Six Things to Know about Travel Insurance

Whether running with the bulls or leaving a museum in Pamplona, it pays to have travel insurance.

Getting travel insurance may seem like an afterthought, but there are times when it proves vital.

When my mother broke her hip in Pamplona, Spain —  I’d like to say running with the bulls, but actually slipping and falling on her way out of a museum — she had a week’s stay in a hospital there and then a first-class flight home complete with nurse accompaniment, all covered by travel insurance.

It was one of the best investments my parents ever made, because the bill ran to something like $30,000-$40,000.

Many personal health insurance policies don’t cover medical costs abroad, so it pays to be on the safe side. For an outlay of perhaps five to 15 percent of the total cost of your trip, you could save yourself a significant loss if something does go awry.

But travel insurance can still be both expensive and filled with potential pitfalls, with the “fine print” running on for several pages; the devil is very much in the details.

Here are six things you should know before paying for the travel insurance policy that you – and the insurance company – hope you’ll never need to use.

1. You may already be covered for some travel contingencies by your other insurance policies or credit card.

Homeowner’s insurance may already cover your personal property if it’s lost or stolen, even when traveling abroad. (Check your policy or check with your agent, of course, before making that assumption.) Your medical insurance policy may cover travel abroad – again, check your policy. (The U.S. Medicare system does not cover overseas travel, except in rare instances).

Your credit card may already cover some travel insurance needs.

Or you can buy a less expensive secondary policy as a supplement to your own policy if it doesn’t cover all your medical expenses abroad. (You’ll need a pricier policy if your own insurer covers nothing overseas.)

You should also check your credit cards for possible travel coverages. If you pay for your flight or rent a car with certain credit cards, you may be covered for things like lost or damaged luggage or rental car insurance. (You may have to sign up for this coverage with your card company and pay a small extra premium for it, but it can save you money in the end.)

       2. The lower the price of your policy, the higher the chances that it will be filled with exclusions and coverage limits.

Sure, it’s tempting to pick the lowest-priced policy, but there’s a reason why it’s such a “bargain” – it may not cover all or even any of the things you’re really concerned about, or only pay out mostly small amounts.

When a travel insurance premium is notably lower than others, chances are it means the company doesn’t pay out many claims on that policy – or they have very low limits on what they do pay out. (This is true of many insurance policies sold directly by airlines.)

Ask yourself:

Do you have a pre-existing condition that might require treatment during your trip?

Flooding or drought can ruin a river cruise. Photo by Lia Liqun/China Stock.

Is there a danger that flooding or drought might ruin your expensive river cruise?

Are you planning to engage in various risky adventure travel activities on your vacation?

Is there a possibility your prepaid trip might be interrupted or cancelled by an emergency back home?

Is there a chance you’ll “miss the boat,” quite literally, because of flight delays or missed connections?

A bare-bones, inexpensive travel insurance policy may exclude some or all of these contingencies. Even lost luggage may not be covered under certain circumstances.

If you think there’s a real possibility that your trip might be cancelled or interrupted for any reason, on the other hand, you can probably find a policy to cover it – if you’re willing to pay much more. It all comes down to cost versus potential benefits, and how much financial risk you’re willing to take.

        3. You may not be covered for the most expensive situations with regular travel insurance.

Yes, you may have already insured against losses on your prepaid tours, flights, cruises, or vacation packages.

But consider this scenario: you’re trekking toward Machu Picchu and you fall and break your ankle or worse. You need to be rescued by helicopter and flown to a hospital, and then after the hospital stay, special arrangements are needed to fly you home.

When you get the bills, they’re staggering: into the tens or possibly hundreds of thousands of dollars.

What you needed was medical evacuation insurance, which may or may not be included in standard policies, or may have a payout capped at too low an amount to cover most of your expenses. There are entire companies that specialize in medical evacuation insurance, and some organizations offer it to their members at group discounts. (Some companies also offer it as part of their employee medical plans.)

Do you have crocodile insurance?

If you travel a lot, you may want to consider annual coverage, which means you’re always covered if evacuation is needed a certain distance away from your home. Keep in mind that, like all travel insurance policies, medical evacuation plans differ; some will only take you to the nearest hospital, for instance, and not cover other medical expenses, while others will fly you all the way home and pay for a nurse to accompany you.

      4. Timing may be everything.

You may think you’re covered for a terrorist incident interrupting your trip, but when, exactly did the incident take place? Many insurers require it to be within 30 days of your scheduled arrival (and, for good measure, the terrorist group must be officially recognized by the U.S. State Department).

How about a hurricane ruining your Caribbean cruise? If the hurricane had already been named when you left – that is, it was already a known storm called Ida or Jacob or whatever – your losses may not be covered.

What about a pre-existing health condition that requires treatment? If you didn’t sign up for your insurance within a week of making your initial trip deposit, the pre-existing condition might not be covered. (Or on some policies it won’t be covered if it was known to exist any time before you start your trip.)

And while you’re traveling, you may have only 72 hours to notify your insurance company of any problems, or just one day to file a police report in case of theft – or lose your coverage. Policies differ in their details, and some are less restrictive than others, but if you don’t read the fine print, you may wrongly assume you’re covered when you’re not.

        5. Your travel insurance may be worthless if you forget to carry along the contact information for the insurance company.

In the rush to get ready for a trip, it’s easy to forget what might prove to be the most important documents next to your passport – your travel insurance cards and your policy detailing exactly what you’re covered for and how to report a problem.

For instance, if your luggage is lost and you need replacement cash to buy new clothes, you’ll be out of luck if you don’t know whom to call.

Coral can be dangerous as well as beautiful.

Or if you break your ankle on that trek to Machu Picchu and don’t call your own medical evacuation insurance provider to send that helicopter, chances are your company won’t reimburse you for the bill.

Make sure at least one other trusted person on your trip – preferably the tour operator or guide — knows about your medical evacuation insurance; if you’re unconscious or otherwise unable to call on your own, they need to know what number to call.

       6. It pays to comparison shop.

A number of websites (such as insuremytrip.com and quotewright.com) offer comparisons of travel insurance plans from several different companies, with information about what is covered or not covered for each plan.

If you know you want trip cancellation protection, for instance, but don’t need medical coverage, you can pick the plan or company that best suits your needs. You may also want to opt for a plan that pays your expenses up front and doesn’t make you wait for reimbursement.

In any event, be sure to save receipts and any needed documentation, because the insurance company will want to see them. To get full reimbursement on any expensive items, such as cameras or jewelry, you’ll probably need to show receipts for the original purchase.

When you are ready to buy insurance, make sure you enter the correct cost and dates of your tours, flights, cruises, etc., or – once again – your coverage might be jeopardized.

Note: An earlier version of this post appeared in StrideTravel.com, the one-stop website for shopping for travel tours of all types and destinations. Check it out!

For specific reviews of travel insurance companies and their products, see this excellent guide from reviews.com.