you have to pay an annual fee for specific types of coverage.
You can go online and check your credit card account to see the perks and benefits associated with your card. If you’re on a budget, you’ll be especially glad to find out that your credit card can help you travel more cheaply.
Often, credit cards provide travel insurance as a benefit. It won’t be cancel-for-any-reason coverage, and there may be a maximum reimbursement listed, but it can provide a level of protection that you’re comfortable with.
Health Insurance Coverage for Travel
It is possible that the health insurance you already have will cover your medical expenses when you’re traveling abroad. Don’t take any chances on this one.
Confirm with your provider where they provide coverage. It’s possible that they will cover you out of the country but all visits will be considered “out-of-network,” in which case, you will have to pay a significant amount between what the charges are and what your insurance covers.
Homeowners Insurance for Travel
Your homeowners coverage will usually cover your belongings no matter where you are. You could rely on your homeowners coverage for your lost luggage.
The problem with that, though, is that your homeowners coverage usually requires a deductible, and often that deductible is around $1,000. If your luggage isn’t that valuable, it won’t be worth it to make a claim with your homeowners coverage.
Unless you have very expensive equipment, you’re likely better off with luggage coverage because there won’t be a huge deductible with it.
Travel with Peace of Mind
Knowing you have the right kind of insurance coverage can help you enjoy your trip to the fullest. You won’t have to worry about going broke if things don’t go as planned.
As with all types of insurance coverage, you hope to not have to make a claim, but if adverse events occur, you’ll be thankful for the coverage you purchased.
Before you spend extra money for coverage, check to see if you may already have coverage. If you don’t, consider what your needs are and decide if travel coverage is worth the cost for your situation.
Melanie Musson is a car insurance expert and writer for the insurance site, USInsuranceAgents.com. She is the fourth generation in her family to work in the insurance industry. She grew up with insurance talk as part of her everyday conversation and has studied to gain an in-depth knowledge of state-specific car insurance laws and dynamics as well as a broad understanding of how insurance fits into every person’s life from budgets to coverage levels.
