What’s the difference between an underwriter, administrator, and agent?
In the world of tangible goods, you have a manufacturer, a distributor, and a retailer.

The manufacturer designs the product and decides what materials to use in making it.

The distributor negotiates prices with the manufacturer and arranges for the product to be sold by retailers.

The retailer finds customers, explains the product, makes the sale, and provides support.

It basically works the same in insurance
An underwriter is the manufacturer. They design the products (policies), decide what to include in it (coverages), and what they need to charge to make a profit (premium collected vs. risk of paid claims)

An administrator is the distributor. They handle phone calls, process applications, and administer policies. They also work with agents and brokers.

Agents are the retailers. They market the policies, help customers find the right product, answer questions, submit applications, and collect payment.

For example:
InsureMyTrip.com is an agency (retailer). They market policies for administrators such as CSA Travel Protection, Seven Corners, and Travelex. These administrators process payments/claims for policies underwritten by companies like AIG and Virginia Surety.

In the world of travel insurance, there are two basic types of coverage.

Medical expense coverage. As the name suggests, this will provide coverage for your medical expenses while outside your home country. If you break a leg, or get sick while traveling, this is the coverage you would want. Go to the hospital, give them your insurance card, and eligible expenses will be covered with travel medical insurance. You might even group emergency medical evacuation coverage in with this as well.

Trip cost coverage. Here, you have coverage for trip cancellation, lost baggage, delayed flights, or vacations that are cut-short. If you’re going to Cancun for 2 weeks, and a 3-day hurricane causes you to cancel your trip, this is the coverage you want to have.

Some travel insurance policies have aspects of both, but will usually focus their benefits on one area or the other.

For example; the Custom plan from CSA is focused on offering trip cost benefits including trip interruption, trip cancellation, anf lost baggage. It also provides, however, up to $50,000 of medical expense coverage. This is low compared to some medical expense plans that offer $1,000,000, but it still provides some medical coverage in addition to the trip cost benefits.

How do I decide which coverage I need?
Consider your destination and length of trip. If you are going to Europe for a week, the risk of a medical emergency is low, and you might choose trip cost coverage to protect the money you have spent on the trip. Plus, the “smaller” amount of medical coverage would give you some coverage.

If you are going to Tibet for 3 months, the risk for medical emergencies is much higher, and a medical cost plan is the right choice. Plus, the additional coverage would apply to emergency medical evacuations as well, and this can be one of the most expensive risks of all

Photo Credit: stuckincustoms

When many people think of travel insurance, they think of canceled vacations and lost baggage. The medical coverage offered by package policies is almost an added benefit, especially if you are traveling in your own country.

Travel insurance companies offer what is called a package policy, which includes some travel medical, trip cost, and medical evacuation benefits. This is a very common type of policy due to it’s broad range of coverage. Lost baggage travel insurance would be included in most package plans.

Lost baggage travel insurance coverage and benefits vary by provider

RBC Insurance offer their Deluxe policy with lost baggage benefits of up to $500, while TravelSafe offers their Vacation plan with up to $2500 of lost baggage benefits.

Most other policies are somewhere in between, offering $1000 to $1500 of baggage and personal effects benefits. If you have specific items such as camera or camping equipment and would like to protect them, you can opt for a higher coverage policy.

Also, some homowners policies may provide coverage for some of these items. Check your policy, and if you have adequate coverage for baggage, etc., you can shop for travel insurance with other criteria in mind knowing that your baggage is covered.

Legal Version: A pre-existing condition is defined as any injury, illness, sickness, disease, or other physical, medical, mental or nervous condition, disorder or ailment that existed at the time of application or during the past duration(specified by each insurance plan) prior to the effective date of the insurance, including any subsequent, chronic or recurring complications or consequences related to thereto or arising there from.

What is a pre-existing medical condition with travel insurance?

Simple Version: Something that happened before you bought insurance is called a pre-existing medical condition. Travel insurance generally does not cover pre-ex, or if it does there are specific conditions.

The concept is simple; insurance companies cannot pay a medical bill for something you already had when you bought insurance.

This would be like trying to place a sports bet after the game ends, you already know the outcome. The pre-existing condition in travel insurance stipulation makes sure “all bets are in”, so to speak, by the start of the game.

For example: A travel medical policy states that insurance will not cover any condition(see definition above) that occurred within the previous 36 months. So if you are diagnosed with kidney problems, and take a trip a year later, any re-occurence of your kidney problem will not be covered. The kidney trouble did not start within the insurance coverage.

Every travel medical policy is a little different. If you are a non-US citizen visiting the US, there are no policies that will cover pre-existing conditions.

For US citizens traveling abroad, some policies will cover pre-existing conditions up to a certain limit, an/or for a shorter time (12 months instead of 36 months, or some as low as 60 days). In these cases, the policy must be purchased in a certain period of time; such as within 14 days of the initial trip depost. This varies by company.

The exclusion of pre-existing conditions, or “pre-ex”, is one of the most common reasons for a denied claim. Some travelers hope they can purchase a policy and get that surgery they always wanted, but it just doesn’t work that way.

Photo Credit: LondonMummy

Eligibility for different travel insurance policies can vary. Most people traveling from the US can buy a policy online with guaranteed acceptance, no medical exam, no waiting; just print it out and go.

Foreign citizens may experience more limitations on policies that will cover them in the US, but usually there is some level of coverage they can get.

The insurance companies can issue insurance coverage easily because of their underwriting policies. They tend to issue policies based on some basic information, and depend on sound underwriting to cover their costs. If a claim is submitted, they will investigate to confirm that the condition was not pre-existing. They can obtain medical records and other information to confirm or deny pre-existing conditions.

Is terrorism covered by travel insurance policies?
It depends. Over the past 5 years since 9/11, many insurance companies have addressed terrorism coverage in their policies. They will provide coverage for trip cancellation if there is a terrorist incident in one of the cities on your itinerary.

As always, read the policy certificate thoroughly. You can even do this after you have made the initial decision for travel insurance, since there is a “free-look period”. This means that you coule decide on your policy and make your purchase. Then, depending on the company, you have a “free-look” period of time in which you can review the policy and return it for a full refund. This also assumes you have not departed on your trip.

Will I be covered by travel insurance if the injury is alcohol related?
No. This is a standard exclusion in travel insurance policies. Basically, it states that injuries or losses suffered while under the influence of alcohol (or drugs) are excluded from coverage.

It only makes sense that an insurance company needs to exclude injuries sustained while intoxicated; the risk for injury is much higher when drinking; similar to the higher risk associated with hang-gliding, skydiving, or motor sports.

This story about a young Canadian man on vacation is a perfect illustration:  after arriving in Mexico, he and two friends celebrated with several drinks. He fell 7 stories off the balcony of his hotel, and sustained multiple injuries. He did not remember exactly what happened, but admitted that drinking was involved.

Unfortunately for the young man, his medical expenses will not be covered, even though he had purchased a travel insurance policy.

This illustrates the need for common sense and caution. All travel insurance policies have exclusions for high risk activities. Read your travel insurance policy and make sure you understand what is covered and what is not covered.

Travel safe.

Who uses travel insurance?
Any traveler could use travel insurance. That’s not to say everyone needs it, but every traveler and every trip type has an element of risk.

Many people only think international travelers or safari adventurers can benefits from travel insurance. The truth is, most policies are sold to everyday travelers going on vacation. Often, the trip isn’t even abroad, but a domestic trip with a high cost that the traveler wants to protect.

How does travel insurance work?
With any trip, there are two main things to consider. 1) The cost of the trip, and 2) your health while on the trip.

If you are going to Europe for a week or two, you would probably focus on insurance to cover the cost of the trip. This can insure against canceled trips, missed flights, lost luggage, etc. This is generally referred to as a “package policy”, or simply trip insurance.

If you are going to Tibet for a 3 month retreat, you would want your insurance to cover emergency medical expenses while traveling. This can insure against accidents, hospital stays, medical evacuation, etc. This is called travel medical, or international medical insurance.

Why don’t I ever hear about travel insurance?
In the US, roughly 30% of travelers purchase travel insurance (based on 2006 data). In Europe, Canada, Australia, etc., up to 90% of travelers purchase a travel insurance policy. This may be due to a cultural difference where we in the States believe our health will be taken care of.

Should I buy travel insurance through my travel agency?

No. If you live in the States and purchased travel insurance for the first time, it may have been sold as an add-on to a travel package purchased through a travel agency. Even Expedia.com offers the “up-sell” while you go through the check-out process. While these plans do provide some coverage, it is always better to purchase insurance from an independent company.

You have probably noticed the popularity of these plans with your travel agent…usually a good supply of brochures and they never forget to mention it. Much like the insurance offered at auto rental companies, this added insurance is very profitable and usually not worth it. Go directly to a travel insurance company.