When Life Interferes with Fun: Travel Insurance to the Rescue

When events interfere and make travel planned in advance difficult or impossible, travel insurance can protect your investment.

Families in the South who booked their summer vacations months in advance hardly expected that snow…of all things…might cause them to have to change their plans. Since unusually cold and snowy winter weather in many parts of the U.S. forced school districts to cancel classes, many will be extending the school year a week or two longer than expected. As a result, many families will have to decide whether to take their children out of school early or face considerable cost in cancelling or postponing their vacations.

Travel insurance can help protect families from the cost of changing or cancelling travel plans due to unexpected events such as illnesses, bad weather and sometimes extensions of the school year or work emergencies that require you to change plans. The typical travel insurance policy includes one or more of these coverages:

Interruption coverage: This coverage reimburses you for nonrefundable costs due to trip cancellation, interruption or delay in situations arising from conditions such as carrier delays, illness, bad weather or baggage loss. To receive reimbursement, the reasons for cancellation, interruption or delay must meet policy terms.

Medical insurance: Travel medical insurance policies cover emergency or urgent medical care you need while traveling outside the U.S. and its territories. This often includes coverage for medical evacuation to the U.S. or to a facility that can handle your condition.
Emergency assistance: Perhaps the fastest-growing type of coverage, this offers 24-hour assistance, provides help finding doctors, helps arrange accommodations, contacts your family or arranges other assistance in case of emergency.

Travel insurance can be purchased on either a per-trip or annual basis. The U.S. Travel Insurance Association notes that more than 80 percent of travel insurance purchased by Americans is purchased on a per-trip basis and covers trip cancellation; interruption; travel delay; baggage delay; lost, stolen or damaged baggage; medical expenses and medical evaluation expenses.

Frequent travelers may want to consider purchasing an annual plan. These plans typically include medical and medical evacuation coverage. Many HMO plans do not cover anything except emergency treatment out of their service area; Original Medicare and many Medicare supplement plans do not cover medical services rendered outside the U.S. and its territories.

Do We Really Need Travel Insurance?

Travel insurance costs roughly 4 to 8 percent of the cost of a trip. Is every trip worth insuring? The U.S. Travel Insurance Association recently released a survey that found one in six Americans (17 percent) have had their travel plans affected by medical conditions, natural disasters including severe weather, or mechanical or carrier-caused problems.

Only you can decide your appetite for risk, but things to consider include the cost of the trip, ease of rescheduling and your health. In addition, bad weather, financial instability among airlines and other travel providers and political situations such as strikes and protests can all increase the likelihood of travel delays or cancellations. Travelers should be familiar with the cancellation policies of their hotels, tour providers, cruise lines or other travel service providers.

Before purchasing any travel insurance, you will want to review your home and auto policies and credit card agreements. Some of these policies/agreements might cover certain travel-related items, such as lost luggage and car rental liability. This coverage might be sufficient, especially for short or domestic trips.

Consider what you plan to pack as well. Common carriers typically provide low reimbursements for lost or damaged luggage. Certain items should never be put into checked baggage, including cash, credit cards, expensive jewelry, cameras, heirlooms, passports and critical documents, medicines and fragile items, such as eyeglasses. Check coverage under your homeowners policy, since travel insurance policies might also exclude coverage for some of these items.

Finally, you will want to ensure that the insurance company underwriting your travel policy is in good financial standing and meets industry standards. Make sure that the coverage offered includes reasonable limits for medical expenses and personal liability. The U.S. State Department notes that medical evacuation alone can cost more than $50,000, on top of any emergency treatment you may require.

For assistance with travel and other types of insurance, please call us.