Mar 14, 2013 14:21 - travelinsreview | 6,108 views
While there a few specialty insurance plans designed for unique travel needs (car rental protection and flight guard are a couple that come to mind), there are essentially two types of travel insurance that most travelers end up buying:
- Trip cancellation insurance
- Travel medical insurance
As you might expect, trip cancellation insurance hikes the cost of travel insurance considerably. What you may not know is that travel medical is really inexpensive. Since we’re all trying to keep an eye on costs these days, it’s important to tackle this important question: do you really need trip cancellation or is travel medical enough?
Let’s start with how you know what coverage you need for a particular trip.
If you’re traveling abroad, you’ll need travel medical.
What many travelers don’t know is this: your health insurance stops at the border. This is true of many health insurance plans and it’s true of Medicare. Medicare supplement plans often have a little travel medical, but if you’re hospitalized it may not be enough.
The U.S. State Department’s Tips for Travel Abroad includes this warning:
“Obtaining medical treatment and hospital care abroad can be expensive, and medical evacuation to the U.S. can cost more than $50,000. Note that U.S. medical insurance is generally not accepted outside the United States, nor do the Social Security Medicare and Medicaid programs provide coverage for hospital or medical costs outside the United States.
If your insurance policy does not cover you abroad, it is a good idea to consider purchasing a short-term policy that does…”
Luckily, travel medical is some of the least expensive coverage you can get – often costing less than a dollar a day!
Travel medical care usually includes evacuations.
Every year, there are media stories like these that describe badly injured travelers without medical evacuation coverage:
- A young Toronto woman stranded in Croatia after slipping on a yacht
- An injured man left in a German hospital while his family tries to find medical transportation
- A couple trapped in Costa Rica after a tragic ATV accident
A medical evacuation can easily cost $100,000 depending on the patient’s injuries and location, and travel medical coverage typically includes coverage for events like this.
Plus, the travel insurance company will arrange and pay for the medically necessary transportation, bring a friend or loved one to the patient’s bedside, and arrange for their travel back home (especially useful if you can’t travel by commercial means due to your condition).
If you’re gonna be adventurous, cover that too.
Activities like hang gliding, para-sailing, SCUBA diving, skiing, mountaineering, rock climbing, etc. are often specifically excluded, so what’s an adventurous traveler to do?
While most activities that put a traveler at more risk than say lounging all day at the beach with a book are typically excluded from all travel insurance plans. You can get coverage for those adventurous activities by buying the right plan or adding additional coverage.
It’s a little more expensive, but when you consider the range of things that can go wrong and how much it might cost to patch you up and get you back home, it’s really not that expensive.
So, now that we’ve explained what you really need on your next travel adventure, let’s get back to our original question – do you really need trip cancellation coverage?
Why buy trip cancellation coverage?
Actually, you might. No one plans a trip – or even starts their trip – thinking they’ll have to cancel it before they leave or abandon it after they start.
Still, things happen, and even worse travel suppliers like resorts, tour operators, and hotels are getting more and more strict about their cancellation policies making most pre-paid travel expenses 100% non-refundable. While we all know that those supplying our travel experience are just trying to maintain their bottom line and cut financial losses, it can really leave a traveler in a bind when:
- Someone gets sick and you need to be with them
- Your boss cancels your vacation leave
- A terrorist attack occurs at your destination
- Your job ends and you have to find new work
- Your passport is stolen the week before your trip and can’t be replaced in time
- Your business partner is hospitalized and you need to cover their responsibilities
- You’re in a car accident on the way to the airport
- You’re the victim of an assault and want to cancel or abandon your trip
- You’re required to appear in court
Notice we mentioned abandoning a trip in addition to cancelling it. Trip cancellation coverage is always coupled with trip interruption coverage, which kicks in when you are called home to handle an emergency or are required for some reason to leave your destination (mandatory evacuations is one of those reasons).
Trip cancellation coverage reimburses a traveler 100% of their pre-paid, non-refundable trip costs if they have to cancel for a covered reason. If you pay for a once-in-a-lifetime cruise through the Panama Canal for your anniversary, that comes with a hefty price tag and if you don’t want to lose all that money if your wife is suddenly hospitalized after a car accident, you’d better have trip cancellation coverage.
If you’re on that cruise and you get a phone call saying your son has been hospitalized, you better have trip interruption coverage to catch the next flight home and get the rest of your pre-paid cruise expenses reimbursed.
It’s all about what you can afford to lose and your comfort level with the risk involved.
Some trips are just not worth insuring.
To be perfectly honest travelers don’t always need travel insurance. Here’s a list of trips where you probably don’t need much in the way of insurance:
- A last-minute domestic getaway using your airline miles. In this case, you don’t have a lot of money invested and your own health insurance will cover emergency medical care (at out-of-network costs).
- A super cheap trip to stay with family or on friends’ couches. Again, you don’t have a lot of money involved and you’re not worried about medical care, you likely don’t need extra coverage.
- Anytime you can afford to lose all your pre-paid trip expenses. If you can afford to lose the money, skip the insurance.
Damian Tysdal founded Travel Insurance Review in 2006 on the belief that travel insurance should be easier to understand. See their travel insurance comparison tool to sort through the plans and qualify them based on the benefits you need at a price you can afford.
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