Travel without worry: When to buy travel insurance

Doris P. was on vacation in Mexico with her family when she decided to take a relaxing horseback ride on the beach. Shortly after she set out on her excursion, Tabasco, the horse she was riding, was spooked by the sound of nearby construction equipment.

Tabasco tried to buck Doris off, but her foot got caught in the stirrup, and she was pummeled several times into the saddle horn. When her foot was finally freed from the stirrup, she landed on the beach, unconscious. She was taken to a hospital in a nearby town, where doctors told her she had three broken ribs, a lacerated liver, and a collapsed lung. The physicians recommended she be transported to the United States. She was flown to a hospital in San Diego, where she spent three days recovering. The medical transport ended up costing more than $27,000, not including her hospital expenses.

While travel horror stories like this don’t happen very often, they do happen (check out the website www.worldsunluckiesttraveler.com, where Doris submitted her story). That’s why, in some cases, it’s a good idea to buy travel or medical evacuation insurance before your trip, so you don’t end up paying out of pocket, like Doris did.

What does travel insurance cover?

Depending on the policy, travel insurance may provide:

• Reimbursement of the cost of a cancelled trip, even if the cancellation is due to an illness, divorce, or a work-related reason. Some policies may cover a cancelled trip’s costs in the event of job loss.
• Assistance with re-booking a flight or hotel, or renting a car if your flight is cancelled.
• Hotel and food expenses if your return flight is delayed.
• The expense of replacing damaged baggage and lost travel documents.
• Coverage for medical assistance if you get sick or injured.

When do you need travel insurance?

If you’re just going on a short trip to grandma’s house, you probably don’t need travel insurance. But here are some scenarios that might justify a travel-insurance policy¹:

• If your trip is very expensive (more than $10,000), or if you can’t afford to lose the money, no matter how much you spent. Travel insurance protects the investment you’ve made.
• If your trip involves complicated connections and missing a flight would ruin your trip.
• If you’re going on a cruise. Most cruise lines offer travel insurance, so they have a no-excuses policy. If the cruise is cancelled or you miss the departure, you’re sunk.
• If your trip is a year or more in the future, which leaves a lot of time for a problem, like illness, a divorce, or a work issue, to crop up and interfere with your trip.
• If your insurance doesn’t cover medical treatment outside of the United States. Be aware that your insurance probably won’t cover you if you’re traveling on a foreign-flagged cruise ship, even if it’s cruising in U.S. water, and Medicare doesn’t pay for anything once you set foot outside of the United States.

Medical evacuation insurance

While some travel-insurance plans have medical coverage for treatment outside of the United States, you may also want to get a separate medical evacuation plan to make sure you will be medically treated and stabilized, and transported to a U.S. hospital if you get sick or injured while traveling abroad. Medical evacuation flights can cost thousands of dollars, so it may be worth paying for the coverage.

If you are traveling to exotic, remote locations, you may want to make sure you have a way out if you get sick or injured. Knowing you have a way to get to a U.S. hospital quickly for treatment can let you enjoy your vacation without worrying. Most medical-insurance plans won’t pay for medical evacuation.

Before you buy

The Better Business Bureau recommends that before you purchase travel insurance, you should check your homeowners and medical-insurance policies to avoid any overlapping of coverage.² Also, check to see if your credit card offers protection. Some cards offer accidental death and dismemberment insurance, additional lost baggage coverage, and protection for car rental loss and damage.

Before you purchase travel or medical evacuation insurance, also make sure you read the policy carefully. Many have exclusions. For instance, make sure you can get a refund if you “cancel for any reason.” Some policies offer this feature. Others only allow you to get a refund for a few specific reasons.

Other common exclusions include treatment for pre-existing conditions, treatment for complications of pregnancy or childbirth, cancelling a trip due to the death or illness of a pet, and a trip cancelled due to acts of war/local protests taking place in your intended destination.³

¹ “Do You Need Travel Insurance?” by Kelli B. Grant, Smart Money, September 29, 2006. Accessed November 3, 2010.

²“Will Travel Insurance Help You this Holiday Season?” Better Business Bureau, October 31, 2007. Accessed November 3, 2010.

³“10 things travel insurance doesn’t cover,” by George Hobica, MSNBC, updated September 24, 2007. Accessed November 3, 2010.