Travel Insurance – Is It Worth Getting?

Going on vacation is an exciting event. You want to make sure it’s as enjoyable as possible. And when you booked your vacation, you were likely asked if you wanted travel insurance.

It’s important that you understand what’s involved with travel insurance. Otherwise, you may spend more money than you need. Or you might not have enough coverage in case of an emergency.

So, is it worth getting travel insurance? Yes, travel insurance is worth getting if your vacation is taking you out of the country and especially if you are going on a cruise. Travel insurance can cover you if a natural disaster cuts your vacation short, if you have a medical emergency while on vacation, if you get sick right before your trip preventing you from traveling, or if your travel provider goes out of business before your vacation begins.

There are a number of other things travel insurance can cover. But you should be aware of how travel insurance works. This will help you understand what your policy will cover.

At this stage, I want to inform you about something very important regarding travel insurance. It’s a reimbursement arrangement. That means no matter how much your policy covers, you have to pay first. Then you can apply for reimbursement.

Let’s say you need to cut your vacation short because of a medical situation. You are required to pay for those expenses out of your pocket first. Afterward, you can file a claim to be reimbursed for those costs.

Assuming that the insurance company accepts your claim, you’ll be issued a check for the covered costs.

Some things, of course, you won’t be expected to pay up front. For example, if you need to be airlifted back home, you won’t be expected to pay out of pocket.

But that bill will hang over your head. With travel insurance (assuming you pick the right policy), after you submit that bill for reimbursement, it goes away.

After considering these examples, it begs the question: should you skip travel insurance? That is to say, are there reasons you should take a pass on purchasing travel insurance?

When You Could Skip Travel Insurance

You might be surprised by this but there are instances when you probably could skip getting travel insurance. Specifically, if you plan to travel domestically, even to a domestic resort, you probably don’t need travel insurance.

That’s because you are extremely likely to be covered by a credit card (we’ll talk about that more later). The only time this doesn’t apply is if you are flying to a cruise port.

In that case, you will want travel insurance. A delayed flight can be the difference between just barely making the cruise and watching the ship sail away without you.

On the other hand, if you’re traveling to Disney or a ski resort, those places will still be there if you need to take another flight.

Let’s look at why you might want to pass on travel protection for domestic travel.

Airlines Will Accommodate

It’s no secret that airlines overbook. Overbooking means that they take payment for more seats than the plane can hold. As a result, when you check in, you might be told that the flight is full.

Crazy, right?

But it happens. Now, for the sake of explanation, let’s just assume that you’ve just been bumped. The airline will do one of these things:

  • Put you on another flight, possibly on another carrier
  • Put you on the next flight
  • Offer you money and even pay for a hotel and put you on a flight the next day

In this situation, travel insurance would cover you. But considering that the airline is going to accommodate you for the delay, and you would still have to submit a claim for the delayed flight, there is a possibility your claim could be denied.

Hotels Will Usually Accommodate

If you find yourself in the situation we just described, your first call after dealing with the airline should be to your hotel. In most instances, the hotel will accommodate you.

At the time of this writing, the Hyatt hotel chain has a question in their FAQ section that asks: “Will I be charged a night’s stay if I arrive late or miss my arrival date?”

Their answer at the time of this writing is:

“If you do not arrive at the hotel on your scheduled arrival date, cancellation policies will apply.”

To see how this worked, I used Hyatt Hotels website to book a 3-night stay at a property near Disneyworld in Orlando, FL. Before even selecting a room, the web page displayed its rate rules. In this case, this is what the cancellation policy says if I couldn’t make the first night:

“1NT DEP DUE AT BKNG/24H CXL TO AVOID 1NT FEE”

Translated into readable English, that says: “1-night deposit due at booking/24hr cancel to avoid 1-night fee”.

To make it clearer: “You have to pay for 1 night at booking. You have 24 hours before the scheduled check-in to cancel. Otherwise, we keep the deposit you gave us when you booked.”

Going back to our example, if your airline caused you to miss your first night at your hotel, make a call. The policy does expressly state that you have to cancel 24 hours in advance to avoid the 1-night fee for last-minute cancellation.

But you aren’t cancelling. You’re still coming; you’re just delayed one day. If you explain the reason, the hotel will most likely work with you.

The way to avoid being the one that gets bumped on a flight is to check in early. Those that come later are usually the people who get left standing when the music stops.

Your Credit Card and Auto Insurance Company Will Cover Accidents

When vacationing domestically, there’s a real possibility that you will rent a car. You might even rent the car to go on your vacation. In this instance, there are two things that can protect you without getting travel insurance.

If you own a vehicle, you are already paying insurance. Did you know that you can use your policy to cover a rental car?

State Farm says that if you already have collision and comprehensive, it will carry over to your rental car. Liberty Mutual doesn’t include it in your comprehensive and collision, but you can add it onto your policy and get the same protection. Allstate has a similar practice that allows you to add rental coverage to your policy.

What If I Don’t Own a Vehicle?

Does this mean that if you don’t own a vehicle, you should get travelers insurance or worse, pay through the nose for the coverage at the rental lot?

Fortunately, the answer to that is, no. You’re renting the car with a credit card. The major companies – specifically Visa and MasterCard – give you rental car coverage by default. Call your credit card company to find out what they cover and how much.

We’re going to go into detail later in this discussion on the type of travel insurance you are covered with by your credit card.

Medical Coverage

This one you are probably aware of already. But it’s worth mentioning. Because when discussing vacations, travel insurance always comes up. And medical concerns are usually the first reason given for obtaining it.

Let’s keep in mind, we’re still talking about domestic travel. For this discussion, this applies specifically to travelers who live in and are traveling in the United States.

The medical coverage you have through your employer will cover you should you get sick or injured while on vacation in the country. But make sure to check with your provider. Coverage limits vary depending on whether you have an HMO or PPO. You’ll also have to deal with in-network and out-of-network details. So check your policy.

But when vacationing within the country, your existing policy through work will protect you.

When You Absolutely Should Get Travel Insurance

Ok. So we’ve gone over the reasons why you can skip travel insurance. If I had to bottom line it, I’d say that if you’re vacationing domestically, there’s no need for insurance.

On the other hand, if you’re leaving the country, you absolutely should get travel insurance.

You definitely should get it when traveling out of the country to cover problems that can arise during your vacation. This would cover medical problems, flight issues, political uprisings, lost luggage, and more.

Let’s take this as an example. You’re a Canadian visiting a Disney resort in the United States. You get hurt during your vacation. Unlike the United States, as a Canadian, you don’t get medical coverage through your employer. The government takes care of that for you.

So to get treatment, you’d have to pay out of pocket for your care.

Unless you have travel insurance.

As important as it is, medical problems aren’t the only reasons you should get travel insurance.

What Does Travel Insurance Usually Cover?

There are quite a few things that travel insurance covers. In most instances, you won’t come across them. But in the off-chance that you do, you’ll be glad you got a policy.

Some things that travel insurance covers include:

  • Illness or injury
  • Death
  • Natural disaster
  • Terrorism
  • Evacuation/repatriation
  • Financial default of the travel company
  • Lost or delayed luggage
  • Damage to residence
  • Change of employment
  • Travel accidents
  • Emergency medical situations

Let’s unpack these.

Some of these reasons explain themselves. Death, injury, illness, terrorism, natural disaster, lost luggage, emergency medical situation – these are kind of obvious. Some of the others require a bit more explanation.

Financial default of the travel company

This means that the company you were planning to use for vacation goes out of business. If the resort you booked or the cruise line you were to sail with went bankrupt, travel insurance would reimburse you for your money you paid for that trip.

Damage to residence

This one might surprise you. It’s a problem that could definitely happen if you live in an area prone to natural disasters.

Let’s say you made it to your vacation destination with no fuss. You’re enjoying yourself. Then you find out that a tornado or hurricane has damaged your home. Now you have to cut your vacation short.

Travel insurance can cover you in this instance.

Change of employment

Most vacations are planned months, sometimes years in advance. In the time between paying for your vacation and actually taking it, your employment situation could change drastically.

For example, you might have a job change. The new job doesn’t give you the vacation time you accumulated at your old job. So your options are to take unpaid leave. Or…you could file a claim with your travel insurance.

Another example of employment change is that you are no longer employed. If you’re unemployed, you probably aren’t in a position to take vacation. And you probably could use that money. With travel insurance, this would be a covered reason.

How Does Travel Insurance Work?

Now that we’ve discussed what travel insurance covers, it’s time to look into how it actually works.

The first thing to know is what I stated at the beginning. Travel insurance is a reimbursement. That means you have to put the money out first. Then you’ll submit a claim. If the claim is accepted, you’ll get a reimbursement check.

It’s important that you understand that this type of insurance will reimburse 100% of your prepaid and non-refundable expenses. “If” those expenses are on the approved list.

When you get a quote for your travel insurance, the company will want to know when you made your first payment toward your vacation. If you want travel protection, there is a window from the time you made your first payment toward your trip and when you can buy travel insurance.

What Is Cancel for Any Reason Travel Insurance?

With all this talk about being reimbursed for covered expenses if the claim is accepted, you might be wondering if there is a way around it.

The answer is, yes!

What you’ll want is “cancel for any reason” travel insurance. It means exactly what its name implies. You can cancel your trip for any reason and receive reimbursement for your prepaid and non-refundable expenses.

Now, you might be thinking: ‘There’s got to be a catch! You mean an insurance company will let me cancel my trip and reimburse me for any reason?’

As crazy as it sounds, that is true. It does, however, come at a cost. Your premium will be higher. But you will be able to cancel for any reason.

Did you wake up and decide that you just don’t feel like going to the airport? It’s covered.

Forgot that you were supposed to be a bridesmaid and the wedding is scheduled during your trip?

Covered.

You got up and didn’t like the color of the sky that day.

Yep. Still covered.

Cancel for any reason coverage is good for when you want peace of mind or if you are concerned that you might be denied for a non-qualifying event.

And as awesome as that is, there is something that you don’t hear about much with travel insurance that will guarantee your claim will be denied.

What Is a Pre-existing Condition Exclusion Waiver?

If you are getting travel insurance primarily to cover you in case you have a medical emergency, you absolutely must pay attention.

When you get a quote for travel insurance, you will have the option to look at the coverage details before you buy.

That’s a good thing. You can see exactly what’s covered, in what amounts, and a list of terms you’ll need to become familiar with should you have to file a claim.

But buried deep within that document you will find the expression “pre-existing condition”. I got quotes from 3 different travel insurance companies. I used the same dates and provided the same cost of the vacation.

The coverages varied. But in every single instance, if I didn’t know anything about a pre-existing conditions clause, I would have never seen it. But it’s there.

The pre-existing condition waiver gives the insurance company the right to withhold payment under certain conditions. The wording varies by provider, but the point is the same.

I took one of the easier to digest explanations to use as an example.

According to this particular company’s definition, a pre-condition “means an illness, disease, or other condition during the [look-back period] immediately prior to the Effective Date” for your trip. If you or those booked to travel with you:

  1. exhibited symptoms which would have caused one to seek care or treatment
  2. received a recommendation for a test, examination, or medical treatment or
  3. took or received a prescription for drugs or medicine

This policy makes a point to say that this “does not apply to a condition which is treated or controlled solely through the taking of  prescription drugs or medicine and remains treated or controlled without any adjustment or change in the required prescription throughout” the look-back period.

What This Means

According to this definition, if a person has Type-2 diabetes and has it controlled by prescription drugs or medicine, the pre-existing condition waiver would not apply. If during the look-back period, that person was diagnosed with lupus, the waiver would apply.

The terms and length of the look-back period vary by company and even between policies issued by the same company. Most travel insurance companies will offer you a PDF of the coverage you plan to purchase when you get the quote.

To find where the pre-existing condition waiver section is in the policy you’re considering, if using a Windows computer, hold down the CTRL key and hit the letter “F” key. Type (without the quotes) “pre-existing”. And the PDF reader will take you straight to the section that talks about it.

What Is the Look-back Period?

You’ve heard me reference the term “look-back period” a few times in discussing pre-existing condition waivers.

The look-back period is the time the insurance company will “look-back” to see if you had something that would fall under the insurance company’s definition of a pre-existing condition.

The look-back period will vary by company and between policies issued by the same company. But it generally is 60 to 180 days from the “effective date” of the policy.

It’s very important that you answer truthfully when you fill out your policy. The company could view incorrect answers as lying. And because it’s an insurance, the company could come after you for insurance fraud. Insurance fraud is punishable by fines, repayment and possibly jail time.

It’s worth noting that this pre-existing condition waiver does not apply to emergency medical evacuation or accidental death and dismemberment. But you can be sure, the insurance company will check back over the look-back period to see if the situation developed because of a pre-existing condition.

Ways Around the Pre-existing Condition Waiver

Everything isn’t all bad. There is a way around the pre-existing condition exclusion.

Using our sample policy, the pre-existing conditions exclusion is waived if you:

  • “enroll in this Certificate at the time You pay the deposit required for your trip (or within fourteen (14) days of the initial deposit)
  • purchase this Certificate for the full cost of your trip; and 
  • are medically able to travel on the Effective Date.”

Let’s quickly unpack that.

To be excluded from the pre-existing conditions waiver for this policy, you’d have to pay for the insurance policy in full within 14 days of booking your vacation. It needs to cover the full cost of your trip. And you’d need to be healthy (a.k.a. “medically able to travel”) on the date the policy is to take effect.

How Do I File a Claim?

It is my sincere desire that you never have to file a claim against your travel insurance policy. But if you do, how should you go about it? What will you need to get your claim processed as quickly as possible?

The first thing you should do when you see the need to file a claim is to call the insurance company. What you specifically need to know from them is what documents are needed to file a claim and how to send them.

If you are cancelling your trip due to sickness or illness, you’ll need to see a doctor and get a document confirming that you are too sick to travel. That could include a full diagnosis or a Physician’s Statement.

This is important because you need to prove to the insurance company that the doctor decided you are too sick to travel. (This isn’t necessary if you have “cancel for any reason” coverage).

Assuming there are other reasons you are filing a claim, these are some other documents that will help process your claim quicker:

  • Receipts and itemized bills for all expenses (trip cancellation)
  • Unused tickets, proof of payments (trip cancellation)
  • Explanation of diagnosis from doctor (medical claims)
  • Police reports (stolen baggage or car collisions)
  • Proof from airline that baggage was delayed

What If My Claim Is Denied?

The first thing to remember is that is can take some time to process a claim. It’s not uncommon for it to take a few weeks to process. If the claim is complicated, it could take even longer.

But let’s assume that your claim has been processed and denied. What are your options?

If you purchased the policy though an agent, you could contact them and ask for help. If you purchased directly, ask the company how to file an appeal.

After filing an appeal, if your claim is still denied, your remaining options are to contact your state insurance commissioner and the Better Business Bureau for help.

Do I Have Insurance Through My Credit Card?

I said back in the opening that if you are traveling outside the country it’s probably a good idea to get travel insurance. However, depending on the type of coverage that interest you, you may already have it from your credit card company.

The two big players are Visa and MasterCard. American Express offers trip cancellation as an insurance company and to card holders. The coverage varies depending on which card you have.

Coverage protection will vary from company to company. So I’m going to focus on Visa for our discussion because they have the most documentation available without having to call.

Here’s the rundown of the travel protection you get just by using your Visa credit card:

  • Medical Referral Assistance: provides medical referral, monitoring and follow-up
  • Emergency Transportation Assistance: arranges for transportation under medical supervision
  • Emergency Message Service: can relay emergency messages for travelers and is available 24 hours a day
  • Prescription Assistance and Valuable Documents Delivery Arrangements: can accommodate unexpected prescription needs or transport critical documents (e.g. passport or travel visa) that might have been left home or somewhere else
  • Legal Referral Assistance: can arrange contact with English-speaking attorneys, U.S. embassies and consulates, bail-bond assistance, cash advances, and follow-up assistance
  • Emergency Ticket Replacement: arranges for the replacement and delivery of new tickets and assists with ticket reimbursement procedures
  • Lost Luggage Locator Service: can help you through the common carrier’s claim procedures or can arrange shipment of replacement items if an airline or command carrier loses your checked luggage
  • Emergency Translation Services: provides telephone assistance in all major languages and helps find local interpreters if available

As you can see, using your Visa card offers a lot in the way of travel protection. Still, call 800-992-6029 for exact coverages. Use this link to find Visa Global Customer Assistance numbers.

Can I Amend My Travel Insurance?

Believe it or not, you can make changes to your travel insurance policy. However, those changes have to be made before taking the trip. Most changes usually involve increasing or decreasing coverage.

Things people typically change on their travel insurance are:

  • Contact or traveler information
  • Deductible amounts
  • Change of return date
  • Additional trip costs like new tours or airline tickets

What Travel Insurance Companies Can I Choose From?

There are a number of travel protection companies to pick from. I’ve listed them below. Most are the actual company that will issue your policy. Some are comparison sites that let you see how much one costs compared to another.

I want you to choose wisely. So don’t just compare price. What coverage is being offered? What are the limits for each item? A low price will also mean lower coverage.

For example, in order to not have the pre-existing exclusion waiver, the same company might require one policy to be purchased within 21 days of the initial trip/vacation deposit. Whereas another policy from the same company will let you out if you purchase the policy within 3 days of the final trip payment.

Also, look at the coverage for emergency medical expenses. The cost to get you home from Mexico to the United States is going to be far lower than the cost of bringing you home from Thailand. Make sure the policy you choose will cover you based on where you will vacation.

Popular travel insurance companies and comparison sites:

  • Travelex Insurance Services (recommended affiliate partner)
  • TravelInsurance.com
  • Trawick International
  • World Nomads
  • AXA Travel Insurance
  • General Global Assistance
  • AardvarkCompare.com
  • Allianz Travel
  • Roam Right Travel Insurance
  • American Express
  • Travel Guard (AIG)
  • Seven Corners
  • IMG
  • All Clear Travel Insurance
  • Safety Wing
  • Atlas Travel Insurance

Stay Safe While You Travel

Hopefully, you found this information useful. If so, please share it with family and friends and on social media. I’ve attempted to answer as many questions that might come into the mind regarding the details of travel insurance.

The key takeaway here is that you don’t necessarily have to use a travel insurance company. You might get the required amount of coverage from your credit card company. If more than the credit card company can offer is needed, you have many options.

Finally, don’t just shop price. See what you’re getting for that price. Will the coverages be enough to protect you should you need to use it?

It is my sincere hope that you will never have to use any of the coverage we’ve discussed today. But if you do, at least now you know what to look for.

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