So you just booked the trip of a lifetime — with nonrefundable tickets. Now you find yourself lying awake at night with various scenarios running through your head. A wide variety of unforeseen circumstances may throw a wrench in your plans, including natural disasters. Then what? Do you lose the cost of the trip?
The good news is, you may be able to protect your investment with travel insurance. Before you book your trip, the Insurance Information Institute (III.org) recommends that you check to see if the credit card you plan to use offers travel insurance that would be helpful.
There are four basic types of travel insurance, according to the III.org. In some cases, you can also purchase packages that offer several options. Policies can be obtained for a single trip or on an annual basis for frequent travelers.
Here is a brief description of the four types of travel insurance:
1. Trip Cancellation or Interruption Insurance. The cost of this insurance is generally a percentage of the trip cost. It provides reimbursement if:
It's a good idea to check to see if the coverage includes trip delay as well as cancellation. In these cases, a carrier will pay out a certain daily amount per person, once a trip has been delayed beyond a specified number of hours.
Don't confuse trip cancellation insurance with a "cancellation waiver" offered by some cruise lines and tour operators. Waivers provide some coverage if you have to cancel and they cost much less but they contain numerous restrictions. They generally must be purchased at the time you book the trip. In some cases, they only provide partial credits for future travel.
In addition, waivers are technically not insurance, so they are not regulated by state insurance departments. If you have a dispute, a government insurance office cannot help you.
2. Lost Baggage Coverage. One common traveler's nightmare involves arriving at a destination without any luggage. This type of insurance provides coverage if your belongings are lost, stolen or damaged during the trip. Some insurers also offer baggage delay insurance in case you need to purchase items while you wait for your luggage to be found.
Before you purchase this insurance, check to see if your homeowner or renters policy provide coverage for off-premises theft, in the case of stolen luggage. These policies might also be more cost effective than travel insurance if you're traveling with expensive electronic equipment.
3. Emergency Medical Assistance. This insurance is provided if you receive medical care after an illness or accident, you are hospitalized or have to be airlifted to receive proper care.
The U.S. State Department advises travelers to familiarize themselves with the conditions at overseas destinations that might affect their health, such as high altitude, pollution, availability of medications, safe water and types of medical facilities. Get required immunizations before leaving.
Note that medical insurance is generally not accepted outside the United States, and Medicare and Medicaid programs do not provide coverage for hospital or medical costs.
Check with your health insurance company. If your policy doesn't cover you abroad, consider purchasing a short-term policy that does. If your policy does provide coverage, bring both your insurance ID card and a claim form.
Although some health insurance companies pay "customary and reasonable" hospital costs abroad, very few cover medical evacuation back to the United States. Consider getting insurance enough to cover the cost of a slight home or to country with the medical care you need
4. Accidental Death. This provides coverage if you, or a family member, die while traveling. The decision to buy travel insurance depends on many factors — how much the trip costs, your physical condition (as well as the health of your companions) and your risk tolerance.
Important: If you do have to file a claim with the insurer, you will be asked for documentation to support your loss. So keep copies of receipts, travel manuals, photos you may have of lost or stolen personal belongings, invoices for medical treatment, and other relevant documentation.
It's a good idea to review existing insurance policies to make sure that you don't pay twice for the same coverage. As mentioned earlier, most homeowners policies provide some coverage, including personal property in your possession while you're away. That way you can avoid buying duplicate coverage.
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