Frequently asked questions about travel insurance

Should I buy travel insurance - or not? / Photo by Horrigan S - Flickr
Travel insurance used to be a small segment of the insurance business that protected people against the loss of a non-refundable deposit on a big-ticket vacation such as a safari or a round-the-world cruise. But the Sept. 11, 2001, terrorist attacks and a series of natural disasters in the early 2000s pushed it into the mainstream. Today, it’s hard to find a travel agent or travel site that doesn’t try to sell an optional insurance policy as part of a trip.

But should you buy one? That depends. Here are the most frequently asked questions about travel insurance:

What does travel insurance do?

Travel insurance covers the investment in your travel plans, your personal belongings, and you and your family on your vacation. If something goes wrong, you can recover some or all of your costs, depending on the kind of insurance you buy. Most policies cover trip interruptions and cancellations and even acts of terrorism. They can also pay for emergency medical and dental care and, if necessary, a medical evacuation.

What kinds of policies are out there?

There are two major types of travel insurance: wholesale plans and retail packages. Wholesale plans are sold through travel suppliers like a cruise company or your airline. They typically have more limitations in coverage, and are not age-sensitive in their pricing. You can’t compare these plans because they are customized and priced for each travel supplier. Travel agents and online websites sell retail packaged plans, mostly. These are priced and configured exactly the same no matter whom you buy from. A retail travel insurance policy lets you cancel your trip for a covered reason and has specific limitations; the most frequent “gotcha” is an exclusion for any preexisting medical conditions. A “cancel for any reason” option in a policy pays for a percentage of your non-refundable trip costs if you decide to stay home.

How much does insurance cost?

A standard policy typically costs 6 to 10 percent of your trip’s prepaid, non-refundable price. A “cancel for any reason” policy, however, can run you 10 percent or slightly more. Policies are priced based on the length of the vacation, the age of the travelers, the total cost of the trip, and the coverage features included in the plan.

Do I need insurance?

Maybe. Experts recommend it if you are concerned about losing a large non-refundable vacation deposit, or non-refundable airfare. Also consider a policy if you’re cruising or taking a package tour. (Both have unforgiving cancellation policies, which could result in your losing the entire value of your trip.) Medicare, and most health insurance policies don’t cover you outside the country. More importantly, medical evacuation expense is a critical coverage that can help get you home or to a hospital that can treat you. You need to weigh the additional cost of the insurance against the risks of making a claim.

Where can I buy insurance?

You can buy directly from your travel supplier or your travel agent. In both of these cases, you will have trouble comparing plans or coverage verses cost because they typically only offer one or two brands, and rarely give you an easy way to compare coverage. You can buy directly through the insurance companies on their websites. The largest are Allianz Global Assistance (formerly Access America), TravelEx, Travel Insured International and Travel Guard. You can also buy through a third-party comparison web site such as Squaremouth, Travel Insurance Review, TripInsuranceStore.com and InsureMyTrip.com. Those sites sell the same products you buy directly from the insurance company or your travel agent, but make it easier to compare policies. A new comparison website, TripInsurance.com, sells exclusive policies directly from the major underwriters, eliminating several layers of middlemen.

How do I shop for a policy?

Get a quote from your travel agent, and specifically ask them the brand and name of the policy. Get a list of the coverage levels in the plan they are suggesting. Check a comparison website to see if you can find the same coverage for less money in a different company’s policy. Look for a policy with a pre-existing conditions waiver. Make sure the comparison website is licensed to sell insurance in your state. If they are, then they will only be offering legitimate policies from insurance companies licensed in your state.

If you are buying from a travel supplier, make sure a licensed insurance provider provides their insurance. If you have a question about a policy or provider, check the US Travel Insurance Association site or your state insurance commissioner to make sure that it’s legit. Make sure you read the actual certificate of coverage for the particular areas of coverage you are concerned about to see what their exclusions are. The devil is in the fine print.

What do I do after buying?

Read the policy immediately. If you see a problem in a coverage area of concern, call your insurance company right away. Every policy offers a 10-day “free look” period. If after reviewing the policy, you decide that it doesn’t meet your needs, you can cancel it and get a full refund as long as you haven’t left on your trip or filed any claims.

What if I have to file a claim?

Your travel insurance company will tell you how to do that in the policy certificate. Documentation of your loss is the most important item you’ll need to pull together. If you don’t have a pre-existing conditions waiver, your insurance company may have to request your medical records. Claims typically take two to four weeks to process, but some complicated ones can take longer. Expect a final decision within roughly a month.

What if my claim is rejected?

A rejection means the company can’t honor your claim based on the information provided, and the provisions of your plan. Ask the company for the specific provisions of the plan, and what is missing in your documentation that cause them to come to this decision. Insurance claims are highly regulated, and the decisions are not arbitrary. They follow the policy provisions and evaluate your claim information on their face value. Send the company a brief, polite written appeal with any new information you believe is relevant to your case. Most insurance companies have their most senior adjusters and management review appeals.

If my appeal is rejected, am I out of luck?

Again, ask the insurance company for the specific reasons for rejection of your claim. Discuss the policy and their rejection reasons with your attorney before you make a claim in court. If an attorney thinks you have a case, you’ll want to start in small claims court. Asking your travel agent or comparison website to intervene will rarely help, but it can. (They are not qualified or authorized to interpret policy provisions.) If you suspect insurance fraud you can contact your state insurance commissioner. Before they take action, they will want to see all the documentation on how your claim was handled.

Christopher Elliott

Christopher Elliott is an author, journalist and consumer advocate. You can read more about him on his personal website or contact him at . Got a question or comment? You can post it on the new forum.

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