As people plan their vacations and begin to make purchases for their trips, they ask themselves, “Do I need travel insurance?” The answer to this question has two answers, and they are “Yes” and “No.” Which one of these will depend on the type of trip you are planning, what you will need an insurance policy to cover and whether or not the insurance you are considering has adequate coverage for you.
Above and beyond all the advice below its wise to start with the questions;
- What might you need cover for?
- Do you have adequate cover already e.g. does your credit card purchase cover cancelations?
- Is your health insurance adequate? Always read the small print!
Do I Need Travel Insurance?
It depends. For example, if you are taking a short trip, you may not need to buy travel insurance. In the event that you need to cancel a short trip, any non-refundable portions may be very small, and you may not find that this expense is worth insuring. However, there are times when you may decide that travel insurance is a must.
In the event that you needed to plan your travels well in advance, a travel insurance policy would be a wise purchase. If the vacation is several months into the future, this leaves plenty of time for a reason to need to cancel or postpone the trip to present itself. Also, the trip may be very expensive and non-refundable. If you were unable to go, would the loss of the money you already paid cause an undue hardship? If the answer is, “Yes,” then you would appreciate the fact that you purchased travel insurance.
One time when you may not need travel insurance is when you are planning to depart in a couple of days and your main concern is that you may have to cancel the trip. For example, you would already know that your destination isn’t expecting a hurricane. Also, you aren’t likely to contract a serious disease in this amount of time. If you aren’t traveling outside of the country, you will be able to more easily change your airplane tickets if you need to do so for a minimal amount of money. You can also change your hotel reservations up until the day before you are expected to arrive in most cases without having to pay a penalty.
Flight Insurance
Flight insurance is the portion of travel insurance that covers the cost of your airline tickets if you need to cancel your trip. Airline tickets can be very expensive, and one trip may require that you spend thousands of dollars on air travel. If there is a chance that you won’t be able to make your flight, you may wish to consider purchasing travel insurance. In addition, you will have coverage for lost luggage in your flight insurance package.
Flight insurance also covers you in the rather unlikely event that there is an accident and you pass away in a plane crash. Air travel is so safe and accidents so unlikely that this really shouldn’t be the main motivator for purchasing flight insurance and you may already have sufficient coverage under your life insurance plan. If so, it’s very likely that your plan offers your beneficiaries much more money than they would receive from the flight insurance plan. If you are concerned about an airplane accident and you don’t currently have life insurance, a better idea would be to purchase a term life insurance policy.
Term life insurance is relatively inexpensive, and it will cover you under many more circumstances than just your flight.
Medical Travel Insurance
The answer to the question, “Should I buy travel insurance for medical expenses?” is a little complicated. If you are going to remain within the United States, your health insurance coverage should follow you. Generally, health insurance doesn’t cover you outside of the country. Senior citizens on Medicare definitely do not have coverage for international travel unless they purchased supplemental insurance. Therefore, many people will find medical travel insurance to be essential.
Some medical travel insurance plans are more beneficial than others. For example, if you have coverage with a company that only pays when you go to a hospital or physician within the network, you may discover that you are responsible for paying the bills in the event that you are unable to arrive at an in-network medical facility. Many travel medical insurance plans will pay no matter where you obtain care, so be sure to ask this question when you are deciding which policy is the right one for you.
Another consideration is emergency evacuations. Most likely, your health insurance doesn’t cover them. If you are going someplace that is relatively isolated and/or far away and the need to be evacuated by air is a possibility, emergency evacuation coverage is a wise purchase as fee’s can run in to tens of thousands of dollars.
Baggage Insurance
Baggage insurance is part of a larger trip interruption or cancellation policy, and it pays a sum of money if your luggage is delayed, lost or damaged. It also applies if your luggage is ever stolen. This type of coverage is useful when you need to check your bags and are traveling internationally. If you don’t purchase this coverage, you will only be entitled to receive approximately $9.07 per pound for your checked luggage. For unchecked baggage, you will only receive up to $400 total.
Airlines within the United States are required to offer you much more money than the international airlines. If an American airline loses the passengers’ luggage, for example, each person is entitled to receive $3,000. However, the airlines take depreciation into consideration. It’s extremely rare that anyone receives the full $3,000.
Although the airlines would rather you didn’t exercise this option, you can purchase something called “excess valuation.” For the cost of $1 per every $100 in value, you will receive an extra $5,000 in baggage insurance coverage. The time to buy this extra coverage will be when you arrive at the airport.
Where to Buy Travel Insurance
Generally, it’s not a good idea to buy your travel insurance from your tour or travel agent. If you use a small travel agency that has the possibility of going bankrupt in the near future, you will lose the money you spend on your trip as well as the money you spend on insurance coverage. Even if the agency is financially solvent, the company’s policy may state that you aren’t entitled to a refund if any mishaps occur. These types of policies tend to offer credit for future travel instead.
If you decide that the answer to the question, “Should I buy travel insurance?” is “Yes,” then it will benefit you to purchase it from one of the many independent companies that sell travel insurance. The most advantageous coverage is the type that allows you to cancel for any reason. You may also want to consider health insurance that includes pre-existing conditions. By determining what you need and do not need in advance, you will be able to put together a policy that protects you under the conditions that most apply to your circumstances.
The best time to purchase your travel insurance is right after you have paid for your travel tickets and hotel accommodations, in case you need to cancel soon after booking. The only time when this rule doesn’t apply is when you are going on a cruise. Wait until you enter the penalty period in this case, then purchase from an independent company.
Claim Rejection
Insurance claims are often rejected so its worth knowing the most common reasons for this:
- Alcohol. Many of us will enjoy a drink or more when on vacation but if any accident or losses are incurred whilst under the influence it will probably invalidate your insurance.
- Failure to declare medical conditions. If required to, you must be 100% honest about pre-existing medical conditions.
- The policy doesn’t cover what you’re claiming for. As mentioned right at the start of this post it’s worth spending time thinking about what you might need cover for and ensure that any policy you buy is appropriate.
- Failure to involve the Police. If claiming for theft the insurer will usually require Police confirmation.
- Proof of ownership. Falsely claiming for lost items for personal gain has been been an unfortunate and all too common occurrence that insurers have faced and indirectly have lead to our premiums being increased. Insurers will now want to take more than your word for it and will want proof of ownership e.g. receipts, for items you claim have been lost.
In order to help you circumvent any possible issues should the unthinkable happen, we’ve compiled this guide to filing an travel insurance claim the proper way!
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