Should You Buy Travel Insurance?

With summer vacations just around the corner – and the memory of thousands of travelers stranded during the recent volcano ash cloud – you may be wondering whether to purchase travel insurance for your next trip. Here are the ins and outs of this type of coverage for both business and personal travel.

INSURING AGAINST THE UNEXPECTED

So you just booked the trip of a lifetime – with unrefundable tickets. Now you find yourself lying awake at night with various scenarios running through your head. What if … there is a natural disaster or you come down with a serious illness just before departure? You’re called for jury duty? An unexpected emergency causes you to cut your trip short? Or a terrorist attack or political unrest breaks out at your destination?

You may be able to protect your investment with travel insurance.

There are four basic types of travel insurance, according to the Insurance Information Institute. In some cases, you can also purchase packages that offer several options. Policies can be obtained for a single trip or on an annual basis for frequent travelers.

Here is a brief description of the four types of travel insurance:

Trip Cancellation or Interruption Insurance – This coverage provides reimbursement if:
- You are forced to cancel a trip due to illness, a death in the family, or other catastrophe listed in the policy.
- A cruise line or tour operator goes out of business.
- You or a family member becomes seriously sick or injured during your travels. In this case, you would generally be reimbursed for the unused portion of the trip.
“The cost is generally five to seven percent of the price of the vacation, so a $5,000 trip would cost roughly $250 to $350 to insure,” according to the Insurance Institute.

Check to see if the coverage includes trip delay as well as cancellation. In these cases, a carrier will pay out a certain daily amount per person, say $150, once a trip has been delayed beyond a specified number of hours.

Don’t confuse trip cancellation insurance with a “cancellation waiver” offered by some cruise lines and tour operators. Waivers provide some coverage if you have to cancel and they cost much less – about $40 to $60 – but they contain numerous restrictions. In some cases, they only provide partial credits for future travel.

In addition, waivers are technically not insurance, so they are not regulated by state insurance departments. If you have a dispute, a government insurance office cannot help you.

How can you tell the difference between travel insurance plans and waiver programs? The name “insurance” should not be used in the latter. For example, Celebrity Cruises offers a “CruiseCare Cancellation Penalty Waiver,” at a cost of $29 and up, depending on the vacation price. Celebrity also offers more expensive “CruiseCare Travel Insurance,” which provides more protection and falls under the jurisdictions of state insurance departments.

Lost Baggage Coverage – One common traveler’s nightmare involves arriving at a destination without any luggage. This type of insurance provides coverage if your belongings are lost, stolen or damaged during the trip.

The Insurance Institute estimates it could cost about $50 to insure $1,000 worth of personal belongings for a week.

Emergency Medical Assistance – This insurance is provided if you receive medical care after an illness or accident, you are hospitalized or have to be airlifted to receive proper care.

The U.S. State Department advises travelers to familiarize themselves with the conditions at overseas destinations that might affect their health, such as high altitude, pollution, availability of medications, safe water and types of medical facilities. Get required immunizations before leaving.

Note that medical insurance is generally not accepted outside the United States, and Medicare and Medicaid programs do not provide coverage for hospital or medical costs.

Check with your health insurance company. If your policy does not cover you abroad, consider purchasing a short-term policy that does. If your policy does provide coverage, bring both your insurance ID card and a claim form.

Although some health insurance companies pay “customary and reasonable” hospital costs abroad, very few cover medical evacuation back to the United States. This can easily cost $10,000 and up, depending on your location and medical condition.

Other health tips from the State Department when going abroad.

Accidental Death – This provides coverage if you, or a family member, die while traveling.

The decision to buy travel insurance depends on many factors – how much the trip costs, your physical condition (as well as the health of your companions) and your risk tolerance.

Important: If you do have to file a claim with the insurer, you will be asked for documentation to support your loss. So keep copies of receipts, travel manuals, photos you may have of lost or stolen personal belongings, invoices for medical treatment, and other relevant documentation.

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BUSINESS WISDOM FOR TODAY’S ECONOMY

Don’t Buy Duplicate Coverage

Review existing insurance policies to make sure that you don’t pay twice for the same coverage.

In addition to protecting your home, most homeowners’ policies also cover personal property in your possession while you’re away. Check to see what the airline, tour operator or cruise line offers for lost or stolen luggage.

Do you have a fine jewelry insurance policy for the loss or theft of an engagement ring and other pieces? Does your auto policy cover you when you rent a car? Are there limits?

If you already have a good life insurance policy, you may not need an accidental death travel policy. Credit card companies also offer some travel-related coverage.

Insurance for On-the-Job Travel

Business travel is a fact of working life for many employees. Although most business destinations are not especially dangerous, all travel poses some degree of risk. Business travel accident insurance helps shelter employees and their families against the financial harm posed by these risks.

Coverage is flexible, with most carriers offering employers the ability to customize the coverage to meet a company’s own business travel needs.

Business travel accident policies may provide:

An accidental death and dismemberment benefit for injuries incurred during travel.

Coverage for accidents occurring on company-owned or leased aircraft.

Pre-trip planning services, including assistance with passports/visas, immunization recommendations, and information on currency and culture.

Travel assistance, such as legal referrals in a foreign country, help with lost or stolen passports and luggage, emergency cash advances, and interpreter services.

Emergency medical assistance, including transportation to a health care facility and payment of providers’ bills pending any reimbursement from the employee’s regular medical plan.

Emergency evacuation services.

Relocation benefits.

Coverage for family members during a relocation or when traveling with the employee.

Numerous insurance carriers offer business travel accident coverage under employee benefits product lines. Consult with a professional adviser about appropriate carriers for your company’s size, industry and business travel needs.