What Is Travel Insurance & What Does It Cover

If you're lucky enough to be planning a trip, you may be thinking about whether purchasing travel insurance is necessary. To help you decide, consider the costs of not purchasing insurance if something goes wrong and whether you've got the funds to support you. For example, paying for additional accommodation costs if your travel arrangements are delayed or replacing essential items if your luggage is lost or delayed. Learning about what travel insurance covers can help you decide whether it's necessary for your upcoming trip.

Health Plans of NC, Kelly Quinn
Father and mother waiting with young daughter at airport. Tourist family at airport terminal with luggage holiday.

What is travel insurance? 

Travel insurance helps protect you against risks or financial losses that can happen while traveling. These can include minor issues, such as a missed connection or luggage delays, or can also cover significant injuries or illnesses. Given the recent global pandemic, many people are interested in finding out about Covid travel insurance to ensure their coverage protects them from any associated costs with delays because of Covid-19.

What does travel insurance cover?

What your travel insurance plan covers depends on the policy you choose, from a basic policy with specific limits to a comprehensive plan that covers all of your out-of-pocket costs associated with various travel issues you may experience.

Depending on the insurance provider and your specific policy, you may be covered for: 

Lost luggage

Travel insurance can help you cover any associated costs if your luggage is lost or stolen. With the current issues facing many airlines around the globe, lost luggage is becoming more common for many people. In the U.S., the Department of Transportation requires that all airlines compensate travelers up to $3,300 for lost baggage. There isn't, unfortunately, any definition of when a bag is 'lost' vs. 'delayed,' which can be frustrating. Airlines are also only required to provide funds for delayed bags to buy necessary items, such as clothes, medicine, or toiletries. 

In many foreign countries, the maximum compensation is only $1,750, and you'll need to provide receipts that prove the value of your bag and all your contents, which can be difficult. Some international airlines also ask you to file a claim within 21 days for the claim to be processed when the bag is considered 'lost' instead of just 'delayed.'

Injury or sickness

Some policies provide set levels of coverage to protect you from any medical expenses you incur while traveling overseas that aren't covered by your regular health insurance plan. Many health insurance plans don't offer coverage when you're overseas or only offer limited coverage compared to what you receive when traveling throughout the U.S. For example, if you're enrolled in Medicare, you're not eligible for any costs associated with medical bills while overseas. In addition, a travel insurance policy helps cover medical expenses if you suffer an injury or illness during your vacation. 

Cancellations

Travel insurance helps cover the costs if you need to make a last-minute cancellation. Unfortunately, many major resorts or cruise lines don't provide full refunds in the event of a cancellation. For example, even if you give more than two weeks' notice, many resorts still charge you a cancellation fee, and cruise lines may only offer you a partial credit to use on another cruise. However, you're not likely to receive a refund for cancellations in under two weeks, which can cost you a lot of money.

More coverage than your credit card

Some credit card providers offer limited travel coverage, usually with limits or restrictions related to cancellations or interruptions (if provided at all). However, most credit cards won't offer coverage for medical expenses, emergency evacuations, and other more expensive travel risks, so it may be worth considering a separate policy to ensure you're fully covered. 

What travel insurance might not cover

Here are some things that some plans may not cover:

  • Preexisting conditions - unless you can find a plan with a preexisting waiver.

  • Threat level - depending on where you're traveling, you may not be able to get coverage. For example, if you're visiting a country that's currently experiencing political unrest and has been deemed unsafe by your provider. 

  • Tour operator defaults - check your policy to see what coverage is offered if the tour operator defaults due to financial issues if you're using a tour operator and are concerned. 

How much does travel insurance cost?

Travel insurance costs can vary depending on the length of your trip and how old you are. For example, a 35-year-old can expect to pay approximately 3% to 5% extra for their insurance compared to an additional 10% for someone in their 60's. 

What's the best travel insurance coverage?

Finding the best travel insurance depends on your circumstances and the risks associated with your trip. For example, is a delay due to extreme weather likely to impact your vacation? Or are you concerned the CDC will issue a travel warning for your destination? Both can be valid reasons for canceling your trip or ensuring you have a policy that offers full coverage. 

Comprehensive insurance

A comprehensive plan typically covers delays, sickness cancellations, lost luggage, and medical costs in an emergency. When purchasing this type of plan, check the policy details carefully, as they can vary depending on the insurer. 

Cancellation for any reason

When purchasing this policy, you can cancel your trip for any reason, as long as you cancel within a specific time frame before your departure. With this plan, you'll typically receive a percentage of your pre-paid and non-refundable trip costs without providing a reason. This can sometimes be purchased as a stand-alone or add-on as part of a more comprehensive policy. 

Changing your coverage

If you need to change your coverage after you purchase your policy because it doesn't quite fit your needs, you can usually get a full refund so long as you cancel within a specified period. Sometimes, you may have to pay a small administrative fee, but this can give you time to read the coverage thoroughly to ensure it's what you need. Typically, the timeframe for canceling is between 10 to 15 days, though it can vary depending on the insurer. 

Things to Look Out For When Buying Travel Insurance

When you're buying travel insurance, it's essential to look out for a few things, including:

  • Is your destination covered? If you’re traveling to more than one country this can be particularly important.

  • Is your trip length correct? You don't want to make the mistake of not having coverage for your entire vacation.

  • Are preexisting conditions covered? If you have any preexisting conditions, it's essential to ensure that your plan offers coverage for any medical attention you may require throughout your vacation.

  • How much is the excess? If the policy seems cheap, it can be a good idea to check your excess to make sure you can afford to pay the excess if you need to make a claim.

  • What belongings are covered? Check if you can claim for losses or damage to all of your important belongings as part of your policy. 

  • How early do you need to buy your insurance? Some travel insurance providers require you to purchase your policy within a specific amount of time of purchasing your trip or within a set time before you travel.

Need help with your travel health insurance?

At Health Plans of NC, our experienced and locally based health insurance agents can offer advice and guidance on the correct type of travel health insurance for your upcoming trip. If you're interested in discussing your options, contact our team today to learn more about travelers insurance.

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