We get this question a lot and it’s understandable. After all, travel is expensive enough and no one wants to pay for stuff they don’t need and/or can’t use. Even worse, we all hate paying for stuff that doesn’t work the way we thought it would. So, we thought we’d break down what coverage you need, when, and why.
Of course, the reason you buy any insurance coverage at all is to protect yourself from big financial losses. We’re not just talking the kind of losses that leave you bankrupt, however. We’re talking about coming back from what should have been a restful tropical vacation with $25,000 in credit card debt and no tan lines because that would really bite too.
So, let’s go over the typical list of travel insurance coverage and what you need and don’t need. In this case, we’re just going to be working with the big ones – the ones that could hit your bank account really hard.
1. Trip Cancellation
“Do I really need trip cancellation?” is an important question. After all, trip cancellation adds significantly to the cost of a basic travel medical plan and, after all, you probably have no plans to cancel your trip for any reason. Right?
So, what happens if:
- You get into a car accident on your way to the airport and are hospitalized?
- A hurricane destroys the cottage you rented for a week at the beach?
- Your passport is stolen the day before you leave for a trip abroad?
You see, the thing about insurance is that it’s designed to protect you against what hasn’t happened yet. Sure, you didn’t plan to cancel your trip, but things you can’t control or predict do happen and if you can’t afford to lose all your pre-paid expenses, trip cancellation could be your very best friend.
To be perfectly fair, there are at least 3 trips where travel insurance probably isn’t necessary.
2. ‘Cancel for any reason’
If standard trip cancellation adds to the cost of travel insurance, you can bet that ‘cancel for any reason’ does as well so this is certainly one coverage to purchase only when it’s truly necessary.
So when is it truly necessary?
When your life has extenuating circumstances or you may have to cancel for a reason that’s not covered. For example, what if:
- You’re a single parent taking a trip on your own and your child care arrangement comes undone?
- Your target destination suddenly begins appearing on the news broadcasts as a place of rioting, political clashes, and strikes?
- Your mother falls and breaks a hip and you need to care for her for a few weeks instead?
To know if you really need ‘cancel for any reason’ it’s important to think of your current situation and carefully review the covered reasons for standard trip cancellation. If everything in your life is covered by those standard covered reasons, you don’t need ‘cancel for any reason’, but if your life has extenuating circumstances, it couldn’t hurt to get a quote or two.
Here’s the real truth: your health insurance coverage may or may not cover you when you’re traveling – even if you’re traveling for business. Plus, Medicare does not cover seniors outside the U.S., although some Medicare Supplement plans offer seniors some emergency medical protection outside the U.S.
Another scoop? Medical care is expensive everywhere. Sure, it’s most expensive in the U.S. and Canada, but a broken wrist could cost you a big bundle in New Zealand or Australia too and if you don’t have travel medical, you could wind up paying for the X-rays, cast, bandaging, and drugs with your credit card.
Many hospitals require a certificate of travel medical coverage and a credit card before they’ll treat a foreigner beyond basic emergency care. To know if and what your health insurance will pay if you are hurt or ill outside your health insurance network, call your provider and ask a very specific question like this: “How much will you pay if I get food poisoning in Greece?” or “How much coverage will I have if I break a leg in Spain?”
Of course, you’ll want to insert your illness or injury concern and your destination, but you get the idea. If they say you won’t have coverage, then you need travel medical or a really big bank account. It’s a simple as that. If you or anyone else around you has a pre-existing medical condition, you’ll want to look into a waiver for that as well.
4. Trip Interruption
Much like ‘cancel for any reason’, the need for trip interruption does not universally apply to everyone. This coverage, however, is often bundled with trip cancellation plans and it’s often included in travel medical plans as well.
Just so we’re clear, trip interruption is coverage that pays for your unused trip costs and unexpected expenses if you have to end your trip and return home for a covered reason.
Trip interruption is useful in circumstances like these, for example:
- You and your wife are traveling on an anniversary trip when you get a phone call in the dead of night – your daughter has been rushed to the hospital.
- Your family is enjoying the Caribbean when a hurricane turns and heads for the island where you’re staying and evacuations are ordered.
- Your family is having a great time in Disney World when you get word that your father has died.
In each of these cases, the traveler wants to abandon their trip and head home to handle the emergency there. Abandoning a trip prior to your scheduled departure can mean extra airfare and lodging, additional transportation and meals, and you could lose the remainder of your trip investment. Trip interruption coverage takes care of that, but you have to read and understand the covered reasons for trip interruption with your plan because you can’t leave a trip simply because you changed your mind or the weather was terrible.
This one’s kind of gruesome and no one likes to think about it, but several news stories this year alone underscore the need for this coverage if you travel outside the borders of your home country. Evacuation coverage provides for a medically necessary evacuation if you are injured and need treatment you can’t receive locally. Repatriation coverage provides for the return of your body if you die on a trip.
There are two things to understand about this coverage:
- It only covers you outside the border of your home country, and
- Evacuations are really expensive and difficult to coordinate!
This coverage isn’t just for trekkers climbing Mount Everest. It’s necessary and useful anytime you travel outside the range of your health insurance coverage. For example:
- This American was left in Germany while his family worked to arrange medical transport.
- This Canadian was stuck in Croatia with mounting medical bills and no way to get home.
In each of these cases, the injured traveler was stuck in a foreign country as the costs for their medical treatment compounded while family and friends tried to raise the funds necessary to transport them in a medically equipped plane to a place where they could receive medical care within their health insurance network. These operations are expensive and difficult to coordinate, but a travel plan with this type of coverage have the resources to arrange and pay for an evacuation. They’ll also have the resources to navigate the complicated process of bringing a body back home, should the worst occur.
See our post on How Much Travel Medical and Evacuation is Enough? for more details.
6. Missed Connections
Missed connection coverage is really only useful to those on pre-arranged tours and cruises. In fact, many travel insurance plans limit this coverage to travelers taking a cruise. Here’s how it works:
- You leave for your trip
- Your first flight is delayed for hours and you miss your connecting flight
- The cruise ship leaves without you
A ocean voyage on a cruise ship can be quite expensive, but so is a guided cycling tour of the wine country in Italy, or a historic river cruise down the Danube. Either way, you don’t want to be left with no options and no way to catch up to the trip that has already started.
Missed connection coverage provides reimbursement for the extra flights or flight change fees and other transportation necessary to catch up. It’s important to note that the reason for the missed connection has to be a covered reason and the covered reasons do not include missing your flight because you forgot to set the alarm. So, apply this coverage wisely.
7. Travel Delays
Travel delays happen for all sorts of reasons, but if you’re stuck in a place where the airline has no responsibility for your comfort, it can mean the difference between sleeping on the floor of the terminal or having a warm bed and a hot meal.
Travel delay coverage reimburses you a certain amount each day for basic expenses such as hotel rooms and meals if your trip is delayed for a covered reason. Remember, the airlines don’t have to pay a dime when the flights are cancelled because of an ice storm, but they’re also not required by law to compensate you for mechanical failure delays or scheduling delays.
Of course, there are a number of things you have to understand about this coverage, including:
- A minimum delay is required
- The per-day amount is limited and listed in the policy
- The reason for the delay has to be a covered reason
Again, this is not a coverage that everyone needs. If you don’t have connecting flights or don’t mind if you’re stuck for hours in an airport, you probably don’t need travel delay coverage.
8. Lost or Delayed Baggage
Airline coverage for lost, stolen or damaged baggage is very limited but a traveler’s baggage risk isn’t isolated to the airlines. Your luggage and the contents held inside can be stolen from hotel rooms, or left behind on the dock, or destroyed by fire. Your bags could also be simply loaded onto the wrong plane, leaving you for days or even weeks without the stuff you packed for your trip.
As with any coverage, there are a number of things you must understand, including:
- Each policy will have a maximum payout and a per-item limit
- A claim for an item costing over a certain amount must be accompanied with a receipt
- This coverage is secondary to what an airline or train operator will give you
- There are many items that are not covered at all
Many travelers have similar baggage protection with their credit card travel plans, but it’s important to note that many of those plans have the same limits that a travel insurance plan will have. If you aren’t carrying expensive clothes and keeping your bags at your side at all times, this coverage may not be that useful to you.
9. Car Rental Collision Coverage
If a traveler rents a car and gets into a traffic accident with that car, he or she better have rental car coverage to pay for the cost of repairs and the loss of use charges imposed by the rental car company. The cost of coverage at the rental counter is vastly higher than what you’d pay with any travel insurance plan.
Many travelers today have car rental coverage with their own auto plan or their credit card, so this is not a coverage that everyone needs. The key is knowing what protection you already have and balancing that coverage against your risk. Remember that your auto plan may not cover the charges imposed by the rental car company for the loss of use of a damaged vehicle. Also, none of these policies have personal liability protection.
See our full review of car rental collision coverage to decide if you need it or not.
10. Other Coverage
Most travel plans come with a whole list of other benefits like roadside assistance, concierge services, identity theft services, and more that can be useful in certain circumstances but are not as likely to hit your wallet in the violent the way the ones listed above could.
Still, having a travel assistance representative to call from anywhere in the world when you get into a jam can be a real blessing in certain situations. Having someone to call when your passport is stolen and you need to find the closest embassy so you can get home could be highly useful depending on your trip.
See the complete travel insurance coverage guide for other coverage options you may find useful in your travel insurance plan. And if you’re really curious, here are 9 Coverages that Might Surprise You.