What is travel insurance and why do you need it?
When you are planning your long-awaited trip, the one thing that is sure to crop up, in your mind, is the question “Do I need travel insurance?” After all, it is an extra expense, and it can be quite costly depending on the package you choose. The trip may already be costing you a considerable amount and you seriously wonder if you really need it.
Don’t worry, you are not alone, many hundreds of millions of travelers are asking themselves the very same question. We would like to help you make an informed choice before you take the plunge in making this important decision, because there are lots of things to consider if you are purchasing a travel insurance policy. In our opinion, and experience, we believe that travel insurance is as vital as choosing the right trip.
Simply put, travel insurance is very much like any other insurance that you buy. You wouldn’t consider driving your car without insurance, nor could you imagine not having your house insured. Travel insurance will provide coverage for you financially should you experience the unexpected. Imagine, the airport loses your luggage, and they have no idea where it is, so even before you are settled in at your destination, you are already fretting about the costs of the contents of your suitcases. Unfortunately, international carriers do not have a fault-free history of ensuring the safety of your luggage.
Your travel insurance policy may cover such things as hotel stays, medical expenses, and interruption in your travel, accidents or even event tickets. Some insurance policies will offer assistance in providing information or actually making arrangements for you in the case of an emergency, for instance if you fell ill and had to be transported back home.
Naturally, the more insurance coverage you have, the more expensive it will be. Prices and features will vary greatly from one company to the next, so it is worth shopping around ahead of your planned trip, to ensure that you get the best possible coverage at the most reasonable price.
Here are a few scenarios where travel insurance would be invaluable:
Travel company goes out of business—Yes, maybe you think that this scenario is unlikely, but it does, and has happened. Not only do you not get to go on your trip, but you lose all of the money you have spent on it.
Cancellation of your trip—Your spouse suddenly gets taken ill and you are unable to go on the trip. The holiday booking, or deposit, is non-refundable.
Interrupted trip—If a trip gets cancelled, say due to freak weather conditions or an act of nature like a hurricane (Case in point—Hurricane Irma in September 2017) your insurance can cover you for all reimbursements at whatever stage you are at and as assigned in the insurance policy.
24 hour hotline—It is good to know that you can get help or advice on a 24-hour basis, especially if you are in a country whose language you do not speak
Travel insurance is not “one plan fits all.” You may have specific needs that need to be discussed with your insurance company. This will depend on the type of holiday that you are taking. It also depends on whether this trip is a one-off or whether you plan to be a frequent traveler. Perhaps you have retired and now plan to take a cruise around the world, or jet off to many different destinations around the world during the course of a year. So, your choices then come down to whether you need an annual insurance policy or whether you choose a trip-specific insurance policy. Generally, in the long term, an annual policy represents better value, but there are many factors for you to consider before that becomes your choice.
Here are two case studies that might help you to decide if you need travel insurance
Tony H. from the UK
“We had saved up for almost five years to go on the holiday of a lifetime. We had spent years planning it, scouring the internet, phoning up agents and hotels, planning every last detail. We are retired, both worked so hard all of our lives and never had much money, but we had been careful with it and our mortgage was paid off, so we now wanted to do something special together. The kids had left home and they were happy for us as they said we did everything for them, so we deserved a grand holiday. I don’t know what we were thinking of when we decided not to get travel insurance; it seems stupid now. The kids tried to tell us that we had to, but it was a lot more money on top of the trip and we just couldn’t afford it.
Two weeks before we started the holiday, June, my wife, had a major heart attack. It wasn’t expected as she had never had any warnings and we thought she was healthy. I know we are in our seventies, but we didn’t expect it. She was rushed to hospital and the doctor said she needed a by-pass urgently. We both sat and cried in the hospital room because we knew our dreams were shattered. We weren’t going on holiday anywhere. I phoned up the travel agent who had helped us plan. She cried with me, but she said that they couldn’t refund so close to the trip. All that money gone, just like that. We could have saved up for another six months and got the insurance, but we didn’t think anything like this would happen.
June is doing alright but she has to be careful. Maybe it was a good thing it didn’t happen when we were away, that’s what we keep telling ourselves. When she is a bit better, the kids are going to put together for a little holiday for us but our big dream has gone. I am glad you asked me about this because I would say to anyone to get insurance, you can’t risk losing that amount of money unless you are rich.”
Julia G. from Michigan
“I am a bit of a stickler for getting everything right, so when I was asked if we wanted travel insurance, I never thought about saying no. My friend and I wanted this trip and we didn’t want to take any risks. We were going to travel through France, Italy and then Spain as a bit of an adventure. Part of that plan was to do some skiing. We are both accomplished skiers, so weren’t worried at all. But, it all went wrong in Italy when Janice broke her leg. It was treated straight away and we planned to just relax and enjoy the scenery, but then there were complications and she needed an operation. She just wanted to go home and had a bit of a panic. She is my best friend and we did have another week left, but I could see she was upset so I called the insurance hotline. Having that insurance was amazing. They literally sorted everything for us, they got us on a plane within 24 hours and we didn’t have to do anything to sort out the organizing. We also got a small percentage of our holiday money back which I donated to a charity because I believe in giving back. Never go on holiday without insurance is what I would say!”
We think you will agree that no one wants to experience what happened to poor Tony and June.
What to look for in a good insurance policy
Make certain that the company has a high coverage limit for medical expenses. Generally, you want to be aiming for up to $100,000 or, if you can afford it, get even higher coverage; medical costs can very quickly add up! We would advise not to try and save money on this aspect of your travel insurance, because this is the one that it most commonly used and most often needed, especially if you don’t have it. Also look for a policy that offers emergency evacuation and care, separate to your medical coverage. Imagine if you were on a climbing trip up in the Alps and you break your leg. A helicopter is needed to get you off the mountain and to the hospital. Can you even begin to imagine the cost of that exercise? As a standard package, we would suggest cover of up to around $300,000. You might also ask for cover that takes you from evacuation to your home. In the case of a natural disaster (Hurricane Irma September 2017) you need to be evacuated somewhere else, so ask for cover for that. Expect the unexpected and then you know you are safe physically and financially.
Your insurance policy should cover:
- The majority of countries in the world
- Injury, accident or illness
- 24/7 emergency services
- Lost or damaged possessions
- Electronics cover—Phones, iPads, laptops etc.—usually $500 but you can purchase more coverage
- Financial protection in case of issues in the country you are visiting
- Emergencies—Natural disasters etc.
- Coverage cancellations for all aspects of the trip like hotels, flights, other transportation
- Sudden need to return home if you are notified of a serious illness or death in your family or any other emergency
Make sure that you fully understand what is NOT covered by your travel insurance. For instance, say you plan to do any extreme activities like bungee jumping, hang-gliding, whitewater rafting or anything that involves a higher risk.
You are generally not covered if you injure someone on the road—third party liability—nor are you covered for alcohol- or drug-related incidents; these are classed as recklessness, so if you fall over while skiing and it is discovered that you have alcohol or drugs in your bloodstream, expect not to get help from the insurance company.
Much like any normal health insurance, you will not be covered for any pre-existing conditions. So, if you have a heart condition and have problems with your heart when on your trip, that will not be covered. Yes, it seems unfair but all insurance companies will tell you the same thing.
Check out the medical coverage with great care, as insurance companies are not averse to putting in loopholes in the small print. Typically, all medical care on travel insurance is concerned with emergency care. It is not a replacement for your normal health care, so you can’t claim your normal prescriptions on your travel insurance. Travel insurance is purely in place for if you have a medical emergency that is not a pre-existing condition. If you think of travel insurance as being accident insurance, then you won’t be disappointed when they tell you that your illness is not covered.
Our suggestion to you is to inspect the exclusions carefully in your policy. When it is time to make a claim, it will be too late. It is also important to note that you cannot be careless just because you have travel insurance. For instance, if you leave all your personal belongings on the beach unsupervised, while you go swimming in the sea, that would be classed as careless and the travel insurance would not pay up for that.
In closing, our advice to you would be to get travel insurance. You just do not know what may or may not happen on your trip. We advise you to buy your insurance plan as soon as you are able, before you start planning and paying for the trip. Decide exactly what cover you want, and do not skimp on the important details. 99.9% of the time, you will not need to use the travel insurance and you may return home thinking that the purchase of it was a waste of money. But the one time you DO need to use it will be the time when you can breathe a big sigh of relief, grateful that you do not have to worry, you can get home, or you can recover some money for the lost items.