A few weeks ago I asked my readers to send me their questions about any travel topic they would be interested in knowing more about. To my surprise, most of them were focused on travel insurance. To address this complex topic, I decided to do a separate (and extensive) post on how to pick the best travel insurance for your trip, whether it is a short vacation or a long-term trip.
In general, travel insurance is intended to cover financial default or negligence of travel suppliers, medical expenses, and other losses incurred while traveling. These situations can happen either in a domestic trip (traveling in one’s own country) or internationally.
Something I want to stress is that travel insurance is NOT a replacement to your regular health insurance as it is designed to cover you for unexpected emergencies that might occur in the course of your trip.
To prove the point, two years ago I failed to get travel insurance when I went to Honduras (I didn’t want to pay it and was too lazy to research it). When I was in Copan Ruinas I fell from the pyramid and cut open my knee. Luckily I was able to manage without going to the hospital thanks to a very nice lady I met on the way (you’ll know if you read the post) but I was afraid of going to the hospital fearing of the price I would have to pay.
As you might know, the travel insurance industry is a giant and profitable monster with multiple entities offering multiple coverage options. Without doubt, it can be extremely confusing to select the right plan for you. But here are some things you should consider when comparing policies. (no more gross pictures, I promise)
Does it cover you?
First thing you need to have in mind is that many travel insurance companies only provide insurance regionally; meaning, only to citizens of the US and Canada, or Australians, or in the UK. Once you know it covers you based on your citizenship and residence, you can go on to study the details.
Extent of Coverage
Read even the small prints to know exactly what is covered, what’s not, and how much will it cover? Is it only medical insurance or does it also covers your trip expenses and personal items like electronics? Will it cover if you accidentally break your camera?
I once bought a policy and failed to notice that it was only medical. When I got my iPod stolen at the Pyramids of Giza, I went through the annoying process of getting a “dubious” police report, only to be told afterwards by my insurance company that it wasn’t covered. Wah, wah… (now that I think about it, there’s something about pyramids that gets me in trouble!)
If it covers your personal possessions, under what circumstances are they covered? Will it cover your backpack if it gets stolen on the street while unattended, or if taken from a hostel locker, or lost in transit? While the end result is the same –losing your backpack– not all scenarios are equal to the insurance companies and not all of them might be covered.
Most travel insurance policies won’t cover theft caused by your negligence or by leaving things “unattended”.
As said before, coverage varies from plan to plan, but these are the most common risks that are covered by most travel insurance policies:
- Delayed departure and missed connection due to airlines schedule – Gives compensation for any money lost due to a delayed departure that overpasses a given amount of time.
- Trip cancellation and interruption – If due to unforeseen circumstances you have to cancel your trip early, you will be compensated for any monies lost.
- Travel delays due to weather – Many insurance policies can cover weather up to a certain degree.
- Delayed, lost, stolen, or damaged baggage, personal effects, or travel documents – Protects your possessions and gives you the possibility to claim any compensation for stolen or lost items. In many cases it also covers any administrative costs incurred in the event that your passport is stolen and needs to be reissued. Some insurance policies will also compensate you for any stolen cash or travelers’ cheques, up to a certain limit.
- Legal assistance and Personal Liability – This is a legal cover for any accident, injury, or harm you might inadvertently inflict on another individual.
- Medical and Dental expenses – Covers the money you spent in medical and dental expenses. Note that this is not for regular checkups, only for unexpected urgent care or emergencies.
- Medical Emergency and hospital care (Accident or Sickness) – This will provide financial cover for any costs you have to make in the event that you need medical attention.
- Emergency Evacuation, Rescue, and Repatriation of remains – Your insurer will pay all your costs in the event of a medical emergency rescue or the repatriation of remains.
- Accidental death, injury, or disablement benefit – Covers you or a beneficiary in case of physical injury and death. In many cases it also covers overseas funeral expenses.
Medical Coverage and Evacuation
It is really important to take a close look at the medical insurance policy, as this is the main or most important reason why you’re getting travel insurance.
Does it cover pre-existing conditions? Most travel insurances don’t cover them. For example, if you know you have asthma and you suffer from an attack, you’re not going to be covered.
Do they offer a separate “pre-existing conditions” coverage? If they do, which ones are covered?
What are the maximum hospital emergencies coverage limits? Hospital costs for emergencies are extremely expensive in most countries. Know the maximum coverage limits and know who disburses the money to the hospital during the emergency; you (to be later reimbursed by the travel insurance), or if the insurance covers it initially.
The “Emergency Medical” coverage limit is related to the amount of money you pay for the coverage. A limit of $50,000 will surely pay less than a limit of $1,000,000.
When you are selecting your policy, you can see the price you’ll pay depending on the “Emergency Medical” coverage you choose to have.
My personal recommendation is to have a limit of at least $100,000. You don’t want to run out of “insurance money” half way of your emergency procedure or recovery.
How much will your copayment be? As with the “Emergency Medical” limit, the amount of copayment can vary according to the price you pay. Copayments can go from $0 (most expensive policy) to $500 and more. I usually prefer to pay more (about $17 more for a 3 months policy) to have $0 copayment vs. $250 copayment.
Is it primary or secondary coverage? The difference between primary and secondary is who pays the hospital or doctor. With primary travel insurance, you will be provided an insurance card you can present at the hospital. If accepted, the insurance will pay directly the hospital and you’ll only have to pay the copayment (if any). With the secondary, on the other hand, you’ll have to pay ALL expenses and the insurance will refund you back the money if it is covered (except excess and copayment).
Will they cover emergency medical evacuation? Your insurer will pay all your costs in the event of a medical emergency rescue, which by itself can cost $10,000 and more for the helicopter (if you’re in a remote location) or other transportation.
There are chances the policy you’re interested in will not include everything you want to cover. In these cases, do they have “additional coverage” add-on’s and for how much?
Typical add-on’s are:
- Car rental collision coverage
- Pre Existing Conditions – discussed above.
- Sports considered having a high risk – for example, scuba diving, skiing, and others. (More on this below)
- Travel to high-risk countries – Certain countries might not be included due to volatile politics, war, natural disasters, or acts of terrorism.
- Additional Accidental Death and Dismemberment coverage – upgrade the limit to this coverage.
- Kidnap and Ransom Insurance
- 3rd Party Supplier insolvency – In cases when the hotel or airline to which you made non-refundable payments has gone into bankruptcy or liquidation and ceased to offer their services.
Make sure that your policy has cancellation insurance. If it does, what types of cancellations does it cover? Does it cover if you have to suddenly cancel due to work? Or if a family member dies or gets sick? Or if you get sick? If it does cover, what and how much does it cover?
An important note on this specific coverage. In order for it to apply, it must be acquired at the same time you purchase (or given timeframe) your plane tickets, tour, or other. You cannot purchase it right before canceling.
Price is obviously high on the list of consideration on every budget traveler and with all honesty, price is one of the main factors I have in mind when I choose my policy. Still, when comparing travel insurance, don’t focus only on the lowest price. Compare the price alongside with what’s covered. You might notice that a specific insurance might be slightly more expensive than the other, but the coverage might be substantially better. Look at it as a return of investment (ROI). For example: I pay $20 more, but I get $50,000 more in emergency medical coverage.
As a rule of thumb, the insurance policy price should not be more than 7% of the total cost of your trip.
Not all policies are designed the same way. What sort of traveler are you? Do you like extreme sports? Are you visiting dangerous countries? Are you doing a remote expedition?
Not all policies cover injuries incurred from extreme sports, and even certain regular sports. As an example, World Nomads will not cover you if you get injured while Base Jumping, but it does covers you in case of an injury while Bungee Jumping or other sports.
If you know the activities (especially extreme sports) you’ll be doing while on your trip, research if your policy covers them.
How to Make Claims
Know the procedure necessary to make a claim. Is it easy? How long does it take? How can they be contacted? Are they available 24/7? Can the claim be submitted online? What proof is needed and other documentation in order to make the claim?
You can know all this by contacting the underwriter of your policy with all these questions. They will let you know the right procedure to make claims.
Today, most travel insurance provide coverage for most countries in the world. But, there are a few countries that are not covered for different reasons, whether it’s due to political unrest, current danger towards foreign visitors, or for other reasons. Always make sure you verify the list of countries covered by the policy against the list of countries your visiting. It would suck if you spend your money on an insurance that is worthless in the country you’re visiting.
Accidents do happen, and when they do, it’s always good to know who’s liable.
You are in a ceramics store and knock over an expensive figurine with your backpack. The figurine fell on someone’s foot, injuring him or her. Will you have to pay for the medical expenses of that person out of your pocket (and pay for the figurine too)? Well, probably yes. But, will your travel insurance refund you? Read very closely if the policy includes personal liability coverage and who is liable under different types of accidents.
What’s Not Covered
While all travel insurances will tell you what they include, many of them will not tell you what they don’t include. In general, these are conditions that most travel insurances will not cover you:
- Deliberately putting your life in danger – Activities that put your life in an extreme danger or that injury is likely are often not covered.
- HIV or other STD’s – Whether acquired through protected or unprotected sex or other methods. No STDs are covered by travel insurances.
- Injury or illness caused by alcohol or drug use – This is a claim often submitted by travelers and declined by the insurance. When under the influences of drugs or alcohol, you are prone to take more risks since you are not in your “full capabilities to be in control”.
- Illegal Activities – Illegal activities vary from country to country, so if you are involved in an illegal activity, even if unknowingly, your travel insurance will not cover you in case of an emergency.
- War or terrorism – While most plans might not cover this, some do cover this risk as an additional coverage.
How to Buy?
Now that you know what to look, how do you look for it and select the best policy? This is the process I take when I choose to buy my travel insurance.
- I identify the type of coverage I need for my trip based on all the points mentioned above. For example: I need emergency medical of at least $100,000; Evacuation; I need it to cover me in Italy, Morocco, Tunisia; I want to pay $0 copayment and I want it to be primary coverage. (among other details)
- I calculate the total overall trip expenses if I want the insurance to cover for any unexpected cancellation. During my round the world I’ve chosen to skip this step since I’m doing things on the go, so I don’t have a big amount of money in risk of cancellation.
- I research for the best travel insurance. Really popular among backpackers is World Nomads. I like them because they are really good, easy to submit claims, have a very extensive coverage for residents of over 150 countries, and their covered countries (to travel to) is also very extensive. That being said, they are not the cheapest but they are still affordable. For other plans I tend to use SquareMouth’s comparison site, where you just put some basic information and it will show you dozens of policies that apply to you. I’ve found this site super convenient to compare side-by-side different policies. The buying process is extremely quick and smooth too.
And voila… I’m insured!
When not to buy travel insurance?
Ok, not that I’m saying you should travel uninsured, but it is possible you could already be fully or partially insured and not know about it. Some credit cards, like American Express, or certain health insurance providers could offer some coverage while abroad. Just read the small print or contact them to see what and how much is covered, if they do. Should you have some coverage, all you need to do is complement what you’re lacking with additional travel insurance.
So, after this long post I want to finish by stating the importance of reading the small prints! It is a common mistake (as I mentioned above from experience) to purchase travel insurance without reading the details, only to find out later that it is not covered.
I’ve been pretty lucky so far to never need to use my insurance for medical purposes (except for that one case I mentioned I was uninsured), but in case it happens in the future, I will not be afraid to walk into a hospital because I know I’m covered. And that’s a good peace of mind.
Do you have any other question regarding travel insurance?