Travel Insurance Informational Post
by © 2019 Kalimah Jenkins, Esq.
Do You Know the Different Types of Travel Insurance Available?
In preparation for 2020, I often use this final week of the year to go over all insurance policies, change policy coverages, and switch carriers. Given that, I decided to write an article regarding the nuances of travel insurance, hoping to help others avoid a situation similar to the couple detained in Mexico. I am also hopeful that after reading this article, potential insured’s will better understand that questions seeking the “best policy” cannot be answered in a vacuum. We each need to select policies that best suit our individual needs.
For anyone short on time and only interested in the bottom line, I’d advise you to skip to the end of the article and only read the items to consider when selecting a travel policy.
This document is for information purposes only and is not intended to offer specific advice about any particular policy. Nothing written here replaces the insured’s obligation to read his policy and know what is contained within it.
Most Common Travel Insurance policy terms:
A. Trip Cancellation
B. Trip Interruption
C. Emergency Medical, Evacuation and Expatriation
D. Trip Delay or Missed Connection
E. Lost or damaged luggage
F. Other items – Rental car, accidental death
A- TRIP CANCELLATION:
Travel insurance plans are intended to reimburse the purchaser, up to the plan’s limit, for any non-refundable prepaid trip costs if the insured is forced to cancel his travel plans for a COVERED REASON. It is not intended to cover events that, on the date of purchase, would cause the insured to file a claim. In other words, an insured should not decide to buy the insurance for a trip AFTER the insured becomes ill.
A covered reason is determined by the policy but as a general rule, it would cover illnesses where the insured is advised not to travel. It may also cover terrorism at the traveling location, common carrier bankruptcy, etc. It generally DOES NOT COVER situations where the insured simply decides not to travel, gets a new job that prevents the insured from traveling, or has a sick pet, although these may be covered under a CFAR (Cancel for any reason policy). The point here is that the insured should read the policy carefully and if he wishes to have the freedom to cancel for reasons other than those COVERED, he may opt for a CFAR policy.
Pre-existing conditions: The policy may or may not cover medical conditions that already exist at the time of purchase, but again, this clause can vary by carrier. Many policies will cover pre-existing conditions if the policy is purchased within a certain amount of days, typically 14 or 21, after the initial trip deposit. So, it’s important to pay attention if the insured requires this coverage.
Coverage begins: The policy generally kicks in when the insured, a traveling companion of the insured, or a close family member of the insured gets hurt or sick BEFORE your trip and is advised not to travel. In such case, the travel Insurance would reimburse the money lost as a result subject to required proof.
Time of Purchase: Travel Insurance can pretty much be purchased at any time prior to the departure subject to the pre-existing clause noted above.
B- TRIP INTERRUPTION:
Trip Interruption coverage kicks in when the insurance, a traveling companion of the insured, or a close family member of the insured gets hurt or sick DURING the trip and the insured has to return home early. These policies often cover the unused value of the trip and the cost for one-way airfare back home up to the plan’s limit.
C- EMERGENCY MEDICAL, EVACUATION, and REPATRIATION:
If an insured gets hurt or sick DURING his trip, the travel insurance will reimburse the medical expenses. Additionally, the insurance is required to evacuate the insured to a medical facility that can handle the insured’s injury or illness. Lastly, if the insured dies on a covered trip, his remains will be returned to his family.
- Most policies require that the insured be evacuated to the “nearest acceptable facility”, not to the insured’s home. This can result in the insured being stuck in a foreign country for an extended period of time.
- Most policies are reimbursement policies, so if sick or injured in a country that requires payment upfront, this could present a problem.
- Many policies are secondary, rather than primary payer policies. This would force the insured’s home medical insurer to fight with the travel insurance company over who should pay what.
D- TRIP DELAY or MISSED CONNECTION:
Provides meals and accommodations if your trip is delayed by a certain amount of time or if a connection is missed
E- LOST or DAMAGED LUGGAGE:
Provides coverage if your checked luggage doesn’t arrive within 12 or 24 hours, arrives damaged, or doesn’t arrive at all
F- OTHER ITEMS:
Many policies provide coverage in the event of damage to a rental car, accidental death and dismemberment, and a host of other things.
Considerations when selecting a policy:
- Does the carrier pay directly or by reimbursement? The former is preferable, but if only the latter is available, the insured must ensure that he has enough savings in case he’s found in a foreign country that will not treat without an advance payment.
- Is the carrier a primary or secondary payer? The former is preferable because it avoids arguments between carriers about who is responsible for payment.
- If the evacuation portion requires only an “acceptable medical facility”, consider purchasing an annual policy from a company like MEDJET. These policies allow a stable insured to be medically transported by aircraft to whatever facility he or she wishes as long as the injury or sickness occurs greater than 150 miles from the insured’s home.
- If the insured travels several times a year, it may be a better idea to purchase an annual policy rather than a per trip policy
- If the insured is covered for trip cancellation/interruption under another policy, he can still consider buying a policy that covers medical/evacuation/repatriation separately
- Many premium credit cards offer travel insurance, but your miles may vary. Make sure you check the policy for adequate coverage
- Consider a cancel for any reason policy (CFAR) if you think you may have to cancel for a non-covered reason
- If you have a pre-existing condition, find a policy that will cover it and purchase the policy within the stated time period
- If you travel with kids, consider a policy that will cover the children without charging an additional premium
- Is the policy’s coverage enough? One should check each category and ensure that he is comfortable with the maximum amount covered
- Check the insurance company’s ratings. All insurance companies are rated and one should select a company that has proven that it will pay claims
So, there you have it. As I stated earlier, travel insurance should be selected based on an individual’s needs, but I will implore each of you not leave home without it.