Emergencies, accidents, and just bad luck can occur when you’re on the road. Is it better to take a chance at a financial wallop or play it safe and invest in travel insurance? Depending on your destination and how much you stand to lose, the answer varies. Here are some questions to ask.
• Isn’t travel insurance just for medical issues?
These days it’s a lot more. Sure, comprehensive travel policies cover medical service and hospitalization, but you’re also covered for trip cancellation, delay or lost luggage.
Dan Margoni, a retired certified financial planner in Durham, N.C., has purchased policies through Allianz Global Assistance (allianztravelinsurance.com) for more than a decade. In 2012, he was returning home from Rome through Dulles International Airport when he got word of Superstorm Sandy. An unexpected hotel night and meals (about $105) was reimbursed. When Margoni’s laptop was stolen at a Buenos Aires bus station, Allianz reimbursed him $500. “Travel insurance doesn’t eliminate the risk but the cost of the risk,” he says.
John Monroe’s summer vacation to St. George Island off the Florida Panhandle was cut short by a tropical storm. “Every summer we rent a house and though we knew the weather was bad, we didn’t realize how bad,” he says. The family checked in on a Saturday. On Sunday morning, boom! The electricity went off and a mandatory evacuation was announced. The island wasn’t reopened for five days.
“We went to Tallahassee and then on to a friend’s house in Georgia,” says Monroe, who not only recouped the cost of the non-refundable home rental, but the night at a Tallahassee hotel.
• Can’t I chance it?
If you are traveling within the United States and aren’t forking over a hefty non-refundable sum, then you probably don’t need travel insurance. But head overseas and, more times than not, the insurance is warranted.
Most of us have some form of health insurance, but your policy may not be worth much outside U.S. borders. Even a trip to a cruise ship’s infirmary can lighten your pocketbook, because once you set sail you’re considered to be in international waters.
In general, medical plans will cover you for emergencies or urgent care regardless of location. What’s an emergency? Anything a prudent person concludes would jeopardize her life if she didn’t seek care. So chest pains, broken bones, or dehydration caused by food poisoning would likely be covered; toothache, sunburn, or a mild case of the flu probably would not.
Medicare won’t cover illness or injury outside the United States. Medigap (plans C and above) provides foreign travel emergency coverage, but with a $50,000 lifetime limit.
• If I cancel my trip, do I get my money back?
The best thing about trip cancellation is that it covers travelers for 100 percent of all prepaid, nonrefundable expenses as long as cancellation is for one of the policy’s listed reasons. That could include sickness or injury of the traveler, a traveling companion, family member and even business partner. It also applies if there is a death in the family.
Many plans will cover you for cancellation if you are required to work during a trip. Be sure you can submit a written statement from human resources confirming that your previously requested time off has been revoked. If you are prevented from taking a trip because you are laid off from your job, you may be covered as well.
Other covered reasons include financial default of your airline, cruise line or tour operator, being subpoenaed, quarantined or selected for jury duty, or called to active military duty.
And here’s the biggie for residents in states such as Florida. “Fear” that a hurricane will hit your house is not reason enough to cancel a trip and expect reimbursement. However, policies will cover those who cancel their trip if a hurricane causes delay or cancellation of their flights.
Policies can also cover you if your home is made uninhabitable (due to structural damage or power outage) because of a natural disaster such as a hurricane. Similarly, travelers can cancel their trip if their destination lodging is made uninhabitable. The key to hurricane coverage: Purchase a policy before a storm is named.
If you start your trip but have to cut it short for any of the above reasons, you are likely covered. The trip interruption benefit reimburses travelers for any unused days of their trip. Trip interruption should also pay for additional expenses to get home early.
• Where are the best deals?
Do some comparison shopping. Try Squaremouth.com or QuoteWright.com. After asking a few questions (such as age and trip details), each displays a variety of policies and lets you compare them by price and benefits. Expect to pay about 5 percent of your trip cost and as high as 9 percent if you are 70 or older.
But before you snap up the lowest offer, read the policy carefully. Coverage on a $5,000 trip to Peru for a 60-year-old ranged from $250 to $1,030. Every policy included $5,000 in cancellation coverage, but medical evacuation ranged from $250,000 to a whopping $1 million. The average emergency medical evacuation costs less than $40,000. Don’t waste money on a $1 million policy.
Want to save more? If you don’t lose any money if you never make it to your destination, skip the cancellation insurance option altogether. That can cut the cost dramatically, so that $250 policy now offers the same coverage and perks for about $50.
• I’m young and healthy, why bother?
Todd Strong never imagined a bike race before a business meeting could so quickly become a medical nightmare. Along with a colleague, the 45-year-old Birmingham businessman entered a 100-mile bicycle ride through the Canadian countryside south of Vancouver, British Columbia. Just over 50 miles into the ride, a mishap sent Strong smashing onto the concrete.
A broken clavicle, five broken ribs and a collapsed lung meant days of hospitalization. Though Strong received excellent care, all he wanted was to go home for treatment in familiar surroundings. Fortunately Strong subscribed to MedjetAssist (medjetassist.com) which specializes in medical evacuations. Medjet guarantees that members are taken to the hospital of their choice, not just the closest facility.
A few days after the accident, a Medjet air ambulance staffed with an EMT and a flight nurse arrived. Five hours later, the jet landed in Birmingham. Total cost: $260. “I slept the whole way back and never saw a bill,” says Strong. “I’m a healthy guy but you never know. If I go skiing and get hurt I want to know I can be taken home.”
• What if I need someone at night or on a weekend?
That’s the hidden gem of travel insurance. Firms provide 24-hour access to both emergency personnel and a travel agency. Think of it as your own personal round-the-clock concierge desk.
Jill and Jeff Waytashek of Sartell, Minn., planned the perfect family vacation to Curacao, along with daughter Lindsey, a law student at the University of Denver. Things were on track until Lindsey stepped off the airplane in Minneapolis the night before their flight to Curacao through Miami and announced, “I forgot my passport.”
After trying to vain to reach someone at American Airlines, Jill thought to call the Travel Guard Insurance (travelguard.com) service desk, hoping to get a special phone number for the airline.
“I explained the situation to the Travel Guard agent, who told me this wasn’t something they covered, but she would help me figure it out. We started to look at flights to send Lindsey back to Denver and then meet us in Miami. Then we commiserated it was too bad there wasn’t someone in Denver to take Lindsey’s passport to the airport,” Jill recalls.
Good idea. Turns out Lindsey had a willing roommate and Travel Guard was able to work with airline personnel to have Lindsey’s passport flown to Miami, where the Waytasheks were waiting, Lindsey holding up a sign saying “My name is Lindsey. Do you have my passport?”
Says Jill: “Sometimes I think my family is the poster child for travel insurance. We’ve had medical emergencies, lost luggage, a stolen cell phone and each time they come through. But the 24/7 concierge service may be the best benefit of all.”
• What might catch me in the fine-print?
Not declaring pre-existing medical conditions is one of the most common reasons for “payment denied.” Since most policies cover medical conditions if you purchase within two weeks of buying your travel package, be honest. If you file a claim, the insurer gets access to all your medical notes and records.
Save every receipt, police report, physician’s diagnosis, X-ray, lab result or other scrap of paper to prove your case to the travel insurer. Check whether you are covered if your travel supplier (cruise line, airline or tour operator) should go bankrupt.
Consumer travel strategist Laura Daily is executive editor of LivingOnTheCheap.com