“What should I do about travel insurance?”
That’s a question we get asked on a fairly regular basis and, frankly, I have a hard time answering. It’s because… well, what is travel insurance?
Some people are looking for medical insurance while traveling abroad, others are looking to insure their belongings in case of theft, and still others are looking for trip cancellation insurance in case your trip gets cancelled for some reason. All of the above could be considered “travel insurance.”
Wikipedia defines Travel insurance as insurance that is intended to cover medical expenses, financial default of travel suppliers, and other losses incurred while traveling, either within one’s own country, or internationally.
Travelers list three top reasons for buying travel insurance: Peace of mind, protection against the unexpected, and protecting their trip investment.
In this post I’ll talk about each type of insurance and give you some resources to help you wade through it all.
Medical insurance is, as far as I’m concerned, essential. Maybe I’m simply looking at it through my American eyes, knowing how outrageously expensive health care is the USA, but I wouldn’t travel without health insurance.
I have friends who argue that it’s not important because the cost of medical care in other countries is reasonable. They feel they will simply pay for their care in those countries and not waste the money on insurance. I can see where they’re coming from and, if you plan to never return to the USA, that could be a reasonable strategy.
However, it’s not an acceptable strategy for me. Although I lived and traveled in various foreign countries for nearly twenty years, I still came back to the USA on vacation. I came back to visit to my family and expose our children to “their” country and I wanted to be able to visit the ER if we needed to. Without some kind of health insurance policy, that would not have been possible.
I also knew – or at least suspected – that if one of us got seriously ill with some kind of long-term illness like cancer, we would want to come back to America to be with family rather than being all alone in a foreign country. That may not prove possible even with insurance, but it for sure wouldn’t be possible without it.
We ended up with a policy from IMG, but look around and see which plan you feel most comfortable with.
I’ve written about the need for medical evacuation insurance before. This generally goes hand-in-hand with your medical insurance, but check to be sure it does. If not, pick up a separate policy – it’s cheap but worth having.
Trip Cancellation or Interruption Insurance
Trip cancellation insurance reimburses your pre-paid, non-refundable travel costs when an unforeseen event causes you to cancel your trip. Each policy has different stipulations, but in general they would cover your costs if you needed to cancel your trip due to injury, illness, natural disasters, traffic accidents, terrorism, death of your host, etc…
There is a related, type of insurance that is similar, but different. Trip interruption coverage kicks in after the trip has already started. It will reimburse you for unused travel expenses that you will forfeit if you have to end your trip and return home. It will also cover the cost of your plane ticket home.
Personal Belongings Insurance
I’ve never used this type of coverage, and know very few travelers who do; we just accept the possibility that some or all of our gear will be stolen at some point and have money set aside to replace it. For some travelers, however, it makes sense. If you are a professional photographer and routinely carry equipment worth upwards of $50K, it makes sense to pay for insurance.
Check these policies carefully as there are many loopholes. Double check to know exactly what is covered and what isn’t and under what conditions they’ll pay. I’ve heard more horror stories about this kind of policy than any others but I think the problems stemmed from travelers not understanding the terms of the contract.
For most people who take short vacations, insurance companies sell something called a vacation plan. These plans combine most of the above into one plan, which is a great approach. Unfortunately, vacation plans don’t apply to long-term travelers. They are designed for people who stay home most of the year and take off for a couple week vacation.