How your vacation unfolds depends largely on luck or a lack thereof. That four-star hotel you booked at a primo price may resemble an interstate-side dump more than that a posh Beverly Hills resort. That low-grade meat you sampled on the run may keep you confined to that hotel room for a day or two with a minor case of food poisoning. The constant griping by your kids may cause you to explode, making it a stressful, drama-filled time and defeating the purpose of the trip.
Planning the perfect vacation under the constraints of a budget is near impossible, but, with all the anticipation and work that goes into one beforehand, you can’t help but feel disappointed when things don’t go exactly your way. What’s the purpose of spending all that money only to feel as though you never mentally departed from the rigors of everyday life? Unfortunately, there isn’t insurance for those types of inconveniences. However, travel insurance covers other issues that can ruin your trip. It can give you peace of mind when you crave it the most.
Since the summer of 2010, one in eight adults in the U.S. “either had their travel impacted, or considered changing their travel plans, due to natural disasters or world events,” according to a survey from the U.S. Travel Insurance Association (pdf). In that group, just 29% had travel insurance. A modest sum, but statistics compiled by UStiA show that it favorably contrasts to the just 10% of all travelers who purchased travel insurance before 9/11. The uptick reflects an increased desire for financial security during travel, a service from which you may benefit if you decide it suits your next trip.
As with other types of insurance, the amount of protection you receive depends on the specifications of the policy. Two types of plans encompass the areas covered by travel insurance: vacation plans and medical plans. Vacation plans include lost or delayed luggage and delayed or canceled bookings and reservations, while medical plans include medical emergencies and evacuations.
With a vacation plan you can get additional types of coverage, such as rental car collision, identity theft, hazardous sports, golf course closure, and identity theft coverage, depending on the type of trip you take and your personal preferences.
Perhaps the biggest unforeseen expense you can incur while traveling abroad is a medical emergency, so it makes sense to fork over the additional money for coverage when you’re already spending a ton. The Bureau of Consular Affairs advises citizens traveling abroad to consider buying travel medical insurance if they answer “no” to the following questions:
Does my policy apply when I’m outside the United States?
Will it cover emergencies like a trip to a foreign hospital or an evacuation?
Rarely does regular health insurance offer coverage to policy holders abroad, and if it does, the coverage is limited. With Medicare, there’s no coverage abroad. Medical rules and regulations pertaining to medical treatment and payment vary by country. The Department of State points out that some doctors and hospitals abroad may ask for cash prior to performing a service, which, in most cases, is financially impossible to cover for the average American. Hospital costs abroad, just like in the U.S., can reach five figures rather easily.
The best way to determine whether or not you need travel insurance is to measure the overall risk of your trip. Jill Krasny from Business Insider made the carefully thought out decision not to purchase a plan for her trip to Ireland and explained why in an April article. Her reasons: the weather is fine, she isn’t spending much, her flight is covered, and Bed and Breakfasts are flexible with cancellations. However, those circumstances may not apply to you, and your level of comfort may be quite different. Consider these questions before embarking on your journey:
Keep in mind that you may already be covered in some areas. For example, if you’re bringing personal belongings for business use, then they may be covered in a company policy. If you made purchases on a credit card, then a canceled hotel reservation or flight may be covered. Your homeowners insurance policy may cover some items away from home. Some countries have reciprocal agreements with the U.S. that provide partial health care coverage when you visit – eligibility information may be found on the country’s embassy site. All of these are atypical, however, and even if one does apply to you, it only covers a portion of potential unforeseen expenses.
A number of factors impact the cost of vacation travel plans, the most notable of which is the total cost of your trip. Some services provide an average ballpark figure of 4 to 8% the total cost of the trip – a policy with a “cancel for any reason” provision can reach 10%. Other considerations include the number of travelers, their ages, the destination, the type of trip, and optional coverage.
The cost calculation of travel medical plans differs from vacation travel plans in that medical plans are fairly straightforward and don’t include additional areas of coverage outside of medical emergencies and evacuations. The factors considered are the age of the traveler, length of the trip, and medical and evacuation limits. A trip that’s moderate in length could cost you fewer than $100 depending on the insurer, which is just a small fraction of the average total cost of a trip abroad.
Frequent travelers can purchase affordable plans that cover multiple trips over a period of time. Medical plans for single trips can last up to six months, and plans for multiple trips can cover spans of three, six or 12 months. Jetsetters who constantly travel – with no end in sight – can purchase long-term major medical plans that are paid monthly and renewed periodically.