A Practical Guide to Buying Travel Insurance

Complete travel insurance packages start as low as $8 per day, but according to AAA, only about 38 percent of U.S. travelers buy travel insurance. That’s despite the fact that the average claim can run into the thousands of dollars. Insurer World Nomads says that its average claim amount for 2017 was $1,634, and its most expensive claim—a medical evacuation of a child from Sitka, Alaska, to Seattle—was nearly $200,000. Suddenly, that $8 per day seems like a pretty good investment. But, as Michael Holtz, founder and CEO of the travel agency Smart Flyer, says, “People don’t think they need it till they need it.”

I traveled for years without a safety net. Only after handing over a few hundred dollars for an airport hotel on one occasion and a few hundred more for antibiotics to treat a sinus infection on another, did I finally abandon my wild and uninsured ways. And I’m so glad I did.

On a recent trip back to my hometown in Missouri from Barcelona, where I’ve been based for over a decade, a 3 a.m. hospital visit involved a slew of just-in-case tests for an underwhelming diagnosis of gastritis. Then the bills started trickling in—a few hundred dollars here, a thousand there for a whopping total of nearly $6,000. Fortunately, my month-long $185 World Nomads policy covered everything after an initial $80 copay. Whew.

But even if you’ve committed to buying travel insurance, choosing the right policy for your needs—and even knowing what those needs are—can be tricky. To help elucidate the process, I consulted a number of travel agents, insurance industry professionals, and lifelong travelers. Read on for everything you need to know to pick a policy like a pro.

First things first: What are the types of travel insurance and how do they work?

There are three main types of travel insurance. It is possible to buy each separately, but ideally they’re purchased as a bundled package, usually under the generic moniker “travel insurance.”

• Trip Cancellation Insurance: Airlines, cruises, and travel agents sell these policies, which cover the cost of your trip in the event of an unavoidable cancellation due to events such as a natural disaster or disease outbreak at the destination or a serious illness or death in your family. Most sources agree that, as a standalone, cancellation insurance is better than nothing, but it is not nearly as good as a package deal. “While it may seem less expensive, it may not cover all of the components of your trip,” says Andrew David Harris, vice president and COO of Harris Travel Service. You may pay less upfront, but you’ll likely pay more down the road for all of the things this kind of insurance doesn’t cover.
• Medical Evacuation Insurance: This covers the cost of an emergency transfer (in an ambulance, helicopter, etc.) from an area with inadequate medical care to the nearest medical center with the services you need. It’s costlier, but very necessary in isolated and politically unstable parts of the world.
• Travel Health Insurance: This covers the cost of medical care when you get sick or have an accident in another country and usually includes medical evacuation.

Unlike most domestic health insurance policies, travel insurance doesn’t typically have a deductible. Some inexpensive policies (like the one I used with World Nomads) will require that you pay a small, nonrefundable, initial policy excess amount before further costs up to the benefit limit are covered. Many policies work on a reimbursement plan: You pay upfront, save your receipts, and file a claim, then after processing, your insurance company pays you back for covered expenses.

Can’t you just use your existing insurance coverage?

Most U.S. healthcare policies, including Medicare, don’t cover travelers on international trips—both the Centers for Disease Control and the U.S. State Department recommend that travelers purchase medical travel insurance. If you do have an international healthcare policy, double-check with your insurer that you’re covered for your destination, with sufficient benefits and payouts for whatever you may need.

If you booked your trip with a credit card such as World MasterCard, Capital One Venture Rewards, and Chase Ink and Sapphire cards, you may be covered for some delay, luggage, and travel accident expenses. Home contents or rental insurance may cover some lost, stolen, or damaged valuables or even offer a reasonably priced floater policy (an add-on to your regular policy that covers easily moveable property) if you travel with expensive equipment. Again, be sure to check for any gaps that a travel policy could cover.

The best way to know for sure is to call your provider(s) and ask. Traveler Jessie Festa, of the blog Jessie on a Journey, suggests that you ask for a summary of your call to be emailed so that you have everything in writing.

What your plan should include

Experts agree that before you buy, you should absolutely do two things: Look for specific exclusions in the fine print on potential policies, and contact someone on the inside (a travel or insurance agent) with any questions or doubts. If you’re not sure who to contact, email your potential provider’s help address. If the company doesn’t respond to your queries, cross it off your list and move on to the next one. Don’t risk getting stuck in a bad situation with an unresponsive insurer.

While every traveler and trip is different, a complete travel insurance package should include coverage for:

• trip cancellation
• trip interruption
• trip delays
• missed connections
• baggage and personal effects
• emergency medical and dental care
• emergency medical evacuation
• accidental death and dismemberment and repatriation

Your travel insurance policy period should be for the duration of your trip from door to door (no gaps or shortcuts, please), and cover you for every place you plan to visit, whether it’s in-state, out of state, or international. Some destinations are higher risk than others so insurers don’t offer the same coverage for the same price everywhere. Daniel Durazo, director of Marketing and Communications for Allianz Global Assistance, adds that “a good policy includes a 24/7 contact line for both medical and travel emergencies.”

What’s most important? Phil Sylvester, head of PR and Media Communications for World Nomads, says it best: “Truckloads of coverage for hospital costs and medical repatriation home. The rest is just window dressing.”

Extra coverage to consider

A few types of travelers—including adventure travelers, luxury travelers, and corporate travelers—should consider higher tiers of coverage.

“Luxury travelers should upgrade their lost luggage and trip delay amounts because standard levels cover more modest belongings and lodging,” advises Annette Stellhorn, president and Group Luxury Travel Designer at Accent on Travel.

Stelhorn also notes that adventure and high-risk travel “require higher benefit amounts for medical evacuation, which can run more than $250,000.” And Judy Perl at Judy Perl Worldwide Travel says that “most insurance companies will not insure high-risk travel at all, with the exception of big companies like First Allied and Travelex.” Even less risky activities and sports may only be covered to a limit—that is, climbing to certain heights and diving to certain depths.

Finally, corporate travelers needing flexibility may want “cancel for any reason” coverage, although Jennifer Wilson-Buttigieg, co-owner and copresident at Valerie Wilson Travel explains these plans “only cover 75 percent of trip expenses [and only] if travelers cancel their trips at least 48 hours in advance.”

What travel insurance won’t cover

Travel insurance isn’t a substitute for regular health insurance. It is meant to cover expenses related to sudden illnesses, accidents, delays, and cancellations related to your trip while you’re on the road. After your return, you may be able to negotiate reimbursement for continuing care related to an incident that occurred abroad, but only if your regular health insurance isn’t liable for the expense. If your expenses abroad are related to pre-existing conditions already covered by policy at home, chances are, you’ll have to chase down your regular health insurer for any bill reimbursement.

Non-emergency medical expenses (physicals, anything cosmetic, eye exams) aren’t covered. Childbirth isn’t covered either, even for pregnant travelers who go into labor prematurely. Shannon O’Donnell, 2013 National Geographic Traveler of the Year and blogger at A Little Adrift, mentions another coverage gap travelers miss: “You’re only covered for what you’re licensed to do back home—if you don’t have a permit for a motorbike and you drive one in Southeast Asia, you might not be covered in an accident.”

When and where to buy

When

Generally, you should book your travel insurance as soon as you can after booking your flights and hotels. If you’re traveling to a destination affected by hurricanes, book sooner than later, because you can’t buy insurance to cover delays or cancellations related to a storm that already has a name.

People with pre-existing conditions need to take other factors into consideration. Most insurers will only cover expenses related to prior illnesses in very specific circumstances; travelers with pre-existing conditions must book coverage within a specific time frame—usually between 14 and 21 days—following their initial trip reservation, and they must be medically able to travel on the date they purchase the insurance. Some insurers have a few conditions they cover automatically, such as mild asthma. But don’t take any chances and be sure to check.

Where

Always buy from an official, reputable provider or website, such as World Nomads, Allianz Global Assistance, Seven Corners, or First Allied. Any travel advisor you may work with is likely to have a good idea of what you need for your trip and the best insurers to buy from. However, it may cost less to buy a policy online at a comparison site or directly from a provider. “Comparison sites offer a way to search, compare, and purchase from a wide array of plans,” says Stan Sandberg, cofounder of TravelInsurance.com.

Still, he strongly recommends consumers speak with a licensed agent when they are unsure about benefits. The website elliot.org is another good resource and features a list of reputable travel insurance companies compiled by consumer advocate Christopher Elliott.

Some final tips on managing expenses and filing claims

Most policies require you pay non-emergency expenses out of pocket and submit your claim for reimbursement afterward. In a non-life-threatening emergency, call your insurer for instruction if you’re able—it will make the claims process easier, and they may be able to direct you to a hospital or medical center where your care can be billed directly to them. Hannah Logan, of the blog Eat Sleep Breathe Travel, says this step is especially important because the small print on many policies “reads that calling the contact number [may be] a requirement for coverage.”

Buying travel insurance is a little like packing a suitcase—it can seem overwhelming at first, but eventually it becomes a routine and necessary part of every trip. And once it does, you can travel worry-free, calm in the knowledge that you’ve save yourself from a possible $6,000 mistake.

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