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Understanding Travel Insurance: What Is Covered and When to Purchase It

In the wake of Covid, travel insurance sales have increased as people aim to protect their investments against flight delays, cancellations, extreme weather events, and the persistence of the virus. However, travel insurance can be complicated, with various benefits, inclusions, and prices. Here’s what you need to know before making a purchase.

Travel insurance generally covers unforeseen events that force you to cancel or interrupt a trip, such as an illness in the family, the loss of a job, a natural disaster, a strike at a transportation company, a terrorist attack in your destination, or when your travel provider goes bankrupt. It often includes medical coverage, which is especially useful abroad where your health insurance may not cover you.

The price of a policy varies based on factors like age, length of travel, and type of coverage, but typically ranges between 4 to 10 percent of your entire trip cost.

Travel insurance is designed to protect expenses that you can’t get back through other means when things go wrong. This includes nonrefundable bookings like Airbnb reservations or the cost of a cruise.

If your hotel is refundable and you can get credits for your flights, you may not need travel insurance.

Travel insurers recommend purchasing travel insurance shortly after making your travel plans to have the maximum coverage window. A lot can happen between booking a trip and the travel date.

Purchasing travel insurance 10 to 14 days from your first trip payment often comes with “early purchase” benefits, such as a waiver for pre-existing medical conditions that may impact your travel. If this waiver is important to you, make sure to check if it’s included in the policy.

It’s important to note that not all plans have a pre-existing condition waiver. If you have a specific condition and don’t want it excluded from coverage, you’ll need to buy a policy within 14 days of the first dollar spent.

While you can’t control the weather, you can insure against its unexpected disruptions. For example, if you’re planning a trip during hurricane season, buying insurance immediately after booking can provide coverage if your destination is evacuated due to a hurricane.

According to travel insurance experts, this is one of the most common uses of travel insurance. Buying it early is crucial because once a storm is named, it’s too late to insure against it as it is no longer considered an unforeseen event.

Similarly, if you have nonrefundable ski lift tickets for a winter trip and a storm prevents you from reaching the resort, you may be able to claim the unused portion of your ski pass.

As climate change continues to worsen weather events like hurricanes and tornadoes, having coverage for natural disasters can become even more valuable.

Despite the prevalence of automated insurance offers during airline ticket or tour purchases, travel insurance is not a one-size-fits-all product. Many policies exclude coverage for extreme sports like skydiving and mountain climbing, although there are specialty policies that include them.

If you have a specific concern, such as a sick family member or engaging in a high-risk activity, it’s best to call an insurer or the helpline of a travel insurance marketplace for professional advice regarding coverage.

Speaking with an insurance professional can provide you with accurate advice based on your specific situation, avoiding the disappointment of thinking you’re covered only to have your claim denied.

It’s important to note that most standard travel insurance policies will not cover changes of heart or situations that are considered “unpleasantries.” For example, if you decide you don’t want to go on a trip because of unfavorable conditions, the policy won’t provide coverage.

To cover a change of heart, you would need to upgrade your policy to include Cancel for Any Reason coverage. This coverage, not available in every state, allows you to cancel your trip for any reason up until a few days before departure. However, it typically reimburses only 50 to 75 percent of your costs and must be purchased within weeks of your initial trip payment.

Another option is Interruption for Any Reason coverage, which reimburses a portion of your expenses if you decide to cut your trip short for a reason not covered by standard trip insurance. This coverage also needs to be purchased within weeks of your initial trip payment and typically requires you to be at least 72 hours into your trip.

If you need to make a claim, it’s essential to have supporting documents as proof. This can include receipts for purchases made due to lost baggage or canceled flights, flight cancellation notices, or a doctor’s note confirming your inability to travel due to Covid or another illness. It’s important to note that a positive at-home Covid test is not considered official documentation for insurance claim purposes.

When purchasing airline tickets online, airlines often offer travel insurance with attempts to persuade you by emphasizing the risk of not protecting your investment. However, it’s advisable to compare prices and options from other sources. A recent example showed that a $428 flight offered insurance for nearly $28 on the airline’s website, but similar coverage was available for $12 to $96 through other providers like InsureMyTrip.com.

Be cautious and do your research before making a decision.

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