A question many travelers ask is whether travel insurance is necessary.  Travel insurance is like any other insurance–if you don’t need it, it’s an expense you wish you didn’t have, but if you do need it–it will be a welcome relief. If you are planning a trip abroad or an expensive trip within the U.S., travel insurance is worth investigating.

A common complaint among travelers is that they don’t understand why a hotel, airline, or cruise line will not reimburse them if they become ill or have a family emergency that forces them to cancel their trip.  They believe that since these are unforeseen circumstances, that an exception should be made — but sadly enough, that is oftentimes not the case.

Many airline tickets, cruises, tours, or other prepayments and deposits are nonrefundable. If you encounter an emergency, if your flight is delayed, or if you have a last minute schedule change requiring you to cancel or postpone your trip — you stand to lose a substantial amount financially.

There are different types of travel insurance available.

What does Travel/Medical Insurance Cover?

• 24 Hour Assistance – if you require emergency medical care or support, evacuation, travel support, or business services, the travel insurance company is available 24 hours a day for assistance.

• Trip Cancellation Insurance – includes reimbursement for nonrefundable trip payments and deposits if you have to cancel your trip.  Always review the policy to know what reasons for cancellation are covered. 
• Trip Interruption Insurance – includes reimbursement for unused expenses and transportation costs back home if your trip has to end prematurely due to severe weather conditions or other situations beyond your control.
• Personal Property/Baggage – includes reimbursement for covered personal items that are lost, damaged, or stolen.
• Rental Car Insurance – covers damage to rental vehicle only.

Travel Medical insurance provides coverage for emergency medical or dental treatment. It can also include emergency medical evacuation in the event of an illness or accident. This is especially important if traveling abroad where your health insurance coverage may be limited or nonexistent and Medicare is not accepted.

• Medical/Dental Insurance – covers emergency medical or dental treatment for an illness or injury that is included in the plan. Expenses will either be paid directly to the medical provider or reimbursed within a specified time frame, according to policy limits and deductibles. Be sure to check the requirements stated on the policy regarding preexisting conditions.
  
• Accidental Death and Dismemberment – this coverage is similar to a life insurance policy in the event of  a death. It also provides medical coverage for injuries while participating in sports or adventure activities that are not typically covered by travel medical insurance.
• Emergency Medical Evacuation – this covers the cost of emergency transportation  to another hospital for treatment if the attending physician determines that a medical condition warrants it.  The travel insurance provider will make arrangements for transportation to the nearest appropriate hospital. The cost of an emergency medical evacuation (without insurance) can range anywhere from $10,000 to upwards of $250,000, depending on your location.

Before Purchasing Travel Insurance or Travel Medical Insurance:

There are many different policies and combinations of coverage when it comes to travel insurance.  It is important to review the policy prior to purchasing it to ensure you know what is covered and what may be excluded.  Compare rates and coverage with different companies.

Check your Current Coverage:

• Credit Card Companies – many offer travel insurance and car rental insurance. Check the specifics to find out exactly what is and is not covered.
• Home Owners/Auto Insurance Policy – find out if your home owners policy covers lost or stolen personal property while traveling.  Most auto insurance polices cover rental cars within the U.S., but may not cover rentals abroad.
• Health Insurance Policy – if you are traveling abroad, confirm what type of coverage is included and if there are any stipulations on where you can go for treatment. Ask if they cover emergency medical evacuation–most do not.  Medicare does not cover you abroad.

Coverage Stipulations to Be Aware of:

• Preexisting Conditions – know what the terms are on the policy.  If you were previously treated for a medical condition or had prior symptoms, it may be considered a preexisting condition and will not be covered unless you purchase this type of coverage. Some travel insurance companies may require you to purchase the preexisting coverage within a specified time frame (may be within 7 to 30 days of your initial deposit).  Some companies will not cover preexisting conditions or may charge a higher premium to older travelers.
• Cruise Ship Shore Excursions – find out if shore excursion are included if you purchased travel insurance for a cruise.  You may be required to purchase a separate policy.
• Hazardous Activities  – if you plan to go scuba diving or participate in certain activities that are considered high-risk, find out if they are covered.  You may need to purchase additional coverage.
• Cancellation Clauses – each policy has a specific list of reasons that are covered in the event you need to cancel your trip.  You have the option of purchasing a “cancel for any reason” policy for an additional premium, but again, find out what reasons may not be covered. For example, you may not be covered if you cancel your trip because you decide you don’t want to spend that much money or if your reason for canceling is not listed on the policy.
• Deductible – compare the deductible amounts available and choose one that is affordable to you.  Be prepared to pay this at the time of service.
• Travel Medical Insurance: How Payments are Handled – find out if you will be reimbursed for medical bills or if the travel insurance (or your health insurance) company will pay the medical provider directly.  Doctors and medical facilities abroad require payment prior to service and many do not accept U.S. health insurance.
• Emergency Medical Evacuation  – many travel policies cover expenses to the closest medical facility that can provide the necessary treatment.  Some policies offer a Hospital of Choice coverage where you can choose what hospital you would like to be taken to for further treatment. However, this is not a guarantee if the attending physician believes it is too risky.
• Coverage for Children – find a plan where children can be added without any additional cost to the premium.
• Keep a Paper Trail – in order to file a claim, you will be required to submit receipts and other documentation, so keep a paper trail.

Generally, it is about 4 – 8% (and 10-12% for “cancel for any reason”) of the cost of the total trip. If you plan on traveling frequently in a 12 month period, check into the option of an annual policy.

For more information on travel insurance, check out Insure My Trip, a travel insurance comparison site.  There are also companies like MedJetAssist that offer emergency medical evacuation services where you pay an annual membership fee that would cover up to two evacuations a year.