What is Travel Insurance and How Does It Work?

One of the most important parts of preparing for a trip abroad is purchasing travel insurance, something a lot of people tend to overlook.

Getting travel insurance – also referred to as trip insurance or travel protection – can save you from unnecessary and unexpected financial loss if you have to cancel the trip or from a hefty medical bill that you cannot afford.

What is Travel Health Insurance?

Travel insurance is a type of insurance (or protection) that is meant to cover all or part of the cost of any medical expenses that you incur while abroad, trip cancellation, lost or stolen items, travel delays, etc.

Travel insurance is intended to cover expenses for things that are unexpected and that occur after the travel insurance policy comes into effect. For this reason, it usually does not include medical coverage for any pre-existing conditions, such as diabetes or pregnancy.

On the same note, if you purchase travel insurance after an incident has happened, it goes without saying that the insurance company will not cover it.

Keep in mind that travel insurance is not the same as international health insurance, which is intended for ex-pats and students who are not technically just visiting.

What Does Travel Insurance Cover?

Most travel insurance plans cover the following, although the coverage changes from one company to the other, as well as from one specific plan to the other:

Medical treatment. If you get into an accident or get sick during your trip, your travel insurance will cover for doctor consultations, emergency treatment, hospitalization, surgery, prescription drugs and medicine, etc.
Trip cancellation, interruption, or curtailment. If your trip is cut short or cancelled for some reason, you will be covered for any lost travel and or accommodation costs. The reasons deemed acceptable for reimbursement change based on the policy. You can also choose to purchase a Cancel For Any Reason add-on to your existing policy.
Repatriation of remains. In the case of death. It can also include overseas funeral expenses.
Lost, stolen, or damaged possessions, but not is it is due to recklessness.
Missed flight. If the flight you missed was through no fault of your own (ie. the airline rescheduled or had a delay) the insurance company will cover any expenses related to it.
Return of a minor.
Hijacking.

Additional travel insurance coverage

There are some travel insurance plans which will cover things that are outside of the “standard” coverage, but you will have to pay additionally. This can include:

AD & D (accidental death and dismemberment)
Acute onset of pre-existing conditions
Dental coverage
Rental car coverage
Dangerous sports medical coverage
Natural disaster coverage
Terrorism coverage
Cancel for any reason travel insurance

What is Not included in Travel Health Insurance?

Most travel insurance companies usually refuse coverage for the following scenarios:

Pre-existing conditions If you have a disease such as diabetes, the insurance company will usually not cover any costs related to the disease, such as medications or doctor check-ups. Some companies may, however, cover the acute onset of a pre-existing condition.
If you are traveling while pregnant, travel insurance companies will usually not cover any expenses related to the pregnancy, such as giving birth, general check-ups, or morning sickness. There are some plans that offer travel insurance for complications of pregnancy.
Medical treatment as a result of drug or alcohol consumption.
Medical treatment as a result of reckless behavior and/or engaging in dangerous sports activities.
Travel insurance for cancellation during an ongoing event (e.g., extreme weather conditions).
Traveling ravel against government advice.

What Activities Are Covered by Travel Insurance?

Every travel company has its own policy rules regarding what it will offer coverage for. However, in most cases, travel insurers will offer coverage if you get into an accident while doing one of the following activities:

Swimming
Kayaking
Trekking
Surfing
Cycling
Recreational sports

Even the following activities may be covered by some insurers under certain circumstances:

Skiing (if it is done during skiing season)
Scuba diving (if it is done under the supervision of licensed instructors and only up to a certain depth, usually 10-30 meters)
Abseiling and rock climbing (if you have to use special equipment, you will likely not be covered)
Sailing (only within a short distance from the shore)
White water rafting (only for rapids 1, 2, and 3)
Bungee jumping (depending on the specific policy)

What Activities Are Not Covered by Travel Insurance?

There are certain holiday activities that travel insurance companies do not offer any sort of coverage for, such as:

Base jumping
Off-the-season skiing
Motorbiking and motor racing
Hunting
Partaking in professional sports
Running with bulls

If by any chance, your travel insurance company does offer coverage for any of the aforementioned activities, the cost of the overall policy will be higher.

How to Choose the Best Travel Insurance Plan?

There is no single answer to this type of question since it depends on your specific needs and the type of trip you are taking. However, when looking for the best travel insurance policy for your needs, you have to look for the following features:

The actual travel insurance company. Make sure that you’re purchasing your policy from a reputable company.
The coverage that the policy offers:
- Is everything you consider important covered? For example, do you have coverage for medical expenses? How much will you have to pay from your own pocket before the insurance company steps in?
- What holiday activities are covered by your insurance? If you’re going skiing, you will likely want a policy which will cover skiing-related accidents, and so on.
- Is repatriation covered?
- Is there reimbursement for trip interruption or cancellation, and if yes, what’s the nature of it?
- Will you be covered if someone steals your belongings?
The cost of the policy. See whether the cost of the policy is within your price range but at the same time, keep in mind that inexpensive policies have limited coverage. However, that doesn’t mean you can’t use some handy money-saving tricks (see below).

How to Get Insurance for International Travel?

You can get travel insurance online through brokers who are sort of middlemen that work directly with travel insurance companies.

This is usually the best way because they only work with reputable companies and can offer travel insurance plans customized to your needs, meaning you don’t have to go hunt down insurance companies yourself.

Moreover, when deciding on what travel insurance plan to purchase, it is important to really read through and compare different policies, so you know what you are paying for.

Here are the steps you need to go through when purchasing travel insurance for international travel:

Decide how much coverage you need.
Research online.
Find out if the policy offers coverage for where you are going.
Read the fine print carefully.
Buy the travel insurance policy early.

When is the Best Time to Get Insurance?

The recommended time to purchase travel insurance is within 15 days from the day you booked your trip or started paying for it/made your first deposit. As the departure date nears, and you make more deposits, you can include them on your coverage as well.

If you purchase your insurance last minute or after 15 days have passed from the day you booked the trip, you may not be able to get full coverage.

Additionally, if a natural disaster such as a hurricane happens or is expected to happen on your intended destination, and you buy insurance after it has been warned, trip cancellation will not be covered in this case.

How Does International Travel Insurance Work?

Once you purchase a travel insurance plan, if any of the unfortunate incidents covered under the plan happen, you can file a claim with the insurance company and they will reimburse part or all of the costs, depending on the policy rules.

For example, if you fall ill while you are abroad, you can get the doctor’s note and medical bill and submit them to the insurance company to file a claim for re-reimbursement.

Although most people believe travel insurance only covers travel health insurance, there’s so much more to it. It also covers any expenses that you may suffer if you have to abruptly cancel your trip, if your luggage or any other personal belongings are stolen or lost, as well as repatriation of remains in case of loss of life.

How to File a Travel Insurance Claim?

You have to file the claim with your travel insurance company as soon as possible. For this, you need all the supporting documents you can get if you want the company to actually consider your claim legitimate and cover it. Examples include:

If you need medical assistance. If you get into an accident or become ill during your trip abroad, you have to save the medical bills, doctor notes, and any other documents that prove you require medical assistance. Once you submit your claim, the insurance company will reimburse the costs of your treatment. In countries like the US, if you have travel health insurance with a reputable health insurance company, the hospital may be able to bill the costs directly to the insurance company.
Stolen possessions or a car accident. If your personal belongings are stolen or you get into a car accident while you are on your trip, you have to contact your travel insurance provider as soon as possible to learn how to proceed. You must also file a police report, and save the proof for when you make the insurance claim.
Trip cancellation. If you have to cancel your trip, you must give a reason for it to the insurance company. For example, if the reason was work-related, include a letter from your employer. If the reason was health-related, include a doctor’s note, etc.

Remember:

Make sure to contact your travel insurance providers before you depart the country you are visiting so you know what documents you need when making the claim.
In some cases, travel insurance providers require that you contact them immediately in case something happens.
Most importantly, read the insurance policy carefully to find out the exact steps your travel insurance company requires you to take to make a claim.
Make copies of any documents that prove you are eligible for reimbursement.

How Much Does Travel Insurance Cost?

As a general rule, the cost of your travel insurance plan is between 4% to 12% of the overall cost of your trip. More expensive trips will usually cost more to insure simply because if the trip is canceled for some reason, the amount of money that the travel insurance company will have to reimburse is higher. However, the cost also changes depending on the following factors:

The coverage you need. Plans with just basic health coverage will cost less than plans that include other factors as well, such as trip cancellation, theft of possessions, etc. Even with just basic health insurance, there are different levels of coverage, which can affect the cost of the insurance plan.
The duration of your trip. The same plan, with the same amount of coverage, will cost more for a trip of 30 days than it will if you are only traveling for one week or a couple of days.
How many people are included in your plan? Similarly, if you only need to cover yourself, the plan will be less expensive than if you are purchasing health insurance for your entire family.
Your age. The price of travel insurance plans increases along with the age of the traveler. People over the age of 65 usually pay more for plans because they are more likely to make a claim, whereas if you have young children, you may be able to add them to your plan with no extra cost.
Your destination. Some travel insurance companies also look at where you are traveling to when pricing your plan, since some destinations have a higher level of risk than others.

Is Medical Insurance for Traveling Worth It?

Whether or not travel insurance is worth it comes down to how much you stand to lose if the trip is canceled. If you have prepaid your hotel room, flight ticket, and other activities which add up to a hefty amount, then getting travel insurance which is a fraction of that price may be worth it.

However, if you are traveling to stay with family, and have purchased a cheap round-trip ticket, you do not risk losing that much, so travel insurance, in this case, may just be a waste of money.

Another instance when travel insurance is necessary is if you are traveling to a country with high costs for health care, such as the US.

If you get sick or in an accident in a country with high healthcare costs, the medical bill can easily shoot up to tens of thousands of dollars, if not hundreds of thousands of dollars, so the insurance cost is just a fraction of it.

Ultimately, it is up to you to judge the odds and decide whether your trip requires insurance or not.

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