Why Travel Insurance?
(May 2002)
Some of the most frequently asked questions I have
received since September 11 have to do with travel insurance. Do I
need it? Am I already covered? Can I be high-risk and still buy it?
Many view travel insurance as the bane of travel planning, an
annoying extra cost for that dream vacation that just shrinks the
budget even more. However, if recent world events have taught
travelers anything, it's that there is a great deal of value in
having the protection it provides.
What can travel insurance
offer?
Terrorism coverage: Provides protection in
the event you can't go due to terrorism at your destination.
The U.S. Statement Department must issue a warning for that
destination before leaving.
Supplier default coverage: Covers the
unforeseen ceasing of operations (and other types of financial
insolvency) of your tour operator, airline, or cruise
line.
Trip delay coverage: Provides reimbursement
for food and lodging expenses when a trip has been
delayed.
Trip cancellation/trip interruption
insurance: Covers reimbursement for nonrefundable
payments if a trip is cancelled or interrupted.
Baggage loss/delay coverage: Pays for the
purchase of items deemed essential if baggage is delayed more
than one day and up to a set amount if the baggage is lost.
However, you should be aware that most insurance policies
factor in depreciation. For example, a $100 dress that is two
years old might be worth $50 under the insurance
guidelines.
Medical expenses arising from an accident or
sickness coverage: Pays a certain amount for hospital
and physician's bills if an accidental injury or illness
occurs during a trip. The policy must be taken out within the
required timeframe for pre-existing conditions to be covered.
This insurance can be very valuable because most health
insurance will not cover a passenger for medical expenses
incurred overseas.
Emergency medical evacuation/repatriation
coverage: If you have a medical emergency overseas and
need to be flown to a medical facility, this coverage would
either reimburse you for expenses or, depending upon the
insurance carrier, provide the transportation by trained
medical personnel. This coverage is also available on a yearly
basis, as a separate policy. If you travel frequently, it is a
good policy to have.
Emergency networks: This benefit is
generally available through all of the travel insurance
policies and provides phone access to a facility that will
arrange for emergency assistance.
Pre-existing conditions exclusion waivers:
With this waiver, any injury occurring prior to and including
the effective date of the insurance, and any illness occurring
during the 60 days prior to and including the effective date
of the insurance, will be covered. You must purchase coverage
within the specified days of the initial trip
deposit.
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Travel insurance coverage
Generally, a
good basic plan should include trip cancellation/interruption
protection, emergency medical coverage, emergency medical
transportation protection, baggage loss and baggage delay coverage,
and travel delay benefits. Always purchase enough trip cancellation
and interruption coverage to protect all of your non-refundable trip
payments—usually the full cost of your trip. For example, if you
cancel your trip within a given period after you've paid, most
travel companies will not refund your money.
Another thing to
keep in mind is that many policies specifically exclude "dangerous
activities," which include things like scuba diving, motorcycling,
mountain climbing, and rough terrain trekking. If such activities
are on your agenda, you'll need a policy that specifically covers
you while participating in them.
Pricing for policies is
typically based on the cost of your trip, how old you are, and how
long you're going to be traveling. As a rough guideline, expect to
pay between eight and 10 percent of the cost of your trip. My
upcoming family vacation to the Dominican Republic cost around
$2,500, and my travel insurance policy for two adults and two
children cost $196, roughly eight percent.
Are you already
covered?
Many readers write in asking me whether they
might already have travel insurance coverage through other means.
The answer is, yes, some coverage might be available through your
homeowner's or renter's insurance policy, auto insurance policy, or
the credit card you used to pay for the trip. However, nothing will
cover all the travel items in the way specific travel insurance can.
Rachel Thompson of Queens, NY, wonders how necessary is
travel insurance if using a credit card? Some credit card insurance
policies may protect you for flight accidents, car rental damage, or
accidental death while traveling. But this protection is usually
only available if you purchase your trip with that particular credit
card.
When renting a car with a credit card, keep in mind
that coverage varies and may exclude luxury cars such as
convertibles or SUVs. Credit card or not, your own auto insurance
should cover you while you're driving a rental car. However, if
you're only covered for liability, it might be worth getting
collision coverage.
A homeowner's or renter's insurance
policy generally covers theft of your personal property, even if
you're traveling out of the country. Nevertheless, some valuables
such as jewelry, cameras, and laptops may not be
covered.
Always check with your credit card company and auto
and home insurance policies to see what's covered before your
journey.
Health insurance
Don't assume that
your medical insurance at home will cover injury or illness while
abroad. You should check your policy carefully. Medicare recipients
are often surprised to find that they do not have coverage outside
the country. If your regular policy won't cover you abroad, evaluate
your needs and shop around for a plan that suits you best. If your
own health insurance policy does pay for medical expenses abroad,
you still may want to consider purchasing a medical assistance
policy to fill in any gaps, especially for medical evacuation, which
is not covered in most health insurance plans. If you travel two or
more times a year, consider an annual policy. These are available
for as little as $150 a year, and you'll know that your policy is in
effect for last-minute trips.
Sick before you
travel
Anne Bogle of Prince George, British Columbia,
wrote in asking if there are any travel insurance companies that
allow policies to be purchased by high-risk seniors. Yes, but it
depends on how "high-risk" the condition is.
Most travel
insurers break down their policy options into high-risk and general
risk categories, and will not cover pre-existing medical conditions,
which they define as any illness you have before you leave that has
been documented by a doctor. Once you have notification of this
illness, the travel insurer will assess your illness and choose
whether or not to cover you.
Insurance companies can be very
fickle in this area as Judi Switzer of Thornhill, Ontario, recently
found out when trying to purchase travel insurance for her
84-year-old mother. Last year, Switzer's mother had a heart attack
while vacationing in Florida, and thankfully, she had traveler's
insurance to cover expenses and went on to make a full recovery.
This year, however, she was set to return to Florida after her
doctor deemed her fit for travel. But because her doctor changed her
prescriptions from the previous year, the insurance company denied
her coverage.
Buried in the fine print of most travel
insurance policies are grounds to exclude coverage such as "an
adjustment in medication" for a pre-existing condition. Most
policies that offer pre-existing condition coverage state that the
patient must be stable for 180 or 365 days prior to
departure.
Insurance comparison
Linda Byard of
Yellow Springs, OH, is "totally baffled" by the array of prices and
coverage of travel insurance policies. She wonders whether there is
an easy way to compare policies? Thankfully, there's a nifty little
website that puts clarity into this confusing area.
Insuremytrip.com allows consumers to compare and
contrast plans from any one of nine insurance providers and 30
plans. It's currently the only travel insurance site that allows
customers to comparison-shop.
Constant
changes
Virtually every travel insurance company has
changed its policies since September 11, most to include
easy-to-understand, packaged products that address travelers' most
frequent concerns. Nevertheless, one thing remains the same: If ever
something demanded research and reading the fine print, travel
insurance is it. Be sure you understand what you are purchasing and
make sure it meets your specific needs.
Travel insurance is
all about having protection should an unforeseen event occur. No one
expects to get injured or sick on his or her vacation. But it can
happen to anyone, especially if you partake in '"dangerous
activities" or are older. No matter what, travel insurance provides
worthwhile protection, at a relatively economical price, and should
be considered by all travelers.
Additional
resources:
U.S. State
Department - Medical Information for Americans Traveling Abroad:
An extensive listing of over 50 medical evacuation and travel
insurance companies.
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