The Ultimate Guide to Travel Insurance: What You Need to Know Before You Buy

Imagine: you can’t wait to bask under the sun and enjoy the gorgeous beaches of the Bahamas. When you land, your cruise says they accidentally lost your luggage. There goes all the practical and sentimental items you brought with you. At least travel insurance can reimburse you for the losses.

Travel insurance protects you financially, covers unexpected events, and offers peace of mind. Let’s dive into what you need to know before buying travel insurance, including policy exclusions, types, providers, and comparisons.

Understanding Travel Insurance

Travel insurance can protect travelers against a wide range of financial risks. Without suitable insurance, you can lose thousands of dollars for reasons out of your control. The standard travel insurance typically covers:

• Lost and damaged baggage
• Emergency medical treatments
• Trip cancellations and delays
• Medical evacuation

Common travel insurance myths

Travel insurance is too expensive

Many travelers fall for the misconception that travel insurance is too expensive to be worth it. However, the risks of traveling are numerous and can easily ruin your day. By securing affordable travel insurance through top insurance providers, you can protect your family and yourself from these risks.

Cancel for Any Reason has no limits

Cancel for Any Reason (CFAR) travel insurance does let you get reimbursed for trip costs, such as hotel and flight expenses. However, travel insurance providers typically require you to notify them of the canceled trip at least 48 hours before you start traveling. CFAR travel insurance also usually only reimburses around 75% of your trip’s prepaid, non-refundable costs.

Types of Travel Insurance Coverage

Travelers should know the various types of travel insurance coverage before purchasing. Insurance often comes with exclusions and fine print – here are the most common travel insurance policies, what they cover, and what they don’t cover.

Trip Cancellation/Interruption

Travel insurance covers unforeseen trip cancellations and interruptions. It can reimburse you a portion or all of the prepaid, non-refundable trip expenses. Covered reasons for trip cancellation include:

• Unexpected extreme weather events
• Death of a family member
• Jury duty
• Hospitalization

You can purchase Cancel for Any Reason (CFAR) travel insurance. This kind of policy means you don’t need to have a covered reason, you can just file an insurance claim and receive the reimbursement for a portion of your prepaid, non-refundable trip expenses. However, make sure you are aware of any conditions that come with the CFAR insurance policy. There may be a time period limit that only reimburses you if you tell your insurer at least 48 hours before the trip.

Medical Coverage

Travel insurance offers valuable medical coverage to those who may not have adequate health insurance when traveling abroad. Travelers never know when an emergency medical event may strike during a trip. Travel health insurance can cover:

• Emergency medical expenses
• Hospitalization
• Outpatient treatment

Travel health insurance reimburses up to the maximum coverage limit, which starts at $10,000 and can go all the way to $8 million. A policy with a lower coverage limit will be more affordable.

Make sure you’re fully aware of the excluded medical expenses. For example, if you have a pre-existing condition like asthma, it may affect your travel insurance coverage while traveling.

Emergency Evacuation and Repatriation

Travel insurance can cover the costs of emergency medical evacuation, such as air ambulance flights. If you need to be returned to your home country due to a political emergency or civil unrest, travel insurance can also cover the emergency repatriation expenses.

Medical evacuation while traveling abroad can cost over $100,000 depending on the country you’re staying in. This makes emergency medical evacuation travel insurance potentially a huge cost-saving policy.

Baggage and Personal Belongings

Most travel insurance policies provide coverage for lost, stolen, or damaged baggage. It may also cover credit cards, passports, visas, and other personal items depending on your policy details.

Lost luggage coverage can come with exclusions, varying between policies and providers. For example, some providers don’t cover lost baggage if it gets stolen while left unattended.

Accidental Death and Dismemberment

Travel insurance can cover accidental death and dismemberment (AD&D), providing financial protection in case of death or severe injury. Travelers would be able to name a beneficiary upon purchasing the travel insurance policy, similar to life insurance policies.

AD&D insurance can offer extra protection even if you already carry a life insurance policy. The AD&D plan can specifically cover flights and other modes of transportation. However, if you already have a life insurance policy, AD&D insurance may be redundant. Consider the policy’s benefits and restrictions to see whether travel AD&D coverage would be a good fit for you.

Additional Coverage Options

You may benefit from specialized travel insurance coverage and add-ons. Here are some popularly purchased, but niche, travel insurance plans.

• Adventure sports coverage: Covers medical expenses related to extreme sports and other high-risk activities, such as scuba diving and bungee jumping.

• Rental car protection: If you want extra financial protection when renting a car, you can obtain rental car protection.

• Travel delay: If your trip gets delayed because of your carrier, trip delay insurance can help cover costs for hotel rooms, meals, and other relevant expenses. Trip delay insurance can cover additional travel expenses due to delayed flights, ferries, trains, and long-distance buses.

Key Factors to Consider When Choosing a Plan

Coverage Needs

An essential step to choosing the right coverage is determining what risks you face on your type of trip and personal circumstances. What is your planned destination? Is there a high possibility there may be an extreme, unpredictable weather event that results in a trip cancellation? This may apply if it’s storm season or if natural disasters are common in your destination country.

The most common types of travel insurance that are beneficial to travelers are:

• Lost baggage coverage
• Trip cancellation/delay coverage
• Travel medical insurance
• Emergency evacuation coverage

Travelers may also want to consider the following travel insurance add-ons:

• Extreme sports coverage
• Rental car protection
• Accidental death and dismemberment coverage

Policy Limits

Make sure you understand maximum coverage amounts and what they would mean for a travel insurance claim. With travel insurance, there is often a separate coverage limit on each type of claim that is covered by your insurance provider.

If you’re taking valuable assets along with you while traveling, consider raising the lost baggage coverage limit. Usually, only $500 is covered per lost baggage.

Consider how much travel medical insurance you need. If you have any pre-existing health conditions or concerns, you might need a policy with higher coverage limits. You should also carefully choose your travel insurance provider to ensure your medical risks are covered.

Exclusions and Limitations

Travel insurance policies usually come with a list of exclusions and limitations. It is important to be aware of what is excluded from your policy’s coverage since exclusions vary between policies.

Here are the common exclusions and limitations.

• Pre-existing medical conditions
• Disease outbreaks and pandemics
• High-risk activities (e.g. scuba diving and mountain climbing)

Pre-existing Conditions

Travel medical insurance generally excludes pre-existing conditions and their complications from coverage. Different travel insurance providers will handle pre-existing medical conditions differently.

Claim Process

Travelers can benefit from an insurance provider with an efficient and easy claims process. This means that when you file a travel insurance claim, you can expect the insurer to quickly respond to your claim.

Customer Reviews and Ratings

Before obtaining travel insurance, make sure to check the reviews and ratings of different insurance providers. Customer reviews help you get a good idea of the quality of the claims process and customer service. Expert reviews give insight into coverage differences.

How to Compare Travel Insurance Plans

1. Identify Your Coverage Needs

When determining what travel insurance coverage suits your needs, there are numerous factors to consider.

• The type of trip
• Destination
• Activities planned
• Personal health

Try to balance your travel worries with the realistic likelihood of each type of travel incident happening. Not every type of travel insurance is necessary for the average traveler. For example, if you aren’t going to do a high-risk activity like bungee jumping or scuba diving, don’t get roped into buying adventure sports coverage.

2. Research and Gather Information

Travelers can use online tools to quickly obtain travel insurance quotes and comparisons. Visiting insurance provider websites can also give a better idea of coverage options and customer experiences.

Don’t commit to the lowest quote you obtain. Travel insurance providers can have drastically different terms and quality of customer service. You can be far better protected by an insurance provider with competitive pricing and high quality coverage.

3. Compare Policy Features and Limits

Compare the different travel insurance policy features to ensure you’re getting coverage that is both useful and suitable for your needs.

The policy limits determine the maximum coverage amount for each aspect of your travel insurance policy. Having a $1,000 or higher lost baggage coverage limit makes sense if you are carrying valuable personal belongings with you. However, if you’re going on a short trip and taking low-value items, you might not need much lost baggage coverage.

4. Check Exclusions and Conditions

What is potentially more important than the coverage type is what is excluded by your policy. Review what is not covered by each insurance plan you purchase for travel. Common exclusions to watch out for include:

• High risk destinations
• Pre-existing medical conditions
• Extreme sports injuries
• Medical tourism
• Drug overdose
• Expected natural disasters
• Mild weather conditions
• Fear of flying

5. Understand the Claim Process

Travel insurance can offer valuable coverage, but only if you end up successfully filing a claim. Make sure to review the claims process as outlined by your insurer before you go on your trip. In case of an incident, you will already be familiar with the steps.

Look at how claims are filed and processed, as well as the time frame for reimbursements. Insurance policies typically require you to file a claim within 90 days of the eligible incident.

6. Consider Cost Factors:

Travel insurance costs around $204 on average, but you can go as low as $14 for your policy depending on what coverage you want. More comprehensive coverage can cost up to $800, providing better protection but bigger budget constraints.

Other than the cost of the travel insurance policy, also evaluate the deductible. This is how much you need to pay out-of-pocket on eligible expenses.

Tips for Making the Final Decision

Assess Your Risk Tolerance

Everyone has their own risk tolerance. How much risk are you comfortable taking while going on a trip? This can depend on personal values, age, health, destination, family members, and other factors. Take the time to consider how much travel insurance would give you peace of mind.

Seek Professional Advice

If you’re still not sure about whether travel insurance is right for you, you can always reach out to insurance brokers or travel agents. Professionals can help assess your situation and help you find a suitable, tailored insurance policy with competitive pricing.

Buy Early

By buying early, you can ensure that coverage will be active by the time you set off toward your destination. You can also benefit from travel insurance discounts by insuring as early as possible and shopping around for the best policies.

Travel insurance is meant to protect you from unforeseeable events. If you are already close to your departure date, unexpected things might have already interrupted your trip. It will be too late to purchase travel insurance to get reimbursements by then.

Review and Double-Check

Finally, reread the policy details and ensure all of your details are correct before purchasing a plan. It’s important to be transparent about any pre-existing conditions you might have – if the travel health insurance provider finds out later, it can disrupt your coverage.

Summary

Before buying a travel insurance policy, make sure you know the following:

• The coverage type
• Policy cost
• Coverage limits
• Trip cancellation restrictions
• Exclusions and limitations
• Deadlines

Every traveler should take the time to assess their needs and risks before traveling. Check out our 5 best travel insurance companies of 2024 to obtain fast and reliable travel insurance in just a few clicks.