Travel Insurance: What It Is and How It Works
Before paying for a policy, it’s important to confirm exactly what type of coverage you’re getting and...how to file a claim if you need to.
May 11, 2021
Many people's travel plans have been canceled during the COVID-19 pandemic. With border closings and social distancing orders being implemented, vacationers missed out on time they may have planned for rest and relaxation. Some flights, hotels, and cruises may have had non-refundable deposits, and savvy travelers who had travel insurance policies may have found that their policies didn't cover pandemic-related trip cancellation.
Travelers (whether they ran into travel insurance problems or not) are left wondering what's the deal with travel insurance? How does it protect you, what does travel insurance not cover, and how does credit card travel insurance work? Let’s dive deeper into what kind of protection you might need for your next trip and how to make sure you actually get it.
What is Travel Insurance?
Travel insurance is a type of insurance policy that covers unforeseeable events that can happen before or while traveling. Generally, a flat-fee travel insurance policy includes coverage for airfare, hotels, and prepaid activities such as tours, but each policy will vary in cost and coverage. Each traveler should choose what kind and how much coverage they want to pay for. Frequent travelers may want to invest in an annual travel insurance policy, which can be helpful if they tend to spend a lot of money on their trips.
While travel insurance can cover expensive and key components of a trip, these policies don’t necessarily cover everything and tend to have a list of exclusions. Before paying for a policy, it’s important to confirm exactly what type of coverage you’re getting and how to file a claim.
What Protection Does Travel Insurance Provide?
The type of travel protection you get depends on what type of coverage you buy. While there are dozens of different options that can vary greatly by provider, there are three main types of coverage that the Centers for Disease Control and Prevention recommends considering — especially if you’re going to be traveling abroad where your normal health insurance policy may not protect you.
Trip Cancellation Insurance
Trip cancellation insurance can provide you with reimbursement for travel costs you’ve already paid for if you have to cancel your trip and can’t go on it. This type of policy commonly covers reimbursement if you need to cancel your trip because you or a family member falls ill. In some cases, disease outbreaks (such as Zika) are covered, too, but you’ll want to double-check the fine print on this before purchasing to confirm what outbreaks the policy is currently covering.
Travel Health Insurance
When traveling overseas, you may find yourself needing to pay out-of-pocket for medical services, and your healthcare provider might not reimburse you when you get home. If you’re going to be traveling for an extended period of time, have existing health conditions or will be doing any adventurous activities that could result in injury, you’ll likely want to get your hands on some travel health insurance to help cover the costs of medical care should you need it on your vacation. Before purchasing, you’ll want to confirm what your benefits are with your existing health insurance provider so you don’t pay for coverage you don’t need and verify what gaps the travel plan may fill.
Medical Evacuation Insurance
If you like to go off the beaten path and are traveling somewhere remote where medical care can be hard to access or is not up to US standards, buying medical evacuation insurance can provide support during an emergency. In some cases you can add this coverage to an existing travel insurance policy or purchase separately. Generally, medical evacuation insurance covers emergency transportation to high-quality hospitals.
Some of the most common travel insurance claims include missed connections, baggage-related claims, emergency medical treatment, and trip delays.
What Doesn't Travel Insurance Cover?
Every travel insurance policy is different, and it’s important to read any fine print and ask questions about what the coverage entails. Generally, travel insurance policies don’t cover the following events, although you may be able to pay extra to receive coverage for some of them.
War, civil disorder, or civil unrest at the travel destination.
Participation in high-risk sports (like skydiving).
Pandemics (like COVID-19).
Locations where there are government restrictions regarding travel.
How Much Does Travel Insurance Cost?
This is difficult to narrow down, as the price depends on a variety of factors. How much your trip cost to book (the more expensive the trip, the more expensive the coverage) and the age of you and your fellow travelers, are just a few examples of factors that can alter the cost. Unfortunately, the older you are the more you may have to pay, as older travelers can be more at risk for certain health issues. If you decide to purchase travel insurance, you’ll want to shop around for a policy so you can compare who is offering the most coverage for the best price.
Your Credit Card May Have Your Back
Speaking of cost, we have some good news! Before you buy any travel insurance, you might already have some ready and waiting to go, especially if you have a travel rewards credit card. There are credit cards that offer travel insurance as a free cardholder benefit.
While these policies can be a handy thing to have in your back pocket, you’ll want to keep an eye out for some common credit card travel insurance problems. For example, you’ll generally need to pay for the trip (airfare, lodging, etc.) using the credit card offering the travel insurance policy. These policies also tend to have a lot of exclusions, so comparing credit card insurance vs travel insurance may be helpful. You may be able to fully rely on your credit card travel insurance policy or you might want to consider it a supplement for fuller coverage. Reading the fine print of any travel insurance policy you have is important.
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