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Even with the best laid plans, things can and often do go wrong when you're on the road. You miss a flight connection and need to spend the night in a hotel. Your checked bag goes missing. Someone dings your rental car in a fender bender. You get sick during a vacation and need medical care. Any of these could cost you not only valuable time, but a lot of money.
That's where travel insurance comes in. Travel insurance is a way to make sure you are protected against these and other mishaps when you're away from home. As with any type of insurance, the cost, coverage amounts, and terms and conditions can vary from policy to policy. But in general, travel insurance can be an inexpensive way to make sure you are covered if your trip goes off the rails. Here's what you need to know.
How Does Travel Insurance Work?
Travel insurance is a way to shield yourself in case something goes awry during a trip. There are a few different ways to obtain travel insurance. Some homeowners and renters insurance policies include travel benefits (often limited to lost or stolen belongings). Many credit cards also offer a variety of travel protections. Finally, you can simply purchase a travel insurance policy for a specific trip or time period. If you purchase a policy directly from an insurer, such as AIG, Medjet or Travelex, there are five major types of plans:
- Comprehensive plans: These policies usually include things like trip cancellation and interruption coverage, and may reimburse you for items such as meals and lodging during delays. They may also provide medical and evacuation coverage.
- Medical plans: Travel medical plans are usually for folks who want medical coverage outside the area in which their regular health insurance applies. Plans may be geared to people who are traveling long-term, like six months or more, and may have pre-existing conditions. These plans don't usually extend benefits like reimbursing you for canceled trips or lost bags.
- Emergency evacuation: These plans provide transportation assistance if you are injured or become seriously ill while traveling. Some even have a benefit that lets you stipulate your hospital of choice, or will take care of repatriating your remains if the worst should happen.
- Accidental death and dismemberment: This type of policy includes a lump-sum payment to you or your beneficiaries if your trip has catastrophic consequences.
- Vacation rental: You'd never buy or rent a home without making sure you were protected against things like accidental property damage, and you should consider doing the same when renting a home while traveling.
What Does Travel Insurance Cover?
Insurance policies, travel-related and otherwise, are complicated. Many only apply in specific situations, and nearly all set forth long lists of exclusions that could prevent you from enjoying their protections. Here are some things to look out for in so-called comprehensive plans that wrap in trip cancellation, interruption, delay, lost baggage, medical coverage and more.
Coverage Usually Included in Comprehensive Plans
In general, most comprehensive travel insurance plans will cover the following situations, though the dollar maximums you can expect for reimbursements will vary from one policy to another.
- Trip cancellation and interruption: This benefit kicks in when you have to end your trip early, or call it off altogether, due to unforeseen circumstances. Eligible reasons include if you or a family member becomes sick before or during travel, if there's inclement weather or a natural disaster that prevents you from traveling to or remaining in your destination, or if your common carrier (such as your airline or cruise line) goes out of business.
- Trip delay: When your common carrier is delayed (usually more than 12 hours or overnight) and you have to purchase things like meals or lodging, you might be eligible for $100 to $500 per person per day depending on your plan.
- Lost or delayed luggage: If your bag is lost, stolen or delayed, you might be entitled to reimbursement up to a certain amount for things like clothes and toiletries (jewelry, electronics and medications are not typically covered).
- Rental car insurance: Just like you need an insurance policy to drive at home, it's important to get coverage for when you rent a vehicle. These policies can range from bare-bones secondary coverage—meaning you have to exhaust any other types of applicable insurance you have—that only applies to collision damage or theft, up to comprehensive primary plans that will pay for things like medical expenses, too, without the need to go through your regular insurer.
- Medical and evacuation: If you get sick enough to require medical treatment in your destination, or even transport to a medical facility in a different location, this type of coverage can pay for some of those expenses.
- Travel accident insurance: If you are injured, maimed or die on your trip, travel accident coverage might reimburse your beneficiaries. The maximum amount tends to be between $100,000 and $1 million.
Coverage Excluded in Comprehensive Plans
As you might expect, insurers insulate themselves against major payouts by excluding many circumstances from coverage. Here are a few to keep in mind.
- Traveling near home: Protections usually don't apply to trips within 100 miles or so of your home.
- Pre-existing medical conditions: If you become ill or injured due to a condition that you were either diagnosed with or that worsened before your trip, the policy's medical and other protections might not apply to you.
- Seeking medical treatment: If you are traveling specifically to seek medical treatment or care, then a policy's medical benefits are usually void.
- Pandemics: This has really come into play over the past year, but most travel insurance policies exclude trips where the traveler knowingly visits a destination where a pandemic is underway.
- Adventure or other dangerous activities: These might include things like mountain-climbing, contact sports, or learning to pilot an aircraft or boat.
- Substance abuse: If you are under the influence of alcohol, drugs or narcotics while injured or killed, don't expect your coverage to come to the rescue.
- Self-inflicted harm: If you injure or kill yourself intentionally, the policy is nullified.
- War or civil unrest: If you are traveling to a destination where there is war or civil unrest, you might not be able to claim help from your insurer.
- Personal effects: For baggage coverage, specifically, don't expect reimbursement for things like electronic devices, eyeglasses, musical instruments, currency, contraband, vehicles (including bicycles) or animals.
This is a partial list of exclusions, so it's worth reading the fine print on any policy you're considering to make sure you don't violate any of the terms accidentally.
When Does It Make Sense to Get Travel Insurance?
Travel insurance can be a great way to protect yourself from unforeseen expenses, especially on long and costly trips. For everyday travel, though, you might not need to look beyond your credit card. Many, especially those that earn travel rewards like airline miles or hotel points, offer some level of travel insurance automatically as part of their benefits packages. Just remember that, for your trip to qualify, you usually must charge all or part of it to the card. Here are some cards with exceptional travel insurance benefits.
The Platinum Card® from American Express
This premium rewards card recently added a host of new and improved travel protections (terms apply):
- Trip interruption and cancellation: Up to $10,000 per trip and $20,000 per card per consecutive 12-month period.
- Trip delay: Up to $500 per trip and two claims per 12-month period.
- Lost and delayed baggage: Lost luggage coverage maxes out at $3,000 per covered traveler.
- Auto rental insurance: Secondary unless you buy Amex's Premium Car Rental Protection, which is primary. That costs $12.25 to $24.95 per rental and covers up to $100,000 for theft or damage.
- Travel accident insurance: Up to $500,000 per covered person (usually the cardmember and immediate family).
Bank of America® Premium Rewards® credit card
This card offers a lot of benefits for its $95 annual fee:
- Trip interruption and cancellation: Covers up to $2,500 per person, per trip.
- Trip delay: As much as $500 per ticket for you and eligible family members when your trip is delayed more than 12 hours.
- Lost and delayed baggage: Delayed baggage coverage begins at six hours and will reimburse you as much as $100 per person, per day for up to five days. Lost bags are covered too. This coverage is secondary to any benefit you may receive from the carrier, and only essential items are covered.
- Auto rental insurance: Secondary and only for theft or collision damage. You must decline the damage waiver offered by the rental agency to receive this benefit.
- Travel accident insurance: Could vary; check with Bank of America's benefits administrator to find out the coverage for your particular card.
How Much Does Travel Insurance Cost?
One of your main concerns might be the cost of a travel insurance policy. While many policies are reasonably priced, the exact amount will depend on a variety of factors including not just the type of plan you purchase, but also things like:
- The cost of your trip: Especially for plans that include interruption and cancellation coverage, insurers will want to know how much you paid for your trip. That's because you might be entitled to reimbursement up to, or even more than, what you paid.
- The number and age of travelers: The more travelers included on your policy, and the older they are, the more you can expect to pay.
- The length of your trip: The longer you're on the road, the higher chance there is for something to go wrong.
- What exactly you're doing on your trip: Are you flying? Taking a cruise? Renting a villa? These types of details will factor into your quote.
- When you started booking your trip: Insurers are wary of folks who purchase plans close to their travel dates and long after they made their reservations. That's because some fraudsters might wait until they're near to departure and then try to use a policy as an excuse to cancel.
- Where you are a citizen and where you live: Companies will want to know where you're coming from so they'll have an idea of what you might need if you run into trouble.
- The countries you are visiting: Likewise, insurance companies take factors such as the medical infrastructure, distance from home and evacuation options at your destination into account.
- The type of insurance you need: If you're going for comprehensive insurance with all its perks, you will probably be paying more than for a more basic plan that just covers your vacation rental.
To give a quick snapshot of how much coverage can vary, let's say a 30-year-old U.S. citizen and resident is planning a two-week summer trip that only involves flights—no cruises or vacation rentals. For a $5,000 trip to Kenya, the comprehensive insurance options range from $150 to $380, with those numbers doubling for a $10,000 trip. For a $5,000 trip to France, on the other hand, options range from $150 to $650, depending on just how much medical, evacuation and cancellation coverage you want.
In general, expect to pay between $200 and $300 per person for comprehensive policies with high-dollar claim caps that cover international trips of less than a month.
How to Save Money on Travel Insurance
There are a few ways to save money on travel insurance, though.
- Use your credit card. As mentioned above, you might already be carrying a credit card that offers lots of value-added travel protections. So before purchasing standalone coverage, look through your card benefits to see what you might be entitled to.
- Buy only what you need. Maybe you're just renting a vacation property, but you used points or miles to book your flights and are only carrying on a small bag of clothes. Why bother with an expensive comprehensive policy when all you may really need to insure is your rental?
- Shop around. There are several websites, such as Insure My Trip, that can offer quotes from various insurance companies based on your specific itinerary. By researching all the options available to you, you can avoid overpaying while still narrowing down your choices.
How to Keep Yourself and Your Identity Safe While Travelling
Beyond just buying a travel insurance plan, there are a few other ways to keep yourself and your identity safe while traveling.
- Consider an identity monitoring service. The last thing you want while you're away from home is to have an issue with someone stealing your identity. That can lead to headaches like your bank freezing your account or credit card, or even having issues with your passport when flying. Before major trips, consider engaging an identity monitoring service such as Experian IdentityWorks℠ Plus to keep your personal information safe.
- Have a backup plan for lost or stolen devices. Our phones, not to mention tablets and computers, are our lifelines these days. Before you hit the road, make sure your devices are either covered by insurance and replaceable in your destination, or that you have backups on hand. For instance, download any apps that will enable you to use a phone instead of your computer in case it's stolen, or bring along a tablet that will allow you to remain in contact with folks at home in case your phone goes missing.
- Avoid public Wi-Fi. Public internet networks are notorious for allowing hackers to steal any information you send from various devices, so only use secured networks if possible.
Travel insurance can cover a wide array of situations, such as medical emergencies, flight delays, rental car accidents and missing bags. Plans can be costly, however, and also come with lots of exclusions. Before you purchase travel insurance, make sure you're not already covered elsewhere, such as with a credit card. Read through the terms and conditions carefully to ensure that you are getting a plan that will actually provide what you need for your specific trip. Once you do, it can be a lifesaver, literally, if you need help while traveling.