Insurance

Do You Need Travel Insurance? Complete Guide

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When you’re booking your vacation, thoughts of sandy beaches and good times run through your mind.

When paying for the plane tickets and planning your itinerary, the last thing you probably think about is purchasing travel insurance.

Travel insurance has its benefits and drawbacks – but do you really need it on your trip?

When to Purchase Your Travel Insurance

Travel insurance is not a requirement for every trip you take, but it’s valid if you’re going on an expensive vacation or traveling internationally. The last thing you want to happen on your vacation is to see thousands in refundable costs disappear into thin air because of unexpected circumstances.

If you want complete coverage for your trip, then you’ll have to purchase your travel insurance within 2-weeks of booking your plane tickets and hotel reservations. If you decide to wait for the final few days before your trip to book your travel insurance, it gives the service provider the assumption that you are trying to manipulate the system.

Most policies require you to give your insurance provider 72-hours notice before canceling your trip and filing for a reimbursement. Therefore, if you wait until the last week, there’s a high probability that no travel insurance provider will issue you a policy.

If you purchase travel insurance after news headlines of a weather event, such as a hurricane, then there’s a high probability that the insurance provider will throw out your claim. It’s for these reasons that its best to wait no longer than a week before your trip to arrange your travel insurance. It’s also the reason why your travel agent will ask you if you want to buy a policy when you purchase your plane tickets.

When Travel Insurance Isn’t Necessary

Travel insurance may provide you with peace of mind, but it’s often an unnecessary expense that you can do without before leaving on your trip. Here are a few situations where you don’t have to bother purchasing travel insurance.

If You’re Taking a Short Local Trip

Are you hoping on a plane from New York to LA? Do you plan on road-tripping across the Mid-West? In these cases, taking out travel insurance isn’t necessary. Travel with U.S borders isn’t expensive enough to warrant the need for travel insurance, and you are better off spending your money on your vacation.

Statistics from Travel Penguin show that the average trip within the continental United States works out to around $576 per person, and last for about 4-days. It’s best to opt-out of any travel insurance premiums, and your current medical insurance will cover you in the case of any emergencies on your trip.

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If You Already Have Travel Protection

Certain credit card providers and insurers offer their customers protection against property theft and collision protection for your rental car. Paying for the additional cost of travel insurance won’t bring much value to the situation, and you’ll end up paying more for marginal benefits.

Before you commit to purchasing travel insurance, check with your insurers and credit card issuer for details on their policies. It’s also a good idea to review the terms and conditions regarding the cancellation of your travel insurance policy as well.

If you plan on traveling during the peak of the snowy period of winter, or during a hurricane season, it’s a prudent strategy to look at how they handle cancellations for inclement weather conditions. It also pays to review the personal-reason cancellation clauses in the policy, as in some cases, you could get a credit to rebook your trip for up to a year after canceling.

As an example, Chase Sapphire Preferred credit cardholders benefit from onboard trip insurance that provides cardholders with reimbursement for up to $10,000 if you trip gets cut short or canceled due to severe weather or illness. Citi ThankYou Premier and Citi Prestige cardholders also receive trip cancellation and baggage protection as part of the perks of being an account holder.

You Are Too Close to Your Departure Date

If you’re going to purchase travel insurance, then it’s a good idea to make your purchase within 10 to 15-days before your departure. Using this strategy gives you access to the best coverage and rates. If you delay your travel insurance purchase, the insurer may reduce your policy benefits or increase your premium.

However, you need to be aware that if your work situation or personal finances change during the period between applying for the policy and your departure date, you could be at risk. The insurer often reserves the right to decline any claims and void your policy.

If you wait to purchase travel insurance, and a hurricane reaches the news channels, then the chances are that the insurer will also cancel any claims you make and void your policy.

Insuring Flights Only

If your itinerary involves flights to multiple destinations, such as LA to New York, then on to London, and finishing in Singapore before you head home, insuring your flights is a waste of money. In most cases, airlines will compensate your seat if they are liable for you missing your connecting flight, and they forward you onto the next available plane. Sometimes, they might even offer you an upgrade for free if the economy or business section is full.

Having travel insurance won’t get you booked on another flight any faster. In some cases, the airlines have insurance policies in place to provide you with compensation for your tickets. There are also services, such as AirHelp, that offer to complete the reimbursement process for you if you qualify. AirHelp will take a fee of 25-percent of the reimbursement collected, but it’s a small price to pay for a hassle-free service.

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When it’s Worth It to Buy Travel Insurance

There are times when travel insurance can be a life-saver, quite literally. It’s a good idea to purchase evacuation or emergency medical insurance if you’re traveling internationally. It’s especially crucial if your trip involves multiple flights to destinations, and you have to create your itinerary in advance.

Here are some other situations and reasons for purchasing travel insurance.

Supplementing Credit Card Trip Protection

Credit Card reward facilities like the Chase Sapphire Reserve and Preferred programs also come with additional complimentary travel protection. These benefits help to reimburse you for non-refundable travel expenses, as well as provide you with coverage for incidental expenses related to delays. In some cases, they also offer collision damage protection for rental vehicles as well.

While these built-in benefits go a long way to providing you with travel protection, taking on travel insurance offers some additional benefits which you may find advantageous. A few examples of other perks that insurance policies offer you during your travels include coverage for terrorist events, emergency medical costs and transport, and extreme weather events.

Every destination you travel to has its own unique set of risks, and taking out travel insurance provides you with an extra layer of protection against unexpected events. If you’re traveling to a remote area, then the medical benefits alone are enough to warrant the purchase of travel insurance. Medical costs can add up quickly, especially if you need air-lift to a hospital and treatment in the ICU.

Also, it’s important to note that some credit card insurance facilities have caps on the benefits, leaving you short-changed in the case of a severe medical emergency.

Flexibility of Reimbursement

In most cases, travel insurance will have far more lenient reimbursement policies than those offered by travel provider policies on your credit card facilities. However, you will still need to provide the insurer with supporting documentation for your purchases and costs.

If you have to cancel your trip for any reason or experience any work requirements that cause you to cancel or have a family or personal illness, you are more likely to receive reimbursement. Insurers also payout for any military deployments, legal divorce issues, and they compensate you in the case of your travel provider going bankrupt.

Travel insurance typically has more lenient reimbursement policies than travel provider policies. Although you still need to submit supporting documentation in most cases, the small cost of buying a policy is worth the potential payout.

Each insurer has different clauses in their cancellation agreements, so it’s a prudent move to check the terms and conditions before you take the policy.

Travel insurance relies on a level of uncertainty to operate their business. For example, it’s uncertain that a hurricane would form in the next two to three weeks before your departure date. However, if you leave purchasing your insurance to a few days before you go, this eliminates the uncertainty, and insurers are less likely to offer you a policy, and more inclined to reject your claim if a hurricane does delay your travel plans.

International Travel

It should come as no surprise that statistics from ValuePenguin show that Americans take longer international trips than they make domestic trips. The figures show that the average international trip takes around 12-days, with a cost of approximately $3,242 for each person.

Travel insurance is a staple for overseas vacations and business trips, as many of them require booking well in advance of the departure date. International flights sometimes need booking up to 3-months in advance, and taking travel insurance mitigates your risk of something going wrong in the interim.

In this case, comprehensive travel insurance helps to provide you with the protection you need to avoid missing your flight due to unexpected circumstances arising. Also, taking a policy this far out from your travel date allows you to benefit from the lowest rates.

If you are paying 70-percent or more of your international travel costs upfront, then it’s a wise decision to purchase travel insurance, and well worth the money if something goes wrong with your plans.

If You’re Taking a Trip on a Cruiseliner

Going on a relaxing cruise around the Mediterranean ticks all of the boxes for your need for travel insurance. With a cruise, you have a significant upfront payment for the costs of the cruise liner. Flights to and from your destination and a need for international medical insurance in an emergency are all top considerations.

This type of trip can benefit from a comprehensive travel insurance policy that covers you in case of any unseen circumstances coming to light. Some cruise companies offer internal travel insurance policies that are ideal for these types of vacations. The policy covers you for everything from flights to the cruise, medical expenses, and theft.

Many of the in-house travel insurance policies have large insurance firms underwriting the deal, so you don’t have to worry about them defaulting on any reimbursements. The underwriters also cover you for extreme weather events, such as a hurricane that may ruin your cruise plans in the Caribbean.

Speak to your travel agent before booking your cruise, and ask them about the terms and conditions on the policies they offer. Neglecting to read the terms and conditions for exclusions, or not applying for a policy at all and losing the money for your honeymoon cruise is a devastating way to start your marriage.

Wrapping Up – Key Takeaways

As we bring our article to a close, let’s wrap up with a brief summary of the key takeaways involved.

Travel insurance is an excellent way to mitigate the financial risk in your next trip. However, it’s not entirely necessary for all situations.

Domestic trips within the continental United States typically don’t call for the need for travel insurance due to their low cost and flexibility. Your credit card issuer may also cover you for many of the expenses in case you have to delay your plans and need to recoup your costs.

International trips are the best option for travel insurance, as the costs of any emergencies may far exceed what your credit provider offers in their rewards program. The significant costs involved with international travel make taking a policy a no-brainer.

However, it’s vital that you don’t delay the insurance till less than a week before your departure date, as your insurer may charge you a high rate, or refuse to compensate your claim due to a lack of uncertainty in the situation.

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Oliver Dale is Editor-in-Chief of MoneyCheck and founder of Kooc Media Ltd, A UK-Based Online Publishing company. A Technology Entrepreneur with over 15 years of professional experience in Investing and UK Business.His writing has been quoted by Nasdaq, Dow Jones, Investopedia, The New Yorker, Forbes, Techcrunch & More.He built Money Check to bring the highest level of education about personal finance to the general public with clear and unbiased reporting.oliver@moneycheck.com

1 Comment

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    Thanks Oliver. Do you have any go-to travel insurance companies? More specifically, that will sell you insurance when you’re already traveling? SafetyWing looks good, but I’m curious what you think.

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