What is Travel Insurance and How Does it Work?
If you’ve ever taken a trip, there’s a good chance you’ve at least heard of travel insurance.
Like any other insurance policy, travel insurance plans are there to protect you from unforeseen events. But unlike other policies, these plans are specific to people who are travelling away from home.
Travel insurance policies are available to any type of traveller, but most are geared toward international travellers – those leaving their home country of residence.
What Are My Options?
Travel insurance is a fairly broad term that’s used to describe a variety of policies. Most plans fall under two main categories: Trip Insurance and Medical Travel Insurance.
While many trip insurance and medical travel insurance plans offer overlapping benefits, it’s important to understand the distinction between the two.
Trip insurance plans are primarily meant to protect the money you spent on your trip. These plans offer coverage for flight tickets, hotel bookings, or excursion fees when your trip is cancelled. Trip insurance plans may also cover the cost for re-booking when a flight is cancelled or if you need to stay in a hotel due to a delayed flight.
Benefits can be very robust on trip insurance plans, in some cases reimbursing up to 100% or even 150% of your trip cost if you need to cancel in certain situations.
In addition to coverage for your trip costs, these plans generally include coverage for emergency medical evacuation and travel assistance.
Trip insurance plans often include medical coverage as well, but these benefits can be somewhat limited depending on your choice of policy.
Medical Travel Insurance
While some travel insurance plans may also include coverage for trip-related costs, like trip cancellation or flight delay, these benefits typically have relatively low coverage limits.
What Type of Plan Do I Need?
The choice between a trip insurance plan and a medical travel plan will depend on a number of factors. Each trip is different, as is each traveller. Start by considering your destination and the investment you’ve made in your trip. Ask yourself questions like these:
- Have I made a significant investment in my travel arrangements and/or accommodations?
- I got a great deal on my plane ticket, is it worth the extra money for trip insurance?
- Will my home country medical coverage also cover me in my destination country?
- Do I have plenty of money to cover medical expenses if I get sick or hurt on my trip?
Shop around and check out a variety of policies. Read the fine print. Learn what the plan covers and, more importantly, what it doesn’t cover, in your situation.
When Should I Get a Policy?
Travel insurance is something you should consider when you begin planning your trip. It’s not a good idea to wait until the last minute to take out a policy.
Some travel plan benefits, particularly on trip insurance policies, depending on when you booked your trip and when you purchased your policy. If you purchase a policy after you book your trip and then try to file a claim for cancellation, you may not be entitled to any benefits.
Make travel insurance part of your initial trip planning process to be sure you’re eligible for all the benefits on your plan.
What if I Need to Make a Claim?
Travel insurance does not work like other insurance policies you might be familiar with. You may be thinking of your own health insurance, where you’re accustomed to visiting a doctor, presenting your benefits card, and receiving treatment without paying. This is in contrast to the way travel insurance works, where nearly everything is handled on a reimbursement basis.
This means you cover the cost, whether it’s for a rescheduled flight or a visit to the doctor's office while you’re travelling. You’ll then file a claim with your insurance company and if your claim is approved, the insurance will reimburse your expenses according to the policy benefits.
Filing a travel insurance claim is usually a straightforward process, but be aware there is some paperwork involved. It’s important you keep record of anything related to your claim. If you’re filing a travel-related claim, keep copies of your tickets and any other documentation from the airline.
In the case of a medical claim, be sure you maintain copies of all your bills, receipts, and, if available, a medical report.
Do I Really Need Travel Insurance?
Purchasing travel insurance is very much a personal decision. If you can afford to pay high medical bills or miss out on an expensive trip, then travel insurance may not be worth it to you.
However, if unplanned medical bills or trip changes will put a pinch on your wallet, then trip insurance may be a good idea.
Be sure to also check your destination's requirements for visitors. Some countries require you have some sort of travel insurance (and provide proof) before you can obtain a visa.