Alamy Stock Photo
The idea of buying travel insurance is simple enough: Once you’ve shelled out thousands of dollars for your special Grand Tour, you don’t want all that money going down the drain if you have to cancel — or want to pay thousands more if you have a mid-trip medical emergency.
The reality of purchasing travel insurance, however, can be complicated. Take a quick look at one of these policies and you’ll understand why Robert Hunter, director of insurance for the Consumer Federation of America, says that virtually no one reads them. There are enough riders, waivers, exceptions, limitations and disqualifying events to baffle even the most expert interpreter of foreign-language train schedules. “The terminology is confusing,” Hunter says. “People can’t understand what the policies mean.”
So how do you figure out whether you need travel insurance, what coverage you need and what to look out for when you buy it? Look among these reality-based questions to guide you toward the coverage you want.
What if I have a heart attack overseas?
Ask your health insurer if it covers international medical bills. If not, you want to buy a travel policy that includes travel health coverage. (With rare exceptions, traditional Medicare doesn’t cover health problems when you’re traveling outside the U.S., but some Medicare Advantage and Medigap plans do.) Matt Kepnes, of nomadicmatt.com, a travel website, recommends $100,000 in emergency medical coverage. He also recommends at least $300,000 in coverage for a medical evacuation. “Evacuations can be incredibly expensive,” he says. Think backcountry hiking accident or evacuation after an earthquake.
‘‘If you have diabetes, a history of knee problems or some other chronic condition, you’ll want what’s known as a preexisting condition waiver. Good news: The waiver is included if you’re medically fit to travel when you buy your policy and you purchase your insurance soon after making your first payment toward your trip — typically within 10 to 21 days, says Julie Loffredi, of the online comparison site insuremytrip.com. Miss the insurer’s deadline, and that coverage is no longer available.
What if I break my leg two days before my trip
A last-minute unforeseen health emergency that prevents you from traveling should be covered by trip cancellation insurance. To figure out how much coverage you should purchase, add up all of your nonrefundable expenses for such things as airline tickets, cruise cost, tours and prepaid excursions. You’ll need to buy coverage for 100 percent of these costs to be eligible for certain benefits such as the preexisting condition waiver.
To collect, you’ll also need a note from your doctor certifying that you are unable to travel and including the details of your diagnosis or injury.
I’m planning a two-week European tour. If my widowed mother has a medical emergency while I’m traveling, am I covered if I drop everything and head home?
An event that causes your trip to be cut short falls under trip interruption coverage. One common scenario: the serious illness or unexpected death of a close relative such as a mother, brother or child, says Megan Moncrief, director of sales and marketing at squaremouth.com, an online travel-insurance comparison site. To make a claim in this situation, you’ll need a doctor’s note to get reimbursed. And your relative has to have been medically fit at the time you bought the insurance (which, again, you must buy on a timely basis).
I’d like to go on a Caribbean cruise this fall. What if it’s canceled because of a hurricane? Or what if my flight to Miami is delayed and I miss the boat?
A cruise called off as Hurricane Jerry barrels toward Florida would indeed be covered by trip cancellation insurance, assuming you bought it before the hurricane was forecast. Some policies also provide “cruise only” missed connection coverage that will pay for flying you to the next destination port if you miss the boat because of flight delays.
Check a policy’s wording carefully: You might not be covered for a delayed flight if your plane’s scheduled arrival falls too close to your ship’s departure. And if a cruise is rerouted, not canceled, to avoid a storm, you probably won’t get any reimbursement. But some plans may let you cancel if your destination is subject to a hurricane warning close to your departure date.
I’m forking over $10,000 for a Vietnam vacation package. Am I covered if the tour company goes belly-up?
Look for financial default coverage, which typically applies to providers such as airlines, cruise lines and tour operators. Default by the travel agency from which you purchased your land arrangements, however, probably won’t be reimbursed. And you’ll likely need to purchase your coverage shortly after making your first trip payment.
What if I’m worried about all of the above, plus pickpockets?
Comprehensive travel insurance policies are designed to cover a wide range of risks, from trip cancellation and interruption to travel delay, baggage protection, medical issues, emergency evacuation and 24-hour assistance. Some policies will even reimburse you a set amount toward the cost of a new passport. A standard comprehensive policy can add 4 to 10 percent to the cost of your trip.
More Buying Tips
Comparison shop … Cruise lines, group trip operators and airlines all offer add-on trip insurance when you buy your tickets. But it typically isn’t a good deal, says Robert Hunter, who suggests contacting insurers directly for details on prices and coverage. Among other sites, insuremytrip.com and squaremouth.com show you a wide range of policies based on your specific needs.
… but don’t dawdle. There are numerous insurance benefits that are available only if you buy coverage shortly after you make your first trip payment — including any nonrefundable deposits. As you make additional nonrefundable payments, you can usually increase the amount of your coverage.
Know your needs … Insurable trip cost is not the same as total trip cost. Prepaid, nonrefundable costs are typically covered, as are expenses that you will be billed for if you cancel your trip. Tickets purchased with frequent-flier miles aren’t covered, though taxes and related fees might be.
… but don’t overbuy. Are you taking a cheap flight to Chile and staying with friends? Instead of paying for a comprehensive policy that includes cancellation and interruption coverage, you can probably pay less for a policy that covers medical issues only. For lost luggage, you may have sufficient coverage on your homeowners policy or the credit card you use to book your trip.
Play it safe. If your claim results from excessive drinking or recreational drugs, you’re not covered. Ditto if you engage in high-risk sports not specifically listed on your policy, or specifically excluded from it. You’re also not covered if you travel against government advice, ignore local driving rules or leave your belongings unattended.
Personal finance journalist Lynn Asinof worked for 20 years at the Wall Street Journal and has written for Money, Fortune and the Boston Globe.