Choosing a Travel Insurance Policy That's Right for You

TRAVEL INSURANCE

There was a time that I would strike off on an international trip without even thinking about travel insurance. Why spend the extra money on insurance when I could use it on my trip?  As I’ve become older and hopefully a little wiser, I’ve recognized the benefit of travel insurance and the peace of mind that it can bring.  Travel insurance can come in many varieties. In this article I will explain the various travel insurance plans, offer some purchasing advice, stress the importance of knowing the details of your insurance product, and offer a few recommendations on where to purchase travel insurance.  It is also important to note that travel insurance coverage varies from company to company.  Before making your final decision, you should always understand the insurance product, how it applies to you and be sure to read the nitty-gritty fine print.

TRAVEL INSURANCE COMPONENTS

Travel insurance can come with many options and coverage plans.  Before you purchase travel insurance it’s important that you understand what products are available and how they apply to you and your travels.  In general, travel insurance includes one or more of the following components: Trip Cancellation, Trip Interruption, Trip Delay, Missed Cruise Connections, Emergency Medical, Dental, Medical Evacuation and/or Repatriation, Lost or Stolen Personal Effects, Baggage Delay and Accidental Death and Dismemberment.  All these components can be mind boggling, so let me explain each one.

Trip Interruption – This covers the nonrefundable unused portion of your prepaid trip cost and additional costs to return home or rejoin your trip due to a covered reason.  I look for plans that provide 100% to 150% coverage in this area. Note that trip interruption is defined as beginning your journey and having to cut it short for some reason.

Trip Delay – This pays for additional transportation, meals, accommodations and nonrefundable, unused prepaid expenses if you are delayed 12 or more hours en route to/from your trip. A good plan will have at least $1,000 dedicated for trip delay coverage.

Missed Cruise Connection – This may not pertain to your particular trip, but this item is often included in comprehensive travel insurance plans.   Be sure to read the fine print.   If included, this pays additional transportation costs to join your cruise if you miss your cruise connection due to flight cancellation or a flight delay of 3 or more hours. It also covers accommodations, meals, and nonrefundable trip payments for the unused portion of the cruise or tour.

Emergency Medical Coverage – This provides reimbursement and/or medical evacuation should you or a close relative become seriously ill while traveling abroad. This is the most important aspect of your travel insurance program—don’t skimp on funding here. You should look for plans that provide at least $100,000 of coverage dedicated to this area.

Dental Expenses – This is an added benefit that may be included in some travel insurance plans.   Typically, it provides a reimbursement of about $750 should you require dental treatment while on a trip.

Emergency Medical Evacuation/Repatriation – This feature is also very important and typically provides transportation to the nearest appropriate medical facility if necessary.  If hospitalized more than seven days (read the fine print because plans vary here) a person chosen by you will be sent to and from your bedside if traveling alone.  Additionally, should you die while traveling, your remains will be returned to your residence or burial place. 

Loss, Stolen or Damaged Baggage or Personal Effects – This provides reimbursement should your luggage be lost or damaged, items are stolen from you or personal items are damaged.   Coverage plans vary, but typically range from $1,000-$2,000.

Baggage Delay – This feature pays out a certain amount if your baggage is delayed more than 24 hours. 

Accidental Death & Dismemberment – If included, this pays benefits for death, loss of limbs, or loss of sight as the result of an accident occurring on your trip.  Often, the same feature is written for an accident that occurs when you are riding, boarding, or alighting from a common carrier.  Typically, these benefits range from $10,000-$25,000.

Trip Cancellation – This provides reimbursement of the nonrefundable prepaid trip cost in the event that you are not able to travel for a covered reason. Covered reasons vary by insurance company, but most include full reimbursement if you or a direct family member become seriously ill or injured, you lose your job, you or a family member die, and many other reasons (read the fine print).   Look for a policy that pays at least 100% of the trip cost.  Note that trip cancellation is when you do not go on the trip at all.

Trip cancellation insurance is the most expensive element of a travel insurance policy. The policy becomes effective the moment it is purchased.  Typically, you should purchase this insurance as soon as you submit an application and deposit for a group tour or cruise or when purchasing an airline ticket for independent travel.  Most insurance companies require that a trip cancellation policy be purchased within 7 to 10 days of signing up or committing to travel.  For me, this is worth every penny!  People who are healthy, unattached, young and/or frequent travelers often forgo this type of coverage. I’ve traveled for 40 years and have often elected not purchased trip cancellation insurance.  Luckily, I’ve never had a serious incident where it was needed.   However, the older I get the more inclined I am to purchase this very important insurance element.

Insurance companies have very specific reasons when trip cancellation insurance can kick in.   You will have to read the fine print of your insurance policy to confirm what is and is not included.  At a minimum, I recommend policies that address most of the following concerns: sickness, injury or death of you or your travel partner, death or hospitalization of host at destination, jury duty, quarantine, court-ordered appearance, traffic accident, residence uninhabitable, strike, felonious assault, military duty for natural disaster relief, termination/layoff/transfer, weather, terrorist incident, bankruptcy/default, natural disaster, and hijacking.

Cancel for Any Reason – Many insurance companies provide a “cancel for any reason” policy which comes as an added option with an additional cost.  Often this pays out at less than 100% so you’ll need to check the policy’s fine print before purchasing.  You’ll have to jump through some additional hoops to purchase this coverage, but for many it offers full peace of mind when booking travel.   Typically, you must pay for the plan within 7 to 10 days of your initial trip deposit, you must purchase full comprehensive coverage for the complete value of your trip and if you cancel, it must be done within two days of your departure date. 

Rental Car Collision Damage Waiver (CDW) – This may be something you’ll want to consider if renting a car at your out-of-country travel destination. Restrictions apply and it comes at an additional cost, which is usually less expensive than what a rental car company will offer.

WEIGH THE COSTS AND RISKS          

Travel insurance plans that include all or most of the above components are known as Comprehensive Travel Insurance plans. The cost of Comprehensive Insurance is determined by a sliding scale based on the insured’s age, the cost of the trip and duration of travel.  Normally it is about 10%-15% of the tour cost, but shop around for a comprehensive plan that will meet your needs.  Don’t skimp on cost.

I organize European tours for living, so I put in a lot of miles each year, both on the ground and in the air.  At a minimum, I always travel with an insurance plan that covers emergency medical, trip delay and interruption, emergency medical evacuation and repatriation, and lost, damaged or stolen personal effects. It’s a tossup sometimes between full comprehensive insurance with trip cancellation or a less expensive package covering medical, trip delay, theft and baggage loss or delay.  When considering which insurance products to purchase, it’s a good idea to consider:

·         your health,

·         the health of your loved ones,

·         the amount of nonrefundable funds invested in the trip,

·         the value of your luggage,

·         and the financial stability of your tour company and airline.

CARRY YOUR INSURANCE DOCUMENTS WITH YOU WHEN TRAVELING

Purchasing a travel insurance policy is useless unless you have your policy information with you while traveling.  Usually, a small wallet ID card is issued containing the policy number and emergency telephone numbers of the insurance company.   I suggest you make several copies of the ID card.  Leave one at home with a friend or relative, just in case you’ve panicked and can’t remember were you put it. Put another in an inside pocket of your suitcase.  Finally, and most importantly, carry the original in your money belt with all your other valuables.  All insurance companies publish toll-free telephone numbers for you to call in the event of an emergency.

SUMMARY

Travel insurance comes in many varieties and includes varied components. It is important to understand each of these components and how they may or may not assist you when traveling abroad.  Prices vary widely, so do your homework and choose a plan that works best for you.    Trip cancellation is the most expensive component and possibly the one which offers the most benefit. Each traveler should consider their health, the health of loved ones and the amount of nonrefundable funds invested in the trip when choosing a travel insurance policy.  Finally, before making your final decision, you should always understand the insurance product, how it applies to you and be sure to read the nitty-gritty fine print.

CONVINCED YOU NEED TRAVEL INSURANCE?

This link will take you to my website for additional insurance information and how to purchase a policy that fits your needs. 

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Do you want to learn more about traveling to Europe? There is a wealth of information and special discount pricing on my tours at my website. Visit now at http://davidmcguffin.com/.

David McGuffin is Founder and CEO of David McGuffin’s Exploring Europe, Inc., based in Middleburg, Florida. You can connect with him on Twitter, Facebook, Google+, LinkedIn and YouTube. David spends his time in Europe organizing and leading small group and independent tours to European destinations. In business since 2001, David has provided exceptional travel opportunities to several thousand satisfied customers. You can find out more about David and his European tours at his website, http://davidmcguffin.com.