Everything you ever wanted to know about travel insurance (but were afraid to ask)

Editor’s note: This is part one in a series of posts about travel insurance. It is sponsored by Access America and researched with assistance from the US Travel Insurance Association, a trade organization. Here’s more information about sponsored posts.

Do you need travel insurance?

A good policy can offer you peace of mind for your upcoming vacation.

If something goes wrong – if your trip is interrupted or if you have to cancel – you can recover some or all of your costs.

About 1 in 3 travelers buy insurance for their trip, according to the US Travel Insurance Association. Should you be one of them?

Before taking out a policy, it’s important to determine whether you need protection at all.

Buy it:

If you’re spending more than $10,000 on a vacation. That’s known as a “big ticket” purchase, and it should be insured.

If you’re a nervous traveler, and just need the peace of mind that comes with a policy. Even if you can’t recover all of your money, you may still be able to take advantage of certain benefits, like trip interruption coverage.

If you’re cruising or taking a package tour. Cruise lines used to be flexible, when it came to allowing passengers to rebook missed cruises. Tour operators were also more lenient. Not anymore. A policy can protect you.

If you have a complex or lengthy itinerary. If you’re on a tour with a lot of moving parts, then insurance could be useful. When one part doesn’t go as planned, the right policy can help you make a quick recovery.

Anytime when you leave the country. Medical providers outside the U.S. often ask for “upfront” payments for medical services that can cost thousands of dollars, and travel insurance can guarantee these payments. (This is also true for medical evacuations, which can cost tens of thousands of dollars.)

If you’re on Medicare and are traveling internationally. You’ll want to consider a policy that includes medical expenses, since Medicare doesn’t typically cover events outside of the country.

Skip it:

If it’s a short, simple and inexpensive trip within the United States.

If you’re spending less than $10,000 or if you don’t mind losing the value of your trip should something happen before or during your vacation. Also, if you have insurance that would cover a medical emergency or medical evacuation, you may not need a policy.

If your trip includes components that aren’t covered by insurance. For example, say you’re staying at a friend’s house, using a voucher or redeeming frequent flier miles for your vacation. Travel insurance would probably be minimally useful. (Some travel insurance policies may cover the cost of redepositing miles when you need to cancel for a covered reason.)

If you have a pre-existing medical condition that wouldn’t be covered. Read you policy carefully; some travel insurance policies do cover existing medical conditions when certain requirements are met. Normally, pre-existing conditions that are controlled are covered if the policy is purchased within a certain time following initial deposit and payment of your trip.

If coverage would be redundant. For example, if your credit card or other insurance would cover the same event — then don’t worry about it. Note that some cards won’t cover items like medical evacuations, so if that’s important, then think about insurance. (Most credit cards do not cover medical expenses, and just about every credit card will not cover for cancellation and interruption.

Next, I’ll show you how to choose the right policy.

Special thanks to Access America for making this series possible, to John Cook at QuoteWright for his insights into the travel insurance industry, and to my sponsors, SquareMouth, Travel Insurance Review, Travel Insurance Services, and TripInsuranceStore, for their support of this site.

(Photo: Eliza veta Tsitovskaya/Flickr Creative Commons)

  • SirWired

    I’d also add for those that say they wouldn’t mind losing the value of their vacation:

    Ask yourself “If something that WOULD be covered by insurance happens (i.e. beloved Grandma dies the week before departure, or you trip and fall in the airport just before flying out, or you miss your connection and miss the boat, etc.), and I don’t have insurance, am I going to write to Chris complaining about it when the travel provider won’t budge?” If the answer is yes, maybe you should get insurance after all.

  • Arizona Road Warrior

    “Anytime when you leave the country. Medical providers outside the U.S. often ask for “upfront” payments for medical services that can cost thousands of dollars, and travel insurance can guarantee these payments. (This is also true for medical evacuations, which can cost tens of thousands of dollars.)

    If you’re on Medicare and are traveling internationally. You’ll want to consider a policy that includes medical expenses, since Medicare doesn’t typically cover events outside of the country.”
    - – - – - – - – -
    If you are under 65, a person needs to check to see if their health insurance cover events outside of the USA.

  • Annette

    There’s not just the cost of the trip, there’s also the cost of last-minute flights back home in the event of an emergency. I have a family friend that was spending several weeks in AZ one winter when her mother suddenly died. The last minute airfare home was very expensive and she actually ended up missing her own mother’s funeral. There’s also the case of a local couple who went away on a cruise only to be contacted a few day later and told that their house had caught fire and they had to make an emergency trip back home.

  • Brooklyn

    My Blue Cross policy has a website that lists hospitals all over the world where I can just show my card and get care. It’s worth checking before you buy a policy; they’re so very expensive! And of course, some countries will treat anyone if it’s an emergency – those are the ones with the national health plan that we almost got (sigh).

  • Roberto

    I’ve done a fair amount of international travel (although certainly not as much as many readers here), and I have suffered ailments abroad.

    I have to say, the notion that you’ll be spending thousands of dollars abroad for medical care is pretty much only true in Mexico. I don’t recall ever paying more than $100 for medical care abroad, but you can hardly get into a MinuteClinic in the US for that.

    @Brooklyn nice try. Any hospital in the US is required by law to provide emergency care, irrespective of the patient’s ability to pay.

  • SirWired

    I will point out that if you are in a remote part of the world without what we would regard as adequate medical care, and you require medical evacuation, you MUST either have money or insurance. Because if you can’t pay, NOBODY is going to be able to convince the medevac company to fly you out and you are simply going to die. Do not expect the hotel, cruiseline, tour operator, embassy, consulate, State Dept., airline, etc. to do so.

    Luckily, medevac-only insurance is quite cheap, and there are plenty of annual policies out there that are also inexpensive.

  • http://www.thetravelinggiraffe.com Crissy

    I also agree that you should check with your health insurance provider. I used to have an HMO and they would cover any emergency medical incidents. So don’t think that just because you have an HMO you have no coverage. If you’re going away for 2 weeks that should be enough. If you’re going to be away for 6 months or a year then you might need something that will allow you to go to the doctor when it’s not an emergency.

  • http://mytimetotravel.wordpress.com Kathy

    You need to be more specific. “Travel insurance” covers a number of different kinds of insurance. The policy you need to cover the possible cancellation of a $10,000 cruise/tour is completely different from the policy you need for medical evacuation. Conflating them simply ups the costs, and causes people to ignore companies that specialize in one or the other. I just got back from a six month RTW (no tours or cruises) and carried only medical evacuation insurance (my US regular medical covered me for emergencies abroad).

  • Les

    Many if not most of the travel insurance providers are subsidiaries of large insurers who have seen the profit potential of travel risk coverage. You usually have to dig a bit to find these connections but they’re there. The good news here is that these carriers are stable, not fly-by-night operations which will disappear when the claims start to arrive. The bad news is that actually collecting on a claim can be as difficult as for any other coverage. Claim recovery can be sticky, time-consuming, filled with obstructions and generally infuriating – just like any other insurance.. Travel insurance is not the panacea that it’s proposed to be. But, like the legendary crooked roulette wheel, it may be the only game in town.

    Try to find provider references from sources which have no vested interest in the business. That eliminates travel agents, no matter how trustworthy, insurance agencies, the providers themselves … anyone who has a piece of the pie. Best resources are personal connections who have had experience collecting (or trying to collect) on a travel claim. Next best – web sites like tripadvisor where customers might post honest reports. Beware here, however, of industry apologists both paid and unpaid. There has been a very visible growth in shops small and large which specialize in salting consumer web sites with paid-for ‘image management’ services.

    Yes, is IS a jungle out there.

  • kwaked

    @Brooklyn- sure, your Blue Cross covers outside the US, but did you happen to notice HOW MUCH? Outside the US, Blue Cross covers 30% of what they cover stateside. So just saying it covers you doesn’t mean squat when you’re looking at a $50K medical evacuation.

  • Linda Snow

    I disagree that insurance is never needed for a simple domestic trip. Given that most of us buy non-refundable plane tickets these days, a few bucks to insure that ticket is not a bad idea. You can usually insure a simple trip for around $15-20 at the time of purchase, to me it’s worth it.

  • http://profile.yahoo.com/VQZH5JYXEVHHZ3N5RC3DTZVWNA renata

    It is not true that “medical providers outside the U.S. often ask for “upfront” payments for medical services that can cost thousands of dollars”. Actually, the U.S.  is one of the few countries in the world that DOES ask for thousands of dollars for medical services. China does, too, but they are about to complete a 3-year plan to  cover more that 90% of the residents. Here’s a list of countries with national health care, that is, if you happen to need a hospital even as a non-resident you are provided medical service and ARE NOT presented an insane bill to pay afterwards(http://www.medicareforall.org/pages/List_of_Industrialized_Countries)AustraliaAustriaBelgiumCanadaCzech RepublicDenmarkFinlandFranceGermanyGreeceHungaryIcelandIrelandItalyJapanKorea, SouthLuxembourgNetherlandsNew Zealand NorwayPolandPortugalSlovakiaSpainSwedenSwitzerland(Turkey)United Kingdom