Travel insurance was once considered a product
for the wealthy; however, consumer concerns have brought travel
insurance into the real world. Travelers who are worried about
vacations being canceled by incidents out of their control are
taking advantage of this insurance product. A comprehensive travel
insurance policy can cost you as little as 5% of your
Make sure that you check your homeowners
insurance and credit card benefits to see if travel coverage is
already provided to you. You might not need to purchase a separate
Purchasing travel insurance
A travel insurance policy offers two basic coverages: trip
cancellation/interruption and emergency medical evacuation. You may
find reimbursement benefits for lost baggage and trip delays, but if
they aren't bundled with the plan, you shouldn't add them. These
benefits are usually not good buys.
If you do not have health insurance, you should look into a
medical or hospital coverage that will cover you when you are
abroad. Read through the health insurance policy carefully to see if
it will cover your destination area.
Trip cancellation or interruption coverage will reimburse you for
any deposits that are nonrefundable if you are unable to go on the
vacation or are required to leave early. However, the reason you
cancel or leave must be a covered reason. You must read the fine
print to find out what is and what isn't covered.
Some cancellation or interruption policies will cover medical
reasons, while some exclude any pre-existing medical conditions.
Because the policy pays the difference between what you are refunded
from the cruise company, tour agency or airline and what you
originally paid, you must first seek a refund with the company
before you can file a claim on your insurance.
The policy may also cover "unforeseen" emergencies, such as a
traffic accident, a hijacking, natural disaster, fire or flood. Some
policies will even cover a call to jury duty. However, they probably
won't cover a simple change of plans, job problems or personal
problems. Travel insurance policies also exclude self-inflicted
injuries and drug problems.
If your cruise company or touring agency goes out of business,
your policy may cover your losses. But if you purchased the policy
from the company, you probably won't see your money. Some insurance
policies require the company to file for bankruptcy. Often, touring
companies never file for bankruptcy - they simply disappear. If you
operator only closes down for a few days, you may not be covered for
Emergency medical evacuation coverage will pay the cost of
transporting you from location of an accident or illness to your
home. This coverage comes in really handy for helicopter rescues,
which often cost as much as $20,000. It also covers the cost of your
trip back to the states. Emergency medical evacuation coverage is
ideal for adventure vacations or remote area vacations.
When traveling out of the country it is a good idea to have your
vaccinations up to date, an emergency kit with you and quality
medical coverage. First, check with your health insurance plan to
find out what benefits apply when you abroad.
If you don't have health coverage when you are traveling, you
will want to look for a travel insurance policy that includes
medical coverage. You will probably find the best buy from policies
that bundle trip cancellation or interruption with emergency medical
evacuation coverage. Find out if the policy pays for the medical
coverage up front, if you have to get approval from the insurance
company before you can get care, and if there is a referral line you
can call. Don't fall for sales pitches that play on your fears, read
the fine print carefully.
How much should you pay?
Comprehensive travel insurance policies, which include travel
medical coverage, medical evacuation and trip cancellation or
interruption insurance, usually cost between 5% and 7% of the
overall cost of the trip. The premiums are based on your age, the
cost of the trip, the amount of medical insurance you choose and the
baggage-replacement insurance. Where you are traveling doesn't
factor into the price as much as you would expect it to.
If you are traveling to England on a full-blown luxury tour for
$5,000 a person, it will cost you around $350 to insure your
vacation. And if you are planning to tour the African Serengeti, it
will still cost you around $350 in insurance premium.
Where to purchase travel insurance
Most travel agencies, cruise lines and tour companies will offer
to sell you travel insurance. While the prices are often better
through the tour company, the coverage will carry more exclusions.
Plus, if the company goes under, you probably won't be able to
collect. It is usually safest to buy your travel insurance directly
from a reputable insurance company.