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.

There’s a common complaint among travelers. 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. Since these are unforeseen circumstances, they think an exception should be made, but sadly, that is usually 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.

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 lost, damaged, or stolen.
• Rental Car Insurance – covers damage to rental vehicles 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 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. 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 arrange transportation to the nearest appropriate hospital. The cost of an emergency medical evacuation (without insurance) can range 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 necessary to review the policy before 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 what is and is not covered.
• Homeowners/Auto Insurance Policy – find out if your homeowner’s policy covers lost or stolen personal property while traveling. Most auto insurance policies 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 provide coverage abroad.

Coverage Stipulations to Be Aware of:

• Preexisting Conditions – know what the terms are on the policy. It may be considered  a preexisting condition if you were previously treated for a medical condition or had prior symptoms. You will need to purchase insurance that covers preexisting conditons. Some travel insurance companies may require you to buy the preexisting coverage within a specified time frame (within 7 to 30 days of your initial deposit). Other companies will not cover preexisting conditions or may charge a higher premium to older travelers.
• Cruise Ship Shore Excursions – find out if shore excursions 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 if 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 before services are rendered, 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 guaranteed 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 – 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 in a 12-month period, check into the option of an annual policy.