The first travel insurance policy was issued in 1864—and you might be able to guess by whom. Traveler’s Insurance, a widely known brand offering all types of insurance policy today, at one time specialized in travel insurance. The company offered financial protection against loss of life and personal injuries suffered while traveling.
But travel insurance policies have evolved since then, tracking the way we travel now. They cover a wider range of losses, usually bundled into one policy, though certain types of travel protection are sold separately.
So let’s take a look at some of the different types of travel insurance and see what you get in exchange for your premium dollars. Coverage and prices do vary. Keep in mind, if you’re taking an adventure trip, the best travel insurance policy for you may not be the same as for someone traveling to a more routine destination.
What Are the Different Types of Travel Insurance?
Trip Cancellation Coverage
The mainstay of most travel insurance policies is trip cancellation coverage. Trip cancellation, in some cases, may include trip interruption coverage, which offers benefits if you have to cancel your trip midstream. Most insurance policies allow you to file a trip cancellation claim for a wide range of reasons. These include:
- The unexpected death, illness, or injury of you or your traveling companion.
- The death or illness of a family member not accompanying you on your trip.
- Unforeseen natural disasters either at home or in your destination country.
- Legal obligations such as jury duty or a summons to appear in court.
Cancel for Any Reason (CAR)
But not all reasons are covered. If you want the ultimate flexibility, you can purchase a Cancel for Any Reason (CAR) policy. With CAR, you can be as flighty as you care to be, canceling because you catch a cold, have a spat with your travel companion, or any other reason that you’d rather not travel. With CAR coverage, you can also decline to travel due to COVID, for example, if you’re anxious about the infection rates or availability of medical services in your destination country. Basic trip cancellation policies won’t cover you for reasons that arise from COVID anxiety. Not surprisingly, CAR is more expensive than standard trip cancellation coverage.
The amount you’ll be reimbursed for your claim will be calculated on the portion of your trip you’re unable to enjoy, such as non-refundable hotel and excursion expenses, theater and sporting tickets, and more. Trip interruption coverage will also cover the non-refundable cost of your original flight and the price of the new ticket you buy to fly home and other transportation costs, such as taxis and buses.
Lost or Delayed Baggage
Baggage coverage is most often sold as part of a comprehensive travel insurance policy. It covers the cost of your belongings if your bags are stolen or otherwise unrecoverable, allowing you to replace them while you are on the road and salvage your trip. If your luggage is significantly delayed, it provides the same protection. Read the fine print of any policy you’re considering to find out how long your baggage must be missing in action before you can make a claim. Pay attention to the limits of coverage, too, which may not be high enough in a standard policy to cover the cost of replacing expensive camera equipment or electronics. You can purchase additional coverage if you’re traveling with pricey items.
Travel Auto Coverage
If you own a car and have an auto insurance policy, be aware that the coverage it offers almost invariably stops at the international border. If you’re planning to rent a car (or even thinking about it) you might want to consider travel auto coverage. It is not easy to obtain coverage once you’ve arrived at your destination, so you’ll need to plan ahead and the travel insurance they offer you at the rental counter is likely to have low coverage limits, insufficient to protect you against liability in the event of a serious accident.
Travel Medical Insurance: Our Number One Pick for Coverage
Perhaps the most important type of travel insurance to carry is travel medical insurance. You may not realize it, but if your health insurance is through a US company, your health benefits likely stop at the border. If you need medical care abroad, you’ll have to pay for it out of pocket. Given the potentially high costs of healthcare, that’s not a position you want to be in.
A visit to an allergist for a rainforest-induced condition, a broken wrist you suffer on a challenging trail, and other common health events can cost you far more than travel medical coverage, which can be as low as $50 for a two-week trip to Zimbabwe, for example.
Most travel medical policies don’t impose a deductible either. One caveat: some insurers either don’t cover or charge a premium to include extreme adventure activities in their lists of covered activities. So if you’re planning on sky diving into a jungle or tackling particularly treacherous trails, be sure to ask if your policy allows for that kind of fun.
How Has Covid Changed Travel Insurance?
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It’s not much of an overstatement to say that the global pandemic changed everything. Certainly, that’s the case with travel insurance.
Early on in the pandemic, travel insurance companies were widely criticized for their position on COVID-related claims. Since then, many have adjusted their policies to take COVID into account and make their policies more attractive to customers.
Travel medical insurance, for example, almost invariably covers the cost of COVID treatment. Trip cancellation and trip interruption claims due to a traveler’s infection are also routinely covered. But not all insurers and policies offer the same terms. So before you purchase a policy, check the COVID details of both the travel medical and trip cancellation coverage. Ask plenty of questions. You want to be very clear on what kind of protection you’re purchasing in the new world we live in.
Is Travel Insurance Worth It?
Shall we just cut to the chase? There’s only one trouble with travel insurance: it costs money. But when you consider the time and financial commitments you make when you plan a vacation, from airfare to tour prices & accommodations, travel insurance may turn out to be the best deal you’re going to make.
A canceled flight, an unexpected illness or injury before or after you depart, or even the most common of occurrences—lost luggage—can cost you hundreds if not thousands of dollars if you don’t opt to carry travel insurance. Compare that to the average cost of a very robust travel policy: about 10% of your non-refundable trip expenses. Costs are even lower if you don’t opt for all of the bells and whistles and may be as low as 4% of your expenses if you shop around.
Tip: Paying for Travel Insurance
You can buy a travel insurance policy with your own funds, of course. But many premium travel credit cards offer free insurance coverage to cardholders. If you already have one of these travel rewards credit cards, be sure to inquire whether any travel insurance benefits are among the perks you’re entitled to.
While your credit card may not offer all of the kinds of coverage you want, lost and delayed baggage and travel auto insurance are often among your credit card perks. Depending on whether you can meet the minimum purchase threshold in the short time allotted—usually between 30 and 90 days—it might even make sense for you to apply for a travel credit card and charge your travel expenses to it, just to be able to take advantage of the free insurance benefits.
But no matter how you pay for it, travel insurance offers one benefit: increased peace of mind. So before you set out on your next adventure, consider whether you can squeeze the cost of coverage into your budget.
About the Author
|Susan Doktor is a journalist, business strategist, and principal at the branding firm, Branddoktor. Her contribution comes to us courtesy of Money.com, one of the world’s most trusted personal finance publications.