Imagine you’re going on vacation for the first time in years. Your bags are packed, you picked the best hotel in the region, and you have your itinerary planned down to the hour. What would you do if you had to cancel due to health issues or some other type of emergency? How about if you got to your destination and had to return home earlier than planned? Travel insurance is made for these situations.
What Is Travel Insurance?
Travel insurance protects you against financial losses associated with traveling. Your policy may kick in if your trip is canceled, if it’s interrupted due to an emergency or if it’s ruined by circumstances outside your control. Sure, you’d rather enjoy your vacation, but it’s good to have travel insurance in case something goes wrong before you leave or while you’re traveling.
Types of Travel Insurance
If you have a trip coming up, there are several types of travel insurance to consider. Learn more about them to determine which ones you need and which ones you can skip.
Trip Interruption or Cancellation Coverage
Trip cancellation insurance covers cruises, plane tickets and other expenses if you have to cancel your trip for a covered reason. Most plans provide coverage if you’re too sick to travel or if you sustain a serious injury that prevents you from traveling. Some companies also provide coverage for the following situations:
- Your travel companion passes away.
- You’re terminated from your job.
- There’s a terrorist incident resulting in travel restrictions.
- You get called for jury duty.
- Bad weather prevents you from traveling by plane, train or cruise ship.
Trip cancellation insurance only covers your expenses if you have to cancel your trip before it begins. In contrast, trip interruption insurance reimburses you for travel costs once your trip has already started. For example, if you become extremely ill while traveling overseas, your trip interruption policy may reimburse you for expenses related to the unused portion of the trip. This type of insurance may also cover early evacuation due to a natural disaster or trip interruption due to the death or illness of your host.
Vacation Rental Insurance
If you plan to rent a vacation home instead of paying for hotel accommodations, consider getting rental insurance. This type of insurance covers accidental damage to a vacation rental, which can protect you from significant losses. For example, if your Airbnb floods due to improper use of the host’s washing machine, rental insurance may cover the cost of the cleanup.
In some cases, rental insurance reimburses you if you can’t use your vacation rental for some reason. For example, if you arrive at your destination and find out that the “great rental” you booked is an empty lot 30 miles from all the best attractions in town, your policy may reimburse you for covered losses.
Baggage Coverage
When you travel long distances, your luggage takes a beating. Lost baggage is also a big problem, especially if you packed something expensive. Baggage insurance reimburses you if your baggage is lost or stolen. This includes suitcases as well as musical instruments and other personal effects. Read the fine print carefully, as most insurance companies won’t reimburse you if an airline loses or damages your baggage. You may also have to exhaust your other insurance options before filing a claim with your baggage insurance provider.
Medical Evacuation Coverage
If you’re planning a trip to a remote village or a town miles away from the nearest medical center, you may want to purchase medical evacuation coverage. This type of insurance covers emergency transportation to a high-quality medical facility, making it easier to get the care you need when you’re far from home.
Accidental Death & Dismemberment
No one likes to think about suffering a serious injury while traveling, but it happens from time to time. AD&D insurance pays you a lump sum if you sustain an injury during your trip. If the injury results in your untimely death, the policy pays a lump sum to your surviving beneficiary. An AD&D policy typically includes three types of coverage:
- Injuries occurring at any point during your trip
- Injuries occurring during your flight
- Injuries occurring while you’re using some type of public transportation
Travel Health Insurance
Some insurance plans, including Medicare and Medicaid, won’t cover medical emergencies that occur while you’re traveling abroad. If you have a serious illness or injury, you could end up with thousands of dollars in medical bills that your insurance won’t pay. To protect yourself against these losses, consider purchasing travel health insurance before your trip commences. Before you purchase a policy, make sure you have the answers to these questions:
- Does the policy require you to get preauthorization for certain services?
- Will you be covered if you have a pre-existing condition that flares up during your trip?
- Will the policy cover you if you experience a pregnancy complication while traveling?
- Does the policy cover injuries related to skydiving, bungee jumping or other high-risk activities?
What’s Not Covered?
Many travel insurance policies come with a list of exclusions, or items that aren’t covered. Read your policy documents carefully to determine if you need to purchase supplementary coverage or buy insurance from a different provider. Depending on the policy you choose, you may not have coverage for problems arising from pre-existing health conditions, pregnancy, civil unrest at your destination or participation in high-risk activities.
Can You Have More Than One Type of Travel Insurance?
Yes. In fact, it’s a good idea to purchase as many types of coverage as needed to minimize your losses. For example, you can have trip cancellation insurance, baggage insurance and travel health insurance. Each policy covers different things, so you can “stack” them together. Travel insurance may also be paired with one of your existing policies for extra protection. For example, your health insurance plan may cover some of the expenses incurred due to a medical emergency. Then your trip interruption policy would reimburse you for the expenses associated with the unused portion of your trip.
Travel Insurance Coverage Limits
Note that travel insurance policies typically have coverage limits, which means you may not receive 100% reimbursement for your losses. For example, a baggage policy may limit your reimbursement to $500 per lost item. That’s fine if you lost a suitcase with basic clothing in it but not so great if you packed some of your expensive jewelry.
Overall, travel insurance gives you extra peace of mind. Before you purchase a policy, make sure you ask about exclusions and coverage limits. The more information you gather, the easier it is to make a wise decision about your insurance coverage.
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