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When it comes to planning a trip, it can be difficult — and expensive — to prepare for the many surprises that could arise. Travel insurance can be a great way to protect yourself.
The idea behind travel insurance is it gives travelers a way to get their money back in the event their plans are canceled or interrupted. But when do you need it and what does it include?
This article covers the basics of travel insurance: when to buy it, where to buy it and how to make sure it covers your particular needs. In my research, I got some expert advice from money expert Clark Howard. I also talked to a representative from InsureMyTrip, a travel insurance comparison site, to find out about “cancel for any reason” policies.
Clark once owned his own travel agency, and he thinks nearly everyone should consider buying travel insurance.
“I never like for people to buy narrow insurance; that’s why I advise people not to buy appliance warranties. Trip insurance is an exception — and the reason why is because trips can be incredibly expensive and fully non-refundable.”
Let’s get into some questions and answers about travel insurance.
Travel insurance provides a full or partial refund in the case of illness or death of a member of the traveling party or close relative.
It can also provide coverage if a cruise, tour operator or airline defaults and in several other cases, depending on the policy.
In general, insurance will cover only what is explicitly expressed in the policy. Many policies exclude pandemics and epidemics, so you need to do your research carefully.
Clark thinks you should consider travel insurance a conditional expense: You don’t need it for all types of travel.
But he says you do need it if you’re:
“If you book a tour or you book a cruise — those two in particular — if you’re going to lose all your money regardless of why you can’t come, then you need to get insurance,” Clark says.
Clark says you probably don’t need travel insurance when:
The website CoverTrip lays out some of the most common things covered by travel insurance, including:
Lori Silverman from Team Clark’s Consumer Action Center says they receive multiple calls about issues with insurance claims. She emphasizes that there is a wide range of types of travel policies and coverage, so be sure to check the fine print of any policy you are considering before you buy.
Travel insurance policies generally cost anywhere between 4-10% of the price of the total trip.
For example, if you are booking a trip that costs a total of $2,000, you can expect to pay around $80-$200 for a travel insurance policy.
But this is important: Never purchase the travel protection plan from the trip organizer or online travel agent.
“Never, never, not ever, buy the travel insurance offered by an airline at its website, a cruise line at its website, a tour operator at its website,” Clark says.
They are designed to protect the company and not the consumer, Clark says. This includes travel booking sites such as Expedia and Travelocity.
If you’re not supposed to buy travel insurance coverage from the place where you book the trip, where do you go?
Clark recommends that you comparison shop for the best travel insurance that suits your needs at InsureMyTrip.
“The reason I like InsureMyTrip is because it’s like an aggregation service or comparison site, and you can see all the different choices available,” he says.
InsureMyTrip’s quote process also has a recommendation tool that guides travelers toward plans best equipped to protect against COVID-related travel issues.
When you visit InsureMyTrip, you’ll be asked for the following information:
The site will then recommend travel insurance plans for you and show you the cost, plan details and consumer ratings for each travel insurance company. You can read more about InsureMyTrip in our full review of the service.
You can compare the available plans and select the one that best suits your needs.
In addition, Clark says, “There are a number of travel credit cards that include travel insurance with them if you use them to buy the travel.”
Typically, coverage from these cards is less comprehensive than what you’ll find in plans from InsureMyTrip, so make sure you’re comfortable with that before you decide to rely solely on coverage provided by your credit card.
A “cancel for any reason policy” (CFAR) allows you to cancel your travel plans for any reason and still get some of your money back.
Clark says this option is typically considered an upgrade to standard travel insurance coverage, so it costs a little more. However, you should know that it won’t usually cover the full cost of your trip.
“If required conditions are met, CFAR may provide 50%-75% reimbursement of your prepaid, non-refundable trip costs if you cancel at least 48 hours before a trip departs,” Meghan Kayata, InsureMyTrip communications specialist, tells Team Clark.
Here are some key things to know about a cancel for any reason policy:
A CFAR policy is typically available only in the first 10-21 days after you make your first payment on your travel arrangements. “Providers often require the entire dollar amount of the trip is insured,” says Meghan.
CFAR works in tandem with your travel insurance and is not a standalone insurance policy. It must be purchased as supplemental coverage.
“Adding Cancel for Any Reason (CFAR) coverage to a travel insurance policy may increase the base cost of the plan by about 50%, on average. However, some plans may offer the CFAR option for less, while others may charge more,” says Meghan.
“While COVID-19 hasn’t been a big news story recently, contracting the virus is still possible and it could derail a trip,” says Meghan. “The good news is most travel insurance providers are still covering COVID-19 like any other illness that may lead to the cancellation or interruption of a trip.”
“However, it’s important to read through a policy before purchasing it, because some providers may exclude pandemics and may not provide coverage related to COVID-19,” she says.
Clark.com Travel Editor Clara Bosonetto also recommends calling the issuer of the credit card on which you booked your travel to see if it offers any refund options.
Most travel insurance policies include some form of medical insurance and medical evacuation (medevac) insurance. But it’s important to read the fine print to see that coverage alone will be sufficient if you have a medical emergency on your trip.
The Centers for Disease Control and Prevention says, “The total cost of medevac varies by location, ranging from $25,000 for transport within North America to ?$250,000 for more distant and remote locations.”
If you’re traveling to a resource-poor country, you might consider this kind of policy as a hedge against the possibility of a huge medical bill if you need to be taken somewhere that has better medical facilities.
Travel insurance generally reimburses you if your trip is interrupted or canceled for a variety of reasons typically considered to be outside of your control.
Clara points out that standard travel insurance probably won’t cover you if you want to cancel because of a travel advisory or just because you’re afraid to travel.
“Additionally, the uncertainty of a medical outbreak is not a claim covered by policies,” she says. “And some policies specifically exclude pandemics.”
Given these realities, the bottom line with travel insurance is that you really need to do your homework. That means taking time to go over different policies to find one that fits your needs and reading the fine print so you know what’s included.
Here are the two key steps you should take before purchasing travel insurance:
Planning for a trip overseas? Read our guide on travel medical insurance.
This post was last modified on March 4, 2024 1:40 pm
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