With all the recent noise about ‘can you afford travel insurance’ and ‘should you buy travel insurance’, we thought it was time to address the topic from a different angle – saving money on your travel insurance purchase.
Before we look into how to save money on your travel insurance, let’s review what exactly is travel insurance?
Travel insurance is an agreement between a travel insurance company and an insured traveler ensuring the former will pay for the unexpected costs a traveler encounters on a trip. Just like car insurance, you can choose to purchase a bare-bones travel insurance plan or a full-featured one with all the bells and whistles.
What unexpected costs can a traveler encounter? Well, depending on your style of travel and the trip you’re taking, you could encounter:
The loss of all your prepaid non-refundable trip costs if you have to cancel your trip or return home to handle an emergency.
The need to cover the cost for medical treatment outside your health insurance network. Foreign hospitals often require pre-payment before treatment is given.
A flight delay or the loss of your baggage, meaning you have to come up with more cash to cover alternative transportation or to replace clothing and personal items.
A very desperate need to be evacuated out of a dangerous situation to a location where you can receive adequate medical treatment for a serious injury.
As with any insurance product, you buy it to protect yourself from catastrophic financial losses and to ensure your own personal safety. Every insured persons hopes they’ll never need their plan, but when they do they’re glad they have it.
All that being said, let’s look at how you can keep your travel insurance costs as low as possible.
1. Don’t insure your refundable trip costs
Think about it. Not all of your prepaid trip costs are non-refundable. Some hotels allow their customers to cancel their reservations provided the traveler calls within a certain time-frame.
Travel insurance plans only cover non-refundable losses, so don’t cover the costs you can recover because that raises the price of your premium.
2. Avoid over-insuring your trip
Lots of travel insurance plans offer multi-millions in AD&D (Accidental Death and Dismemberment) and flight insurance (just like life insurance, but for flight accidents). If you already have adequate life insurance and AD&D, this ‘extra’ coverage is unnecessary and it only serves to raise the price of your premium.
Likewise, many travel insurance plans include car rental collision coverage, but if you already have the same coverage with your own car insurance back home or with your credit card (check to be sure) you’re over-insuring the trip and wasting money.
3. Don’t get too much evacuation coverage
Emergency medical evacuations are expensive affairs, and it’s not something you want to whip out your credit card to pay for, but at the same time it’s not necessary to have too much evacuation coverage.
It’s rare for an evacuation to cost more than a couple hundred thousand dollars – and that’s only for extreme cases where the traveler is in a remote location (the summit of Mount Kilimanjaro, for example) and medical care is very far away. Many travel insurance plans offer millions of dollars in evacuation coverage, and for most trips it’s just too much.
4. Avoid ‘cancel for any reason’ if you don’t need it
‘Cancel for any reason’ coverage is nearly always an upgrade, and as such, it adds to your trip insurance cost, but the covered reasons for trip cancellation are often adequate. Plus some plans limit how much a traveler can be reimbursed for with their ‘cancel for any reason’ benefit whereas standard trip cancellation always ensures 100% of the prepaid non-refundable trip costs insured by the traveler.
Spend a little time reviewing the policy details to understand the covered reasons for trip cancellation during your plan’s free review period. Many travelers find that their trip cancellation concerns are already covered, and if they’re not, switch to another plan.
5. Don’t cover cheap, last-minute, or domestic trips
If you’re taking a last-minute, super saver trip within the U.S., you probably don’t need travel insurance. Your health insurance will cover emergency medical care (although at an out-of-network rate in some situations) and since you didn’t pre-pay for a lot of trip costs, then you probably don’t have a lot to lose.
Carry your bags onto the plane yourself instead of checking them in with the airline, and you’ll avoid a lost luggage situation and save yourself even more.
6. Avoid travel insurance purchased on booking sites
It looks too easy and it’s usually pretty cheap, but clicking that checkbox could cause you far more harm than good.
The language used to sell the policy doesn’t make the policy details clear
You have one plan to choose and one only – no price comparisons
The plan may not cover your needs (as anyone with a pre-existing condition can tell you)
Purchasing your travel insurance from a third-party travel insurance comparison engine gives you far more options. So, you can get the plan you need without a lot of coverage you don’t. Plus, you can price-shop much easier and, in most cases, you’ll pay a lot less than you’d expect.