Travel Insurance 101

April 4, 2011

travel insurance

Travel insurance may be something you’re offered next time you book a trip. These days, travel can be fraught with uncertainty -from natural disasters to political instability. Since you never know what might happen to jeopardize your trip, and the money you paid for it, many travel companies offer travel insurance when you’re buying through them.

Of course there’s always the possibility that you could get sick injured, or that a family situation could result in the delay — or even cancellation — of a planned (and possibly paid for) trip. In order to protect against losing their money in such situations, some people decide to purchase travel insurance.

What is Travel Insurance?
Travel insurance is designed to protect you in the event that things do not go as planned with your trip. Most “regular” insurance policies won’t reimburse you if a hurricane makes it impossible for you to travel, or if you end up needing to attend a funeral. Additionally, your medical policy may not cover injury or sickness occurring overseas – which means that you could be on the hook for some of your medical costs while traveling. Travel insurance is a policy you can buy to help protect you while you are away from home.

Travel Insurance Coverage
Travel insurance policies come in a variety of shapes and sizes. You can choose different options, depending on what you think you’ll need. Check with your agent to find out what your specific policy covers. Some of the items that you can expect to get coverage for include:

Trip cancellation: In the event that a company (such as a cruise company) goes out of business, if the weather results in a cancellation, or if you have an illness or injury, or a close family member is sick or dies, you can be reimbursed for the cost of your trip. Understand that most standard trip cancellation portions of travel insurance do not apply if you simply decide to change things. That sort of coverage costs extra.

Trip delays: If you get stuck at your location for some reason, including the weather, you can be compensated with a daily stipend to cover the costs of lodging, food and transportation.

Baggage problems: If your luggage is lost or delayed, you can get reimbursed for the personal items and the baggage, allowing you to replace what you need.

Medical and dental: Covers the cost of doctor visits, hospital stays, dental procedures, lab work, surgery and other issues that might arise while you are on vacation. Realize, though, that routine physical exams, eye care, mental health and replacement of lost health items (hearing aids, contact lenses, etc.) are not usually covered.

Emergency evacuation: For the most part, this is insurance that covers the costs of being rescued from your situation. Many adventure travelers get this to pay the costs of being evacuated from a mountain or other inaccessible area. Emergency evacuation can also apply for emergency flights back home should you become sick or injured.

Rental car: Many travel insurance policies will cover rental car damage and liability.

Flight death: If you die in a plane crash, your beneficiaries can receive a payment. (Although your life insurance policy should cover this anyway.)

Repatriation of a body: You can get help with the costs associated with returning a body (a travel companion or even yourself) to your home country.

Costs for travel insurance vary, depending on the policy and how much coverage you get. I often get trip cancellation insurance (and only that) when I travel, since it is fairly inexpensive — only a few bucks per person — and it helps me feel peace of mind when my family visits my husband’s relatives on the other side of the country. Costs can run from 5% of the cost of your trip to much more than that, it’s definitely worth it to shop around and see where you can get the best deals.

Cheap Travel Insurance

Many times, you can get trip cancellation insurance when you book your trip but be aware that travel agencies and travel companies sometimes add a markup to the coverage.  Usually this mean you might be able to save money on travel insurance by using a third party like InsureMyTrip that lets you search and compare insurance rates from multiple providers.  Just remember, if the rate seems to good to be true, you typically get what you pay for. Make sure you understand what a policy covers and what it doesn’t before buying travel insurance.


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Miranda writes about personal finance almost every day. An experienced freelance writer, she's covered your money online and in print from every angle and is always looking for new ones.

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6 Responses to Travel Insurance 101

  • Savvy Young Money

    Great detailed post! I’d also check with your credit card company first. Sometimes they’ll ensure certain portions of the trip.

  • Jon | Free Money Wisdom

    I didn’t know all these travel insurance options existed! Could you tell us a little more about trip delay insurance? I cannot tell you many times I’ve been delayed, if it’s a plane or schedule conflict… Thanks!

    • Miranda

      All trip delay insurance does is allow you to be reimbursed (usually up to $150 a day) for hotel costs and food costs if the delay results in you needing to stay extra days. It’s not really meant for those whose flights were delayed by only a couple of hours. You can talk to a representative and find out what trip insurance costs, and what is covered. Some policies require you to have been delayed a certain amount of time before kicking in, and some will have limits on how many days you will be reimbursed for.


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