How do I choose the right travel insurance policy?

Editor’s note: This is part two in a series of posts about travel insurance sponsored by Access America. Here’s part one.

Nina Boal needs a travel insurance policy. But with so many choices out there, which one should she buy?

“I want to see if I can buy appropriate policy,” she says. “I checked online, and can’t find any direct answers.”

She’s right. An online search for “travel insurance” is likely to pull up a long and confusing list of possible answers. But there are really just three options.

Buy direct. Companies sell insurance policies directly to travelers, usually online. The big players are Access America (which is sponsoring this series), CSA Travel Protection and Travel Guard. A full list of other insurance companies worth checking out are on the US Travel Insurance Association’s website.

Buy through your travel company. Many travel companies, including airlines, cruise lines and tour operators, offer optional insurance directly to consumers. These can be a good deal, but it’s worth shopping around before deciding to buy one of these policies. Also, be careful of tour operators or cruise lines that offer generic protection services. They won’t cover you if the company goes belly-up.

Buy through a travel agent or third party. Your travel agent may offer an insurance policy. (More on buying through an agent in a moment.) You might also see an online company that specializes in comparing and evaluating insurance policies, such as Squaremouth, Travel Insurance Review and Trip Insurance Store, all of which, by way of full disclosure, are site sponsors). Also, check out InsureMyTrip.com. These can be useful ways to quickly find the best travel insurance policy.

But how do you pick the right one?

Let’s get back to Boal. She’s planning a trip to Japan, and wonders which of these places will offer the policy she needs. The answer is: all of them might.

The first time you’ll be given the option of buying an insurance policy will probably be when you book a trip, either directly through a travel company or through an agent. It’s nice to be reminded about the insurance option, because when you’re planning a big trip, it can easily be overlooked.

Still, experts generally agree you shouldn’t take the first policy you’re offered – no matter how attractive the policy, or how hard the sell. (A few years ago, I would have said travel agents were the worst offenders in this department, but nowadays, websites like to use scare tactics to persuade you to “protect your trip” with insurance in bold uppercase letters, making human agents look downright polite.)

Boal will need to shop around for the right policy, which will mean consulting with at least two of the three travel insurance sources.

Travel insurance is extremely competitive, and by checking with multiple sources, you won’t just find better terms or prices. You’ll also avoid buying a potentially useless policy.

What to look for

When comparison-shopping, you’ll want to match your own needs with that of the policy, to the extent that it’s possible. Here are a few coverage areas to be aware of.

Accidental death – Provides cash payment for accidental loss of life or limb while traveling.

Baggage – This benefit provides reimbursement for lost, stolen or damaged baggage or personal items. The coverage usually applies to your entire trip, not just your flight. A subset of this coverage is for baggage delay, which offers reimbursement for clothing, toiletries and other essential items if luggage is delayed for a specified period of time.

Cancel for any reason – This is a subset of trip cancellation (usually available for a slightly higher premium) and provides for cancellations that aren’t covered by the basic coverage. You may be reimbursed for your non-refundable trip payments and deposits if a trip is canceled for any reason.

Deductible – The deductible is a co-pay amount which is the responsibility of the insured. Options vary by plan and can range from $0 to $2,500. Deductibles can be charged per policy, or per individual, per incident or a combination. Most medical plans require you to select a deductible option while most travel protection plans offer a zero deductible benefit.

Emergency medical and dental – Pays for the cost of treatment associated with a medical or dental emergency incurred while traveling. This coverage may be secondary to your primary health insurance, if you have it. A subset of this is emergency medical transportation, which arranges to transport a patient to an appropriate medical facility. Some policies may also cover the cost of bringing a friend or family member to you or getting your children home. Medical repatriation benefits may include arranging and paying for the cost of getting you home.
IMPORTANT: Look for clauses that address pre-existing medical conditions. They could affect your ability to make a successful claim.

Employment layoff – Provides reimbursement for prepaid, non-refundable trip payments and deposits if a trip is canceled due to involuntary layoff or termination of employment. Review this paragraph carefully if you think you might make a claim. It can be restrictive. This is usually a named peril for a trip cancellation or interruption policy.

Missed connection – Offers reimbursement in the event of a missed flight connection or for the additional costs to “catch up” to a cruise if the cause of delay is an accident or bad weather. This is often a subset of trip cancellation or interruption coverage.

Financial default – This coverage is normally offered in the event of a complete cessation of operations due to financial circumstances. The operator doesn’t have to file for bankruptcy. Read this paragraph very carefully, since there’s no standard language. This is a covered reason, or named peril of a trip cancellation or interruption policy. Not all travel insurance policies cover supplier bankruptcy. Most companies publish a list of travel suppliers that they either cover or exclude for financial default.

Life insurance – Provides an accidental death or dismemberment benefit while you’re enrolled. Coverage can include accidental death and dismemberment for public transportation or flights. (Although this benefit is sometimes referred to as “life insurance” it is technically a benefit, not a life insurance policy.)

Rental car damage – Offers collision loss/damage insurance for rental cars covers the costs of damage to, or theft of, a rental car.

Terrorism – Provides coverage in the event of a terrorist incident. Bear in mind that some plans only provide coverage if you are scheduled to arrive within 30 days of the incident while other plans only offer foreign coverage. This is a subset of a trip cancellation or interruption policy.

Trip cancellation – This coverage reimburses you for non-refundable trip payments and deposits if a trip is canceled for illness, death or other specific reasons. Most trip cancellation language is standard or if your destination is uninhabitable.
But it’s worth reviewing to make sure it will cover you in the event your trip is called off.

Trip interruption – Offers reimbursement for non-refundable trip payments and deposits if a trip is interrupted for illness, death or other specific reasons. Again, read the language carefully to be sure you’re covered.

Travel delay – Provides reimbursement for meals and accommodations when a trip is unexpectedly delayed. Read this one and always call your insurance company before you make a travel delay claim to make sure the terms will apply to your situation. Don’t forget to save your receipts when you make a travel delay claim.

Weather – Most policies will include travel delay coverage due to a mandatory evacuation in the event of a hurricane or other meteorological event. Be careful with this one. Some policies offer cancellation coverage if only one part of your trip can’t be taken (if, say, your hotel is closed) while others stipulate that the airport or airline has to cancel its flights. Still others stipulate that your hotel must be uninhabitable for coverage to kick in. This is a named peril for a trip cancellation or interruption policy.

Which policy to buy? Boal has her work cut out. She likes the “cancel for any reason” policy, but has specific requirements for coverage.

I get questions like hers almost every day from readers, and unfortunately, there’s no quick and easy answer. Everyone has to find the right source and carefully compare policies.

Finding the right travel insurance policy, it turns out, can be hard work.

Next up: How much should you pay for your insurance?

(Photo: Grey Mare/Flickr Creative Commons)

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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