If you're taking an expensive tour or cruise, or if you're buying a vacation with components that won't be refundable if things go wrong (such as a making deposit on a rental home), then buying travel insurance is a must. For visits to countries with limited medical facilities, you'll also need good medical evacuation insurance.
But how do you start?
Do You Need to Buy a Policy?
If you're just buying a flight or hotel stay, you can usually forego the extra expense of insurance—in general, those types of travel outlays are refundable if canceled with enough notice.
Before you decide to buy travel insurance, it's important to check what coverage is included with the credit cards you use. Some cards confer trip cancellation/ interruption insurance, auto rental collision damage waiver (CDW), and lost luggage coverage as long as you use that card to pay for your reservations.
If you have several cards in your wallet, use the one that offers the most coverage. You can only get coverage from the credit card you've used to purchase the travel.
The price of travel insurance is usually between 4% and 8% of the overall trip's cost. But it can vary widely depending on the value and length of the trip, your age and overall health, and the type of vacation you're taking.
Insurance for extreme sports or adventure travel, for example, will cost more than coverage for a cruise—if those risky pursuits are covered at all. Often, dangerous activities will be excluded from basic policies. You can also lose your coverage if you participate in a covered activity while intoxicated.
Trustworthy Travel Insurance Companies
The following insurers, listed in alphabetical order, are among the most trusted in the industry:
- Allianz (866/884-3556; www.allianztravelinsurance.com)
- Berkshire Hathaway Travel Protection (844/411-BHTP; www.bhtp.com)
- John Hancock Travel (866/888-7803; www.johnhancocktravel.com)
- Medjet (800/527-7478; https://medjetassist.com)
- Travel Guard International (800/826-5248; www.travelguard.com)
- Travel Insured International (800/243-3174; www.travelinsured.com)
- Travelex Insurance Services (800/228-9792; www.travelexinsurance.com)
Because travel insurance is such a complicated product, its best to always compare and contrast before buying, because a company that may be tops for, say, covering medical mishaps on an African safari, may not offer the best value for a simple vacation home rental policy.
We recommend, however, that instead of going directly to each of of the companies above, you should compare available policies using an aggregator. You can do that with one stop at such marketplace sites as InsureMyTrip.com, TravelInsurance.com, and SquareMouth.com. Once you see the range of what's available, then you can focus your price search with one or two of the best companies.
Types of Travel Policies
The most standard types of travel policies:
Trip Cancellation Insurance (TCI)
There are three major types of trip cancellation insurance (also known as holiday cancellation insurance).
1) for when pre-paid cruises or tours get canceled and you can't get your money back
2) for when you or someone in your family has a medical emergency and can't travel (but beware that pre-existing conditions may not be covered)
3) for when bad weather makes travel impossible.
Some insurers provide coverage for events like jury duty; natural disasters close to home, like floods or fire; even the loss of a job. A few have added provisions for cancellations due to terrorism.
Some advice:
• Always check the fine print before signing on, and don't buy trip cancellation insurance from the same tour operator that may be responsible for the cancellation; buy it only from a reputable third-party travel insurance agency. Why? If the company you're traveling with goes belly up, it's likely you won't have someone to contact to activate your coverage.• Buy shortly after booking your vacation; many policies require policies to be secured within a few weeks after reservations and payment are made.
• Don't overbuy. You won't be reimbursed for more than the cost of your trip.
• Note that you cannot buy trip cancellation insurance for an event that's clearly on the horizon. For example, if you're going to the Caribbean, you can't buy insurance after a tropical storm or hurricane has been forecast.
Medical Insurance
Most health insurance policies cover you if you get sick away from home—but check, particularly if a Health Maintenance Insurance (HMO) insures you back home. If you travel abroad, note that with the exception of certain HMOs and Medicare/Medicaid, your home medical insurance might cover medical treatment—even hospital care—overseas. However, most out-of-country hospitals make you pay your bills up front and send you a refund after you've returned home and filed the necessary paperwork. You'll try to collect from your provider when you return home.
Under U.S. law, insurance companies are not required to cover any medical expenses incurred in countries on the State Department's Travel Advisory List, even if their policies indicate they will cover out-of-country medical expenses. Some supplemental carriers will sell travelers coverage for these areas.
Some credit cards (American Express and certain gold and platinum Visa and Mastercards, for example) offer flight insurance against death or dismemberment in case of an airplane crash if you charged the cost of your ticket to the card, and if you have signed up for the program in advance of your trip.
If you require supplemental insurance, try one of the following companies:
- UnitedHealthcare Global (800/732-5309)
- Travel Assistance International (800/821-2828)
- Only for diving destinations: The Divers Alert Network (DAN) (919/684-2948)
The cost of travel medical insurance varies widely. Check your existing policies before you buy additional coverage.
Also, check to see if your medical insurance covers emergency medical evacuation: If you have to buy a one-way, same-day ticket home unexpectedly, you may be out big bucks.
Lost-Luggage Insurance
Most insurance policies will cover lost luggage. If you decide not to get insurance, you need to know that on domestic U.S. flights, checked baggage is covered up to $3,800 per ticketed passenger by the airlines, the maximum amount under DOT regulations.
On international flights (including U.S. portions of international trips), baggage is limited to approximately $9.07 per pound, up to approximately $1,780 per checked bag. Since those amounts may not cover the actual value of what you have in a suitcase, we always suggest taking valuables or irreplaceable items with you in your carry-on luggage.
If you file a lost luggage claim, be prepared to answer detailed questions about the contents of your baggage, and be sure to file a claim immediately, as airlines typically enforce a 4- to 15-day deadline.
Before you leave home, compile an inventory of all packed items and a rough estimate of the total value to ensure you're properly compensated if your luggage is lost. You will only be reimbursed for what you lost, and no more. Once you've filed a complaint, persist in securing your reimbursement; there are no laws governing the length of time it takes for a carrier to reimburse you.
If your bag is delayed or lost, the airline has the responsibility to reimburse you for reasonable expenses, such as a toothbrush or a set of clothes. Here's the DOT language on delayed luggage, and liability limits.
Lost luggage may also be covered by your homeowner's or renter's policy. Many platinum and gold credit cards cover you as well, so check your benefits before purchasing something. If you choose to buy additional lost-luggage insurance, be sure not to pay for more than you need.
Car Rental Insurance (Loss/Damage Waiver or Collision Damage Waiver)
If you hold a private auto insurance policy at home, you probably are covered in the U.S., but not abroad, for loss or damage to the car, and liability in case a passenger is injured. The credit card you used to rent the car also may provide some coverage, so consult your benefits list.
Car rental insurance probably does not cover liability if you caused the accident. Check your own auto insurance policy, the rental company's policy, and your credit card coverage for the extent of coverage: Is your destination covered? Are other drivers covered? How much liability is covered if a passenger is injured?
Car rental insurance costs, on average, $25 a day and up.
Insurance That Covers Sickness Away From Home
If you suffer from a chronic illness, consult your doctor before your departure. For conditions like epilepsy, diabetes, or heart problems, wear a Medic Alert Identification Tag (800/432-5378; MedicAlert.org), which will immediately alert doctors to your condition and give them access to your records through Medic Alert's 24-hour hotline.
If you worry about getting sick away from home, consider purchasing medical travel insurance and carry your ID card or policy in your bag or wallet at all times in case you are incapacitated. In most cases, your existing health plan will provide the coverage you need.
Pack prescription medications in your carry-on luggage, and carry prescription medications in their original containers. Also bring along copies of your prescriptions in case you lose your pills or run out. Carry the generic name of prescription medicines, in case a local pharmacist is unfamiliar with the brand name. And don't forget an extra pair of contact lenses or prescription glasses.
The International Association for Medical Assistance to Travelers (IAMAT) offers a helpful page with country-by-country information on medical care and medical providers. IAMAT is ahead of many governmental organizations in providing information about worldwide conditions such as malaria, and for a small donation ($25 is suggested), it will provide you with a set of publications showing where you can eat and drink the food, water, and milk safely, and where you cannot.
The United States Centers for Disease Control and Prevention (800/311-3435; www.cdc.gov) provides up-to-date information on necessary vaccines and health hazards by region or country.
Any foreign consulate or embassy can provide a list of area doctors who speak English. If you get sick, consider asking your hotel concierge to recommend a local doctor—even his or her own. You can also try the emergency room at a local hospital; many have walk-in clinics for emergency cases that are not life threatening, and many don't charge prices that are nearly as high as those charged in the USA.
