Travel Insurance

Consumers planning a trip may consider travel insurance to protect their investment

Whether your family is headed to Europe or Disneyworld, travel insurance can protect against possible financial losses if you are forced to cancel, delay or interrupt your vacation. Something may even happen during your trip requiring that you pay the expensive additional costs to travel home unexpectedly.  Travel insurance can protect you from the unforeseen costs of trip disrupting events.

What is Travel Insurance?

Travel insurance can protect against the loss of non-refundable travel costs - such as airfare, hotel and tour expenses. Other types of travel insurance offer protection against losses due to medical emergencies, damage to personal property, and even a death which may occur away from home on vacation. Although each policy or certificate may include different benefits, most policies include coverage to pay for the costs of an interrupted trip, for lost baggage and for medical emergencies while traveling.  Each of these benefits may be tailored to your particular needs on your trip.

If you're working with a travel agent you trust, ask about his or her experiences with any recommended travel insurance companies. Have their customers filed claims? Were those claims paid? If you're planning an adventurous vacation (i.e. skydiving, scuba diving), ask if the insurance will cover those activities.

What are the Types of Benefits that may be in Travel Insurance Policies?

Medical/Accidental Death Insurance
Medical/Health - Typically reimburses you for medical and emergency dental expenses that you have because of an illness or injury while you are traveling. Medical Evacuation - Typically provides emergency transportation, such as air evacuation or ground medical transport, to take you either to a hospital in the geographic region where you are or for transportation back to a hospital near your home. This type of coverage is useful if you're traveling to a rural area without easy access to medical facilities.  In the event a person passes away during travel, repatriation coverage will cover for the insurer to handle the necessary transportation.	Accidental Death/ Accidental Death and Dismemberment. Provides specified benefits to beneficiaries if you die due to an accident on a covered trip or to you if you lose a hand, foot, limb or eyesight due to an accident on a covered trip.  This coverage is usually split into three parts: Air Flight Accident - Covers death or dismemberment during flight only. Common Carrier - Covers death or dismemberment while traveling on public transportation such as a plane, ferry, train, bus or taxi. Accidental Death - Covers death or dismemberment at any time during a trip.
Trip Cancellation/Delay/Interruption Insurance
Trip Cancellation – Typically reimburses you for pre-paid travel expenses if you aren't able to take your trip because you or a family member becomes ill or dies. You may also be able to seek reimbursement should your trip be cancelled due to an unforeseen natural disaster at home or the destination; or a legal obligation such as being called for jury duty or serving as a witness in court. Travel Delay - Typically reimburses you for pre-paid expenses if you aren't able to take your trip because of a travel delay, such as a flight delay or cancellation..	Trip Interruption - Typically reimburses you for pre-paid travel expenses if your trip is cut short because you, or a family member, become ill or die, or because of any other misfortune listed in policy. Covered reasons might include bad weather, airline strikes, terrorism, bankruptcy, jury duty, or fire or flood damage to your home. Cancel For Any Reason (CFAR) policies. These policies typically allow you to cancel a trip and receive the trip cancellation benefits for any reason.  They are more expensive and typically only reimburse you a percentage of your travel costs. The reason for cancellation is not relevant. There is usually a time frame for when cancellations are allowed, and you must insure all of your pre-paid and non-refundable expenses. CFAR policies are usually added as an extra option in addition to trip cancellation coverage.
Baggage/Rental Car Damage Insurance
Baggage Loss - Typically reimburses you for lost, stolen or damaged personal items. This usually does not cover personal items that may be lost or damaged by an airline. If you buy baggage insurance be sure to review the policy for the list of property that would not be covered. Some of your property may exceed the limits allowed.	Rental Car Damage -  Typically reimburses you for damage or loss to a rental vehicle and the rental company’s loss of use of the rental car while any damage is being repaired. You may decline the rental car company’s offer of a "collision damage waiver" if you determine that you have this coverage under travel insurance coverage. This coverage does not provide liability protection.

What is and is not Covered?

Before you buy travel insurance, review the insurance policies you have now. If you have life, health or homeowner’s insurance, you may not need to buy certain types of travel insurance. Many homeowner’s insurance policies may cover you for the cost of lost baggage, but may cover only part of the loss and not the true cost of obtaining new materials while traveling.  Most health insurance policies cover you for the cost of medical treatment, but some do not pay for the cost of medical care provided abroad.  

Before purchasing a travel insurance policy, be sure to review the policy and speak with your insurance company or agent to learn what personal property and medical coverage you have while you're traveling. Find out if your policy requires you to obtain prior approval before seeking medical care. Also check if any pre-existing medical conditions or age limits will exclude you from coverage. Some policies cover pre-existing conditions if you buy the coverage within a week or two of booking your trip. Others won't pay for pre-existing conditions or charge a higher premium to cover them. Some insurers charge more for older travelers. 

You will also want to carefully review the list of covered reasons for canceling your trip, as well as any exclusions and coverage limitations. Also check the refund policies on pre-paid expenses. Some policies will refund your money if you cancel months in advance, but few will offer any refund if you cancel at the last minute. You may also want to ask what insurance benefits you may have if you use a credit card to pay for the trip.

Travel insurance policies typically exclude epidemics and pandemics as these as generally known events. Travel insurance policies similarly do not cover trip cancellations due to a fear of travel because of an epidemic or pandemic.  There may be coverage if a specific country imposes travel restrictions or if your trip is cancelled because you or a traveling companion became ill as a result of the epidemic/pandemic.

Some airlines, cruises and tour operators may offer Cancellation Waivers. Keep in mind that waivers are not insurance policies and are not regulated by the Division of Insurance. Read all of the restrictions before you buy a Cancellation Waiver.

How Do I Purchase Travel Insurance Coverage?  Can I Ever Be Turned Down?

Travel insurance may cost between 4-10% of a trip's price. For example, for a trip that costs $5,000, travel insurance might range from $200 to $500 depending on the coverage. Before you purchase this insurance, consider the following:

• What are the chances you'll be impacted by severe weather or another event?
• How much are you willing to pay for a back-up plan?
• Do you have questionable health or is a loved one ill?

If you cannot afford to cancel and rebook your trip or your health insurance doesn't cover you abroad, you may want to consider travel insurance. You typically may not need travel insurance for short trips close to home.

Travel insurance is offered in a competitive market.  You have the right to shop around for travel insurance from companies available in your area but a company also has the right to turn down your application for coverage. 

In order to obtain a travel insurance policy, you must fill out an application to help the insurance company learn about you, your trip, and the risks the insurance company would be responsible for if they insure you.  After reviewing the information, the insurance company will use its own standards, known as underwriting guidelines, to decide whether to issue you a policy, and the rate it would charge for the coverage.

If an insurer agrees to consider your application, the producer or company may issue you an “insurance binder,” a legally binding statement indicating that you have immediate protection for a specified period of time during which the company will decide whether to issue you a policy.  If the company formally accepts your application, it will issue a policy, usually covering the duration of your trip.  If your application is rejected, you will need to apply to another insurer.

What Should I Do if I Have A Problem on my Trip?

Most insurance policies generally require you to do the following things:

1. Contact and give notice of the covered problem to the insurance company.

2. Protect yourself from further losses or damage.

3. Create a list of all damaged, destroyed or stolen property. Keep a copy of this list and give a copy to your agent, claims adjuster and/or insurance company.  In case of theft, be sure to give another copy to the police.

4. Show the damaged property to your agent, claims adjuster and/or insurance company, if asked. Do not dispose of any damaged property until the company says you can.