You might remember my blog post on Travel Insurance that explains what it is and why you need it. And perhaps you took my advice and purchased travel insurance for your next trip.
Well done, you!
But perhaps, also, upon comparing policies, you said to yourself, “huh?” Travel insurance—like anything using legalese—can sometimes be difficult (and booooring) to decode. This post breaks it down into easy-to-digest bits for you!
Not all coverage is created equal!
If you’ve taken a cruise or escorted vacation recently, the travel company might have offered “travel coverage protection.” This travel coverage can cover a variety of things, but one thing it won’t cover is the company’s financial default or bankruptcy. Travel insurance, on the other hand, comes from a third party that has been licensed (or approved) by the state in which it’s selling insurance. Not only does travel insurance meet stricter requirements than travel coverage sold by a cruise line or tour company, it will cover you in the unlikely event the supplier defaults or goes bankrupt.
TL;DR: Travel insurance covers more and is more regulated than travel coverage sold by travel suppliers.
So now that you know the difference between the two, let’s look at all the types of travel insurance you can purchase. Most travel insurance is a combination of these, so you’ll rarely have to purchase more than one travel insurance policy for your trip.
Trip Cancellation/Trip Interruption
Different travel insurance companies provide different levels of coverage SO IT’S ALWAYS IMPORTANT TO READ WHAT YOUR INSURANCE POLICY COVERS. (Get used to seeing that throughout this post.) But most trip cancellation/trip interruption insurance includes:
Remember that time your flight got cancelled due to weather and you had to sleep all night in the airport because you couldn’t afford to pay for a hotel room? It sucked, right? (And no, the airline doesn’t have to compensate you for that hotel room. It’s in the contract you agree to when you purchase a plane ticket.) The only reason the airline would compensate you is if you were bumped, and even then it may only be with airline credit.
Trip delay insurance reimburses you for any accommodation, meal, and/or transportation expenses you may incur for delays while en route to or from your destination due to:
This insurance reimburses expenses due to theft or the mysterious disappearance of personal property. I would recommend filing a police report or report with the airline so you have documentation to send to the insurance company. Baggage loss insurance also covers damage to your baggage and personal effects, but only up to a certain point. I said it before, but I’ll say it again: IT’S ALWAYS IMPORTANT TO READ WHAT YOUR INSURANCE POLICY COVERS.
Good ol’ baggage delay! This is when the airline loses your luggage, and it takes them a few days to return it. Baggage delay insurance will pay for the purchase of essential items (read your policy to see what they describe as essential, and if there’s a monetary limit) until you receive your bags. Pro tip: pack some changes of clothes and essentials into a carry-on as extra insurance. (Another pro tip: have your travel agent deal with your lost luggage while you enjoy the rest of your trip!)
You got American health insurance? (I’ll assume you said yes.) Well that won’t cover you outside of the US. And even if you’re not out of the country, and you get sick or injured outside of your insurance’s “service area,” you may have extremely high deductibles and/or co-pays. So if you can’t afford to spend hundreds or thousands of dollars because you got sick on vacay, purchase travel insurance. (Note: travel insurance will reimburse you, so in the moment you’ll still have to pay. Make sure you have an emergency credit card or something that will cover unexpected travel and/or medical expenses.)
Emergency Medical Evacuation and Repatriation
I talked a bit about this in my last blog post on travel insurance—this is the bit that can get especially expensive. Medical evacuation transports you to a hospital or medical facility due to an unforeseen sickness or injury WITHIN THE COUNTRY YOU ARE VISITING. If medical facilities aren’t adequate or you need to be transported to a hospital near your primary residence, that is called medical repatriation. IT’S ALWAYS IMPORTANT TO READ WHAT YOUR INSURANCE POLICY COVERS—especially to see if it also covers medical repatriation.
(Sorry for all the shouting, this stuff’s just really important!)
This insurance covers the cost of damage to or theft of a rental car. Your rental car company may also offer this. Your car insurance may also cover this. And your credit card may offer secondary coverage. (More on primary and secondary coverage at the bottom.) This is often the least necessary travel insurance to purchase (and is often offered as an optional add-on), but make sure you check with your car insurance and credit card company to see if you are covered through them.
The insurance company will provide cash for accidental loss of life or limb while traveling.
You’ve probably heard a lot about pre-existing conditions on the news lately. If you have a medical problem you are currently aware of (or are diagnosed within the time the insurance defines of purchasing your travel insurance for most companies), that is a pre-existing condition.
Not all policies include a pre-existing conditions waiver, and most require that purchase your travel insurance within 15 days of your initial deposit for pre-existing conditions to be covered. So even if you don’t have a pre-existing condition now, you get diagnosed with something two weeks before your trip and end up cancelling your trip because of it, your travel insurance won’t cover your cancellation unless it covers pre-existing conditions.
Cancel for Any Reason
It does exist! Cancel for Any Reason insurance is generally added on to an already purchased policy for an additional fee. But travel insurance companies are serious when they say cancel for any reason. It can come in handy because regular travel insurance won’t reimburse you if you decide you can no longer afford your trip or just don’t want to go on it anymore.
Shoo! You are now fully versed in the different types of travel insurance available.
Like I said before, most policies include most if not all of the options listed above, so it’s not as if you have to purchase four different policies just to make sure you’re fully covered. But there is one last vocabulary lesson to go over: the difference between primary and secondary coverage.
If you have other insurance (maybe multiple medical insurances), you might already be familiar with the difference between primary and secondary insurance. (If you are, you can skip to the end!)
Primary insurance will pay out (according to their policy) no matter what. Travel insurance purchased from a third party is primary insurance.
Secondary insurance will only pay out after the primary insurance has paid all it’s going to pay. So maybe your credit card has trip cancellation insurance, and any parts of your trip purchased on that credit card are covered. But most credit card insurances are secondary insurance, so if you didn’t purchase travel insurance, the credit card company won’t reimburse you if your trip is cancelled.
Does that make sense? With primary insurance you are covered within the extent of their policy without having to purchase anything else. With secondary insurance, you will only be reimbursed if you’ve purchased a primary insurance policy. And like I stated before, travel insurance purchased from a third party is primary insurance. So if you purchase travel insurance and it doesn’t cover everything for some reason, your credit card may reimburse you, too. Double insurance!
If I can leave you with one last thought about travel insurance: IT’S ALWAYS IMPORTANT TO READ WHAT YOUR INSURANCE POLICY COVERS. When you purchase travel insurance you legally enter into a contract and you are the only person who can be held responsible for your purchase.
Have more questions about travel insurance? Let me know in the comments!
(But if you have any questions about a specific policy, call your travel insurance company—I’m not qualified to answer every tiny detail about insurance policies.)
Now get out there and go!