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What is travel insurance and what does it cover?
Whether it’s a vacation of a lifetime or a cross-country trip for a cousin’s wedding, you may be wondering when or if it’s worthwhile to buy travel insurance. Probably the best answer is that it depends on what you can afford to lose. By understanding what travel insurance is and what it covers, you’ll be able to make the best decision on whether to buy it.
What is travel insurance?
Travel insurance is coverage designed to protect against risks and financial losses that could happen while traveling. The risks range from minor inconveniences such as missed airline connections and delayed luggage all the way to more serious issues including injuries or major illness.
What does travel insurance cover?
Depending on the coverage you choose, travel insurance can cover a broad array of possible damages and losses:
Injury or sickness
Travel insurance can help protect you from medical expenses abroad that your normal health insurance doesn’t cover. Most health insurance plans don’t provide full coverage in foreign countries and some health plans provide no coverage at all, including Medicare. Travel insurance works in addition to your everyday health insurance and can help supplement medical costs if you get sick or injured before or during your vacation.
Lost luggage
Travel insurance can help cover expenses stemming from lost or
stolen luggage. This is especially useful if an airline loses your
bags, as it can be very difficult to get them to pay for lost
luggage. In the United States, the Department of Transportation
(DOT) requires airlines to compensate fliers up to $3,300 for lost
baggage. In foreign countries that amount is a maximum of $1,750.
But to receive those maximum amounts, passengers must provide
receipts proving the value of the lost bags and their contents.
And some airlines require that the claim be filed within 21 days.
To make matter worse, DOT doesn’t define when baggage is
officially lost (as opposed to just “delayed”). Overseas, a bag is
only considered “lost” after 21 days. For delayed bags, DOT only
requires airlines to provide victims with enough money to buy
necessities like clothing, medicine and toiletries.
Last-minute cancellations
Travel insurance can help cover costs stemming from trip cancellations. Most resorts or cruise lines won’t give you a full refund in the event of a cancellation. If you cancel two weeks or more before your trip, most resorts will at least charge a cancellation fee; many cruise lines might only give you a 25% refund or will give you partial credit on another cruise. If you cancel within two weeks of a trip, with most companies you won’t give any refund whatsoever. Unforeseen circumstances happen, and you want to be covered just in case.
Coverage beyond your credit card
Some credit cards provide limited coverage, with annual limits and restrictions for cancellations and interruptions (if they offer cancellation/interruption coverage at all). However, few credit cards offer coverage for the most expensive travel risks: medical expenses or emergency evacuations, which travel insurance can cover.
What travel insurance might not cover
Travel insurance cost is primarily based on the price of the trip and the age of the traveler. A 35-year-old might expect a policy to add 3% to 5% to the cost of a trip while a 60-year-old might pay around 10%, says Jonathan Harty, owner of a MA-based travel agency. It can be a small price to pay to safeguard your investment in a honeymoon or the trip of a lifetime.