WHEN DO YOU NEED TO PURCHASE TRAVEL INSURANCE?

Background

You’ve just booked a once in a lifetime bucket list trip.  The deposit is down, the paperwork is on the way, and then the travel agent says, “you’ll need travel insurance, I can send you a link”. 

Is the “mandatory” one million dollars medical evacuation a legitimate requirement?  Can a tour company or travel agency require you to have it before allowing you on the trip?

Are they just trying to make a commission or do you really need travel insurance?  What exactly does it cover?

Travel Insurance Breakdown

Let’s first talk about what travel insurance is, and isn’t, and then dive in a little deeper.

Travel insurance usually covers you in three ways:

Reimbursement or Coverage for Money Lost Due to Trip Logistical Issues

Travel insurance can provide coverage for losses due to trip cancellation, delays, lost baggage, flight issues, all of the trip logistics. 

It can also assist with non-medical evacuations.

Medical Coverage and Medical Evacuation

Most plans also offer coverage for medical needs and, if needed, medical evacuation costs. 

Medical coverage could be for anything from treatment for the flu to stitches to an emergency situation such as appendicitis. 

Non-Medical Emergency Evacuation

Most travel insurance companies offer non-medical emergency evacuation assistance. If your location becomes unsafe, they will help get you out.

On my trip to Chile, there were ongoing protests which were a bit concerning. They had been violent in the past but seemed to mellow out. Just in case, I purchased the insurance and made sure I had non-medical evacuation coverage.

Luckily, I didn’t need to use it, but it was nice to know there was a safety net. I’m also lucky I came home when I did, because 1 week later, the borders started shutting down (this was March 2020).

Can I Just Purchase the Coverage I Need?

You can sometimes purchase just medical insurance or just travel insurance, but the most cost-effective packages have both. 

Every company also provides different policy tiers allowing for more personalized coverage. 

In addition, many companies offer supplemental add-ons to fully personalize your coverage. 

If you have specific needs, you could purchase a lower-tier plan and then add only the additional coverage that may be needed. 

How Much of My Trip Budget is Insured?

In general, you are covered for the money you have spent at the time you purchase the insurance. 

For example, if you spend $2000 on an airline ticket and then put down a $3000 deposit for a $6000 trip, you can purchase insurance for the $5000 you have spent. 

Once you pay for the remainder of the trip, you would contact the insurance agency and increase the policy for the additional money so you would now be insured for an $8000 trip.

Not every scenario or category is covered at 100% of the cost.  Be sure to read through the fine print carefully 

It’s important to note what situations the policy will cover (and when it won’t), the maximum amount allowed, and the percentage of money spent that would be covered. 

For example, one policy I looked at reimbursed 50% of the money spent if you used the “Cancel for any reason” scenario.  This is provided that your situation fell into their allowable coverages for this clause.

How Much Does Travel Insurance Cost?

My experience and reviewing a few plans showed insurance is usually 10% the cost of the money spent. 

This can change depending on the coverage, the company you’re purchasing through and, sometimes, your age. 

Most policies provide coverage for children under 17 for free as long as they are traveling with a covered individual. 

Always get a quote ahead of time, and verify the bottom line before signing or paying.

An In-Depth Look at What Travel Insurance Covers

Every company has its own policy and its own “covered reasons” lists so be sure to read the fine print and ask an agent if you need clarification.  

As an overview, here are a few things that may be covered, depending on the policy.

Cancel for any Reason Coverage

This can come in handy if you’re booking far in advance and it’s an expensive trip. 

Now you’re not covered for just any reason, there’s a list of covered reasons that apply.  Most policies also only cover at 50% the cost of the trip so you may not get all your money back.

Some of the reasons a trip may be canceled would surprise you, but they do happen. 

I’ve listed a few covered reasons below from a policy I reviewed. 

This is not a full list and it is only representative of one policy.  Always read through the fine print and ask for clarification when purchasing travel insurance. 

  • You, your traveling companion or an immediate family member become ill
  • The tour operator declares bankruptcy
  • Inclement weather causing a complete stoppage of services for 24 hours
  • You are involved in a traffic accident on route to your departure
  • Jury duty
  • School year extension
  • Your employer undergoes a merger or acquisition
  • There is an evacuation at your destination
  • You no longer are employed due to an involuntary employer termination or layoff

This is not a full list of covered reasons, but you can see there are several things that could happen to prevent your trip.  If you think they’re not common, think again. 

I put a deposit down for Antarctica a year in advance and then was laid off by my employer. 

Luckily I found a new employer and they were kind enough to allow me the two weeks for the trip, but it was tight and I almost had to cancel.

I’ve heard of people needing to cancel due to a death in the family.  It’s not that uncommon.

Trips Where I Purchased Travel Insurance

What if I Paid For My Plane Ticket With Rewards Points?

Believe it or not, some companies like Travel Insured have coverage for when you cancel a trip but a portion was paid by rewards points.

The policies I reviewed only offered $250 for this scenario.

Other Covered Situations

If your trip is cut short where you have to leave with more than 50% of the trip left, you can get up to 150% coverage. 

Travel delay where you receive a daily payout to help cover costs for hotels and meals if the travel company delays your trip.

Money to cover the cost for an airline ticket change due to an itinerary change.

Supplemental or Add-ons

Travel insurance companies offer supplemental add-ons to the policies. 

You can double your coverage for some items, add specific coverage to lower-tier plans, or just add new coverage.

One of my favorites was pet insurance.  You can purchase medical coverage for your pets if they’re traveling with you.

Medical Costs

Many tours require medical evacuation coverage. 

There’s a good reason for this though.  If you’re in the middle of nowhere (say the Pacific Ocean) and need a medical evacuation for life-saving surgery, they’re going to need to send a medically equipped helicopter and you may also need a medically equipped private jet.

Neither of these is inexpensive. 

Many policies cover either $500K or $1M in medical evacuation. 

On my sailing trip to Grenada and the Tobago Cays, they requested $500K in medical evacuation. The tour company managing the trip to Antarctica requested passengers have $1M in medical evacuation. 

If you don’t have the insurance and have to be evacuated, you’ll wind up paying out of pocket. 

The fees will rack up quickly so this isn’t an area to skimp if you’re going to an isolated area with little to no medical assistance and no easy way to get to a hospital. 

Do I Really Need Travel Insurance?

Why You May Need Travel Insurance

There are two main reasons to purchase insurance:

Finances

You’ve booked an expensive trip and you are concerned about the possible loss of money if you are not able to enjoy the full trip.

Some trips are large investments.  A trip to Antarctica these days could be $12000.  That’s a lot of money to spend only to have a family emergency two days before the trip and you need to cancel.

In this situation, consider how far in advance you are paying for the trip and how much money you are putting down as a deposit.

Medical

You may need or wish to have medical coverage.  A tour company may require insurance up to a certain amount for medical evacuation, especially if the tour is in a remote area.

If you’re a US resident with private insurance, they will likely only cover emergencies. 

Accidentally cutting yourself on a tin can and needing 10 stitches doesn’t equal an emergency.  Call to verify your coverage well before your trip.

Individuals on Medicare need to be aware that Medicare does not provide any coverage outside of the United States. 

If you do have an emergency, even if your private insurance will cover you, it’s almost always up to the patient to cover any costs out of pocket, then submit for reimbursement back home.

This means you’ll need to save any paperwork provided by the hospital and hope you have enough information to convince your insurance company to cover everything.

When You May Not Need Travel Insurance

You don’t always need to purchase travel insurance.  As a matter of fact, it’s often not necessary or required. 

When traveling in your home country, your medical insurance will almost always cover you, and the costs are often low enough that you can absorb any losses or easily reschedule.

If you are traveling outside your home country, your planned trip isn’t too expensive, or you can adjust your itinerary with minimal cost and effort, you likely don’t need trip insurance.  

Although, in this instance, you may want to consider purchasing medical coverage.

You May Already Have Coverage

Determine, based on your trip, what type of insurance you would likely need and see if you already have coverage. 

Check your homeowner or renters insurance policies to see if they provide any insurance for traveling.  

Also, check your credit card policy.  If you paid for the plane tickets and put the trip deposit on your credit card, you may have trip cancellation coverage built into your credit card policy. 

Call your health insurance company to see what they cover out of the country and if you feel, given where you’re traveling, that its sufficient, you may not need to purchase travel insurance.

What Happens if I Don’t Purchase Insurance Required by a Tour Operator?

I’m going to preface this section with: If insurance is required by a tour operator, then you should purchase it and have proof of purchase.

Three of my trips required travelers to have medical evacuation insurance and no one ever checked to verify my coverage.

I’m still glad I had the proper paperwork and bought the insurance. There’s a reason tour companies have these requirements.

In the past month, talking to other travel writers, I’ve heard of two instances where someone had appendicitis and had to be evacuated from an area, then taken to a hospital for emergency surgery.  It happens. 

Who are the Main Travel Insurance companies?

There are a lot of companies out there.  Check with the company you insure your home or car through as they may partner and offer deals. 

If you’re using a travel agent, they may also have a company they work with directly. 

Some of the bigger names include:

  • Travelex Insurance Services
  • Travel Insured International
  • Allianz Travel
  • Travel Guard by AIG

Travel Insurance Really Isn’t Too Complicated. 

If you’re worried about the financial loss of a trip not taken, or you’ll be in remote areas with limited medical options, then you should look into a plan.

On the other hand, if you’re traveling locally, the trip isn’t too expensive, or you’ll be in an urban area and feel the coverage you have through other means is sufficient, then skip it. 

I do recommend going online and looking through a few policies just to see what’s offered.  If nothing else, you will feel better knowing you have all the facts.

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