Travel Insurance

Trip or travel insurance, also referred to as trip cancellation insurance, compensates travelers for nonrefundable expenses. For example, if the trip needs to be canceled for some unexpected reason, and the expenses such as airline tickets are nonrefundable, then the insurance company will compensate the traveler for their monetary losses.

In this article, we're going to discuss the topic of travel insurance. As part of that discussion, we're going to talk about the coverage offered by this insurance. We'll also outline some of the typical terms and conditions of these policies. Then we're going to finish-up by running through some of the pros and cons of purchasing travel insurance.

Travel Insurance Coverage

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Although this insurance will be packaged differently by a wide variety of travel companies, agencies and carriers, the types of coverage you can expect within these policies apply to reimbursement expenses associated with the following:

Trip Cancellation
Medical Assistance
Baggage Loss
Travel Accidents

The cost of trip insurance will vary, but the traveler can expect to pay fees that range from five to seven percent of the total cost of the trip itself.

Trip Cancellation

The most frequent claims under the trip cancellation provisions of this insurance involve the injury, sickness, or even death of the traveler, their companion, or a family member. Cancellation insurance may also cover travelers that are asked to report for jury duty, or if their home is damaged by fire, earthquake, or hurricane.

This insurance typically covers cancellation, interruptions, or delays to travel plans.

Trip Cancellation - includes prepaid airfare, car, land expenses, and possibly cancellation charges imposed by various agencies when a trip is cancelled.
Trip Interruption or Curtailment - includes prepaid airfare, car, land expenses, and possibly cancellation charges imposed by various agencies when a trip is interrupted. In addition, this insurance may also pay a fixed amount, typically $100 per day, for accommodation expenses associated with staying near the distressed traveler.
Trip Delay / Departure Delays - includes the covered expenses if the traveler's trip is delayed for the above reasons plus delays caused by inclement weather, loss of a passport, and equipment failure. Covered expenses may include meals, lodging, and any additional airfare necessary to continue the trip.

Medical Assistance

Optionally, the traveler can purchase travel insurance that includes expenses associated with providing the traveler with medical assistance. The medical protection offered by travel insurance companies will vary by carrier, but the types of coverage can range from the payments of local medical expenses, to the emergency evacuation of a sick traveler or even the repatriation of a deceased traveler.

Emergency Evacuations - includes medical and travel expenses associated with transportation to local hospitals and / or return travel to obtain additional medical treatment and / or recovery.
Repatriation of Remains - the covered expenses may include those related to embalming, cremation, or a coffin used for repatriation, as well as transportation expenses.
Accidents / Illnesses - pays for the medical supplies and services rendered in the event the traveler becomes sick or is involved in an accident while traveling. Covered expenses typically include x-rays, hospital care, ambulance service, prescriptions and laboratory tests.

Baggage Loss

Airlines are encouraging passengers to travel light these days, but even downsized luggage can get lost. Here again, this category of travel insurance will provide protection for both baggage loss or damage, as well as costs associated with the delay in recovering lost baggage.

Baggage / Luggage Loss - includes reimbursements for the loss of baggage and / or personal items during the vacation. Covered expenses are typically capped at a fixed amount per item. For example, $500 per unit lost.
Baggage / Luggage Damage - the covered expense here will usually involve the cost to either repair the damaged item or replace it.
Baggage / Luggage Delay - pays for expenses associated with the purchase of personal items that are necessary for the traveler. This coverage generally becomes effective after a fixed period. For example, the luggage may need to be delayed 24 hours or more before benefits are provided.

Travel Accidents

This final insurance protection category usually involves air travel and provides payment in the event the traveler is injured while aloft or while traveling via common carrier. Payments here can be quite large ($250,000 or more would be common); however, the injuries covered will be quite serious. For example, the accident might have caused the traveler to lose a limb, or the use of an eye or the loss of hearing.

Travel Policy Terms and Conditions

Whenever shopping for travel insurance, it's important to understand the terms and conditions of the policy. When comparing policies, it's important to evaluate the following exclusions and terms:

Policy Exclusions - may include preexisting medical conditions, acts of war, travelers when they are under the influence of alcohol or drugs. Polices may also exclude fragile items such as cameras, electronic devices, and musical instruments.
Terms - the terms and conditions of travel insurance may include effective dates / times of coverage as well as the duration of that coverage. The terms and conditions will be focused around both the timeframe of the travel, and the departure and destination locations.

Pros and Cons of Purchasing Travel Insurance

The benefits of purchasing travel insurance are obvious - if the traveler is involved in an accident, or needs to cancel their trip due to an illness, then the insurance will reimburse the policyholder for their out of pocket expenses. This type of insurance is also useful if luggage is lost, damaged, or stolen while traveling.

As is the case with whenever buying insurance, one of the disadvantages of purchasing travel insurance is cost. And unlike life insurance, which has a relatively long time span of coverage, travel insurance only provides protection for the duration of the trip. Finally, the cost of this insurance must be evaluated against what might be relatively generous refund polices of the travel agency, airlines, car rental agencies, and lodging establishments.

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