Buying travel insurance - everything you need to know

Consumers who purchase travel insurance policies do so because they want peace of mind, coverage against unexpected events, and protection of the investment they poured into their trip. If you need to purchase coverage for your travel, this article highlights what you need to know when buying a policy.

What travel insurance covers

Generally, there are five types of coverage available:

Cancellations

Most consumers who purchase a policy consider this their number one concern. When you plan out a trip and the cost of your travel are paid beforehand and cannot be refunded, you stand a great chance of losing a lot in the event something goes out of hand.

This type of coverage will range a lot of things including: hotel expenses, plane tickets, cruise fare, golf greens charges, etc. With cancellation coverage, you get reimbursement for these expenses if the trip gets canceled before your departure.

To be able to get indemnified, your reasons have to be valid, that is, they are accepted under the policy. These reasons include: injury, illness, death of the policyholder, a member of his family or his travel companion. Other reasons include being fired from work, natural catastrophe damaging the destined place, terrorist attack, bankruptcy of the travel firm, jury duty, etc.

Trip interruption is the same as with cancellation but provides coverage while you are already traveling.

Medical emergencies

An important type of coverage especially if you go outside of the country. Medicare will not cover and so do many health insurance policies. Even if you are on a cruise ship you could have no medical coverage especially if it carries a foreign flag.

This coverage takes care of emergency medical expenses as well as dental care costs when traveling abroad.

Emergency Evacuation

This coverage provides coverage for emergency evacuation costs to include airlifts or flights to hospitals or back to the U.S. Evacuation costs can be considerable hence this coverage should be worth a look.

Delays or losses

This includes coverage for stolen, damaged or lost luggage. It can also include provision of cash to purchase necessary items while awaiting the delayed luggage to arrive. Hotel accommodation and meals may also be provided.

Round the clock telephone assistance worldwide

This coverage allows you to get in touch with someone from the travel firm in case of emergencies. This can be critical when the individual involved has a medical issue.

This coverage will also point you to the nearest medical facility, arrange for care, provide translation services, and even arrange for a trip home. In addition, if you need help with your travel papers, this service may also be of help to you.

What it does NOT cover

  • Losses you incur because of a pre-existing health condition (in many cases, a waiver can be purchased).
  • Change in decision, as in opting not to push through with the travel (a waiver can also be purchased allowing you to cancel for whatever reason).
  • Losses incurred for tours or tickets won as prizes or for redeeming credit card or frequent flier miles.
  • Travel expenses in relation to trips made with the intention of securing medical treatment abroad.
  • Bad weather conditions (however coverage that allows you to cancel for whatever reason can be purchased).
  • High risk, extreme sports such as bungee jumping, scuba diving, skydiving, heli-skiing and others.
  • Losses incurred as a result of riots, civil disorder, military actions or war.
  • Loses incurred because of AIDS, venereal diseases, abortion or pregnancy.
  • Losses arising from depression, nervous breakdown, psychological, mental disorders.
  • Losses incurred because of nuclear radiation.
  • Losses arising from the policyholder's participation in an illegal act.
  • Losses incurred because the insured purposely caused bodily harm to include suicide.
  • Losses arising from an activity where the policyholder is considered under the influence of drugs or alcohol.

What types of policies are there

  • Vacation plans – this is, by far, the most common type of travel insurance. Over ninety four percent of travel policies are of this type and for good reason. Vacation plans are known to provide the widest coverage in one package to include medical emergencies, cancellations, delays or losses, evacuations, assistance, luggage, etc.

  • Travel medical insurance plans – these policies provide protection to consumers traveling in other countries. These typically fill the gap that regular health insurance cannot provide when the insured individual goes abroad. This policy provides for evacuation, medical emergencies, as well as life insurance. This plan is for consumers who are more concerned with medical issues than with delays, interruption, cancellation and loss of luggage. Certain types of this policy have added benefits to include coverage for individuals with pre-existing health conditions, renewable coverage, and even long-term coverage when in another country.

  • Specialty travel insurance policies – these are tailored for certain individuals who have unique needs. Examples of specialty plans are: travel accident, evacuation only and rental car. Evacuation only policies are tailored for emergency evacuations. These are usually purchased annually as a membership subscription. Travel accident specialty plans make payouts should the insured individual fall into serious injury resulting to dismemberment or death. The payouts are deemed separate from those provided by other life insurance policies.

Where to buy travel insurance

You have three general options:

From your travel agent

Pros – a travel agent can provide you an advantage when it comes to filing a claim. The insurance company may see you as one client but the agent may be providing thousands of dollars in business to the company. This represents your edge when the agent works on your claim. In addition, many agents are members of larger organizations which provide benefits and reasonable prices that can be accessed by agents' clients.

Cons – many agents do not have thorough information about the plans they sell. So it is best to verify any information with the insurance company first. Also, many agents work with a single insurance company. This could mean the plan they will offer you is likely the same one they offer to majority of their clients. If you have special needs then you might not get the best plan for you.

From the travel supplier

Pros – premiums are not based on an individual's age. Certain travel suppliers offer a waiver on the cancellation charge. The consumer pays a certain amount and the company agrees not to impose their regular cancellation charge should the individual decide not to go on travel. Many plans also offer a cancel for whatever reason coverage at no extra cost to the insured.

Cons – when the tour provider experiences financial default, the consumer receives nothing. Also, coverage amounts are usually very low particularly when it comes to evacuation and medical services. The consumer is not likely to get coverage for travel arrangements done by another party. And when you use the cruise line's coverage while traveling in their cruise ship, you are likely required to shoulder the expenses first and then submit a claim for reimbursement.

From online sources

Pros – much convenient when shopping and comparing policies and their features. Another advantage is the wider range of choices available.

Cons – again, the wider range of choices can overwhelm any consumer as choosing the one that fits one's needs can be quite a challenge.

How to choose an insurance company

Recommendations from those you know is a great place to start. A relative, business associate or even your golf buddy may have recently went on trips where they purchased travel insurance, their experiences can serve as great inputs for you. Do not limit yourself with names of the insurance companies they dealt with, ask about their general experience from the time they purchased a policy, to how they were treated by the customer service agent, if they were able to get discounts and what their experience was  when they filed for a claim.

Next is to verify a company's reputation via the Better Business Bureau. The BBB is a good source of customer experience with a certain insurance company. Positive as well as negative feedback can be available. One good area to look into is how complaints were handled and resolved.

Check online sources. A search engine is your friend here. Google the company for any online rants or raves. Be sure, though, the site you are reading the reviews is an established and independent source. Any company can just put up a website and make a review appear as an independent source. As a rule of thumb, if a review is too good to be true, it probably is.

Experience for yourself how the customer service representative treats the company's clients. Make a call, chat with them online (if their website has chat features) or send an email. See how fast they respond. You will get an idea as to how quickly you will get an answer. This is important especially if you are in an emergency abroad.

Refer to our article “Travel insurance – is it worth the money,” on how to choose the right travel insurance policy for you. When making comparisons of policies from different companies, it is not advisable to look at price alone. Look at the coverage you need, the reputation of the company, and how the policy fits your requirements.

How to file a claim

  1. Get in touch with the insurance company prior to filing a claim. Inquire about the requirements you need to comply with and what restrictions may apply to you that will make your claim unsuccessful.
  2. Study your travel insurance policy. Look at the provision on filing a claim and see under what situations will the company honor your claim.
  3. Gather all your records especially your receipts. In fact, it would be to your advantage if anything related to your policy is kept in your records. This can be hotel folios, invoices, written instructions by the doctor, etc.
  4. If you experienced a delay, be sure you have proper documentation about it. If it is a flight delay, for example, ask the airline representatives for a note.
  5. When filing a claim, your insurance company should guide you on the process. Claims can take up to four weeks of processing. In certain cases, it can be longer. The company should make a decision in two months from date of filing. If they have not responded or made a decision, inquire as to the status of your claim.

What to do if your claim is denied

  • Ask for written explanation why your claim was denied. Look at the reasons the company provides in their response to you and compare it with the provisions in your policy.
  • Insurance companies make a decision based on the information submitted to them. If you have new information to support your claim, you should submit this along with a written appeal.
  • Before you write an appeal, ask for legal advice. If it is a medical-related claim, ask for a doctor's advice. Be ready to submit your medical papers if this can support your claim. You can even consider asking your doctor to write a supporting letter to your appeal.
  • If you purchased your plan from an agent, inform that agent about your denied claim. In certain situations agents have successfully interceded on behalf of their customers.
  • If your appeal still gets a no from the company, your options are as follows:
    • You can bring the matter to your state insurance department. The office of the insurance commissioner in your state may be able to help you.
    • Get in touch with the Better Business Bureau in your area. BBBs do pursue investigations on matters like this.
    • Haul the insurance firm or the agent to court. Specifically, small claims court where you will not be required to have a lawyer. Be aware, though, that there is a maximum amount you can pursue in this course of action.

Canceling your travel insurance policy

All policies allow for a free look or free review period. You can use this period to better understand the policy you have purchased and see if it actually meets your requirements.

If you do not like the policy you can cancel it as long as you are within the free look period. You cannot cancel a policy once you have started your travel.

When the free look period lapses, the policy is now deemed in effect.

To cancel a policy, look at the provisions with regard to cancellation. You also need to get in touch with the company. You may be required to make the cancellation in writing.

If you are considering cancellation, be aware you have other options you can consider. For instance, many companies allow changes on their policies to accommodate the unique needs of customers. You can, for instance, decrease or increase coverage amounts.

Important features and riders to consider

  • Accidental death feature – this rider or feature pays out cash in case the insured gets injured or dies while he is on travel.
  • Cancellation for whatever reason – this rider reimburses expenses incurred by the insured when his trip gets canceled for whatever reason.
  • Deductible – represents the amount which the insured has to co-pay. How deductibles are applied to an insured individual would depend on the provisions of the policy.
  • Emergency dental or medical – reimburses cost of medical services received while on travel.
  • Employment layoff – reimburses payments and deposits made if a trip gets canceled because the insured is laid off or terminated from his work.
  • Missed connecting flight – covers costs incurred when a connecting flight is missed.
  • Terrorism – covers in case a terrorist act takes place.
  • Weather – many plans provide coverage when losses are incurred because of some weather disturbance. Be wary though as to the conditions that the policy allows for coverage. This can differ from one plan to another.
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