What Your Travel Insurance Really Covers

Travel insurance covers lost baggage, trip cancellations, emergency medical bills, and other essentials for travel. As useful as travel insurance can be, it does not cover everything. Knowing the extent of coverage helps you make an informed decision on what travel insurance to buy.

Let’s go over what a travel insurance policy really covers, including coverage types, exclusions, and the fine print.

The Basics of Travel Insurance Coverage

Let’s review what coverage a standard travel insurance policy usually offers.

Trip cancellation

If your trip gets canceled for a covered reason, you can receive a financial reimbursement through your travel insurance policy. Trip cancellation coverage covers some or all prepaid, nonrefundable trip expenses, such as airline and hotel fees. Coverage can kick in cases of:

• Trip canceled for a preapproved reason
• Travel delay causing additional expenses
• Trip interrupted due to a covered reason

Covered reasons that are considered acceptable for insurance claims may include:

• A death or serious illness in your immediate family
• Your illness
• Extreme weather events
• Bankruptcy or other financial conflicts
• Legal obligations (e.g. jury duty)
• Terrorist acts in the destination

Many travelers choose the “Cancel for Any Reason” add-on for travel insurance policies. This is a great way to simplify the process of obtaining travel insurance and can provide great peace of mind. Still, “Cancel for Any Reason” travel insurance comes with certain requirements. Most insurance providers require you to notify them of the canceled trip 48 hours before you set off for your destination. If your trip gets canceled due to civil unrest or dangerous geopolitics, a typical CFAR travel insurance policy may not reimburse your travel expenses.

Travel medical insurance

If your health insurance doesn’t cover medical expenses when you’re traveling, you can invest in travel health insurance. This type of insurance can help you afford the emergency medical bills for injuries and illnesses during the covered period of your trip. Depending on your policy, you can obtain travel medical coverage for five days to over a year.

Travel medical insurance can cover the costs of emergency medical treatments while you’re on a trip. This insurance can be invaluable since you won’t need to delay care. In addition, travel medical insurance providers often offer services to facilitate emergency services, such as translation help. Examples of what can be covered include:

• Heart attacks
• Broken bones
• Emergency dental procedures
• Medical evacuations

However, if you have any pre-existing conditions with complications that arise during your trip, the travel insurance policy may not cover this treatment. Basic travel health insurance only covers unexpected, emergency medical treatments.

Emergency evacuation

If you need a medical evacuation, travel insurance may be able to cover airlift travel expenses that are necessary for receiving urgent care. An emergency air ambulance can cost thousands of dollars, and international airlifts can cost over $50,000. Because of the high potential fees, make sure to check your travel insurance policy before purchase to see whether medical evacuation is truly covered.

Other than medical evacuations, travel insurance may also cover evacuation expenses due to civil unrest. Political evacuation coverage can cover political unrest, armed conflict, and personal threats. Coverage does not necessarily require an active government warning.

If you want evacuation coverage, you may need to obtain a specialized travel insurance policy or an add-on. Many travel insurance providers exclude coverage by default if a traveler’s trip is affected by war, terrorism, or dangerous political situations.

Baggage loss

If your baggage gets lost, stolen, or damaged, travel insurance can come in handy. Baggage problems plague millions of travelers every year. Baggage that gets checked in can also be delayed, which can be troublesome.

Travel insurance can cover losses and damages to your baggage that occur during transport. However, travel insurance policies often place limits on belongings and come with restrictions. For example, the baggage loss coverage of your travel insurance policy may only cover up to $500 per lost item.

By choosing a more comprehensive travel insurance policy, paying for an add-on, or increasing the coverage limits, you can obtain extra baggage loss coverage. The standard travel insurance policy may only provide minimal baggage assistance because many airlines reimburse travelers if they lose or damage baggage.

Common Exclusions and Limitations

Pre-existing medical conditions

The most important exclusion of travel insurance policies that travelers should know about is the exclusion of pre-existing conditions.

Pre-existing medical conditions include illnesses, injuries, mental illnesses, and medical conditions that are diagnosed prior to your trip. For example:

• If you sought treatment or took medications for a condition within a period before your trip
• If you experienced symptoms before the trip
• If you were diagnosed with a condition before your trip

Age restrictions

Some travel insurance companies may not provide coverage to those above a certain age. This is because to some insurers, travelers above a certain age may have a higher chance of medical concerns, making them too risky to insure.

Travel for medical treatment

Medical tourism involves traveling abroad for medical treatment. Medical procedures and post-treatment follow-up care related to medical tourism are both excluded from travel insurance coverage. Medical tourism may be either cosmetic surgeries or non-cosmetic surgeries.

High-risk activities

If you want coverage for high-risk activities, you will need to buy specialized travel insurance for extreme sports and adventure. The standard travel insurance policies exclude activities such as:

• Bungee jumping
• Scuba diving
• Mountain climbing

Without the necessary insurance add-on or policy, medical treatment and evacuation expenses that are a result of high-risk sports and activities will not be covered.

Specific limitations and caps

Travel insurers will impose caps on reimbursement for different aspects of insurance coverage. For example, there may be a specific cap on stolen items or lost luggage, as well as other limits on medical evacuation coverage. For example, you may have a $500 cap on baggage loss reimbursements and a $100,000 coverage limit on emergency medical expenses.

Trip Cancellation and Interruption – The Fine Print

When a trip gets canceled, it needs to meet certain requirements before you can obtain a partial or full reimbursement on nonrefundable, prepaid travel expenses.

Covered reason

First, the trip must be canceled for a pre-approved, covered reason. This may include:

• Inclement weather events that cause disrupted travel services
• Death of your traveling companion or within your immediate family
• Illness
• Terrorist incidents
• Job termination and bankruptcy
• Other extraordinary events listed by your travel insurance policy

Essentially, the trip needs to be canceled for an unpredictable, unforeseen circumstance. Otherwise, you may not receive a reimbursement.

If you obtained Cancel for Any Reason (CFAR) travel insurance coverage, the insurance provider may still have a requirement regarding cancellations. For example, many insurance providers require you to notify them of the canceled trip 48 hours before you set off to your destination.

Claim evidence

Other than notification and covered reason requirements, you will also need to have evidence that helps substantiate your trip cancellation insurance claim. This may mean showing documentation that proves an interrupted trip due to extreme weather, medical records from your physician, receipts, and other relevant proof.

Medical Coverage Abroad

Travel health insurance offers valuable financial protection for travelers who don’t have sufficient health insurance coverage when traveling abroad. Here are the essentials travelers need to know about medical coverage abroad.

Primary vs. secondary insurance coverage

Primary medical coverage allows direct claims. This means you can submit the claim to your travel medical insurance provider before submitting it to another insurer.

Secondary medical coverage requires you to file an insurance claim with your primary insurance provider first. This means after a medical incident abroad, you must file a claim with your US health insurance provider first (even if you expect them to reject the claim). You may need the insurance refusal notice before you can submit a new claim to your secondary health insurance provider.

Naturally, primary travel medical insurance is more convenient. However, it may be more expensive, making it not necessarily the best choice for every traveler.

Single vs. multiple trip coverage

Single trip travel health insurance only provides active coverage if you’re traveling. If you return home at any point, it counts as ending your coverage.

Multi-trip travel health insurance lets you leave for travel and return home as many times as you want during the covered period. Usually, the allowed period that is covered is 30 to 90 days. You need to buy these travel medical insurance policies on an annual basis, and you may be required to carry US-based health insurance.

Documentation and pre-authorization

If you want medical care coverage in your travel insurance policy, you might need to obtain pre-certification. This prior authorization involves requesting approval so that the medical coverage and services you seek will be covered once you start traveling.

Geographic restrictions and how they affect claims

Your chosen destination may affect whether insurance covers your medical expenses. If you travel to a high-risk location, such as a war-torn area or a place with a notoriously high crime rate, you may not receive coverage. Before choosing your travel insurance provider, be sure that they cover the places you are going to visit.

Overlooked Coverage Areas

Don’t waste your travel insurance. A travel insurance policy can cover more than you know. Here are commonly overlooked areas of coverage.

Travel delays and missed connections

If you miss a flight, cruise, or other transportation connection because of travel delays and other unforeseen circumstances, your travel insurance plan might reimburse you for some of the costs. Some travel insurance providers offer this coverage by default, whereas others offer it as an optional add-on.

Rental car damage insurance

If you don’t want to overpay for rental car protection when you rent a car for your trip, consider rental car damage coverage as an add-on for your travel insurance policy. This can protect you from car physical damages.

Non-insurance services

Your travel insurance provider may also offer additional non-insurance services and products. For example, you may be able to obtain help for:

• Bail bond
• ID theft resolution
• Legal referrals
• Emergency cash advances
• Translation services

Make sure to carefully read and understand your policy to fully take advantage of all its benefits.

Reading and Understanding Your Policy

When choosing a travel insurance policy, it is essential to read and understand it thoroughly. However, the jargon and phrasing in insurance policies can be tricky. Here are some tips on understanding travel insurance policies.

Going over the exclusions

One of the most essential parts to understand about an insurance policy is the list of exclusions. This designates what reasons are excluded from coverage. For example, the standard travel insurance policy typically does not cover injuries due to high-risk sports, known storms, epidemics, and acts of war.

Asking the insurance provider

If your travel insurance policy confuses you, it’s a good idea to ask questions to your insurer directly. A good insurance provider should be able to provide you with quick and understandable instructions and clarifications.

Using third parties for help

Travel advisors, insurance brokers, and third-party reviews can help you gain more insight into your travel insurance policy. They can also provide you with useful, time-saving recommendations for the best insurance options that suit your needs.

Summary

Travel insurance policies can cover a wide range of expenses, from well-known baggage damages and trip cancellation costs to medical evacuations and high-risk activities. Coverage, limits, and requirements will depend on your chosen travel insurance provider.

Knowing your policy details can significantly improve the outcome of your insurance claim. Choosing a suitable travel insurance provider can also go a long way in protecting you against travel risks. Check out our list of 5 best travel insurance companies of 2024.