Updated: May 11, 2021
A few years ago, my parents and I took a cruise through Australia and New Zealand. My parents were leaving from Indianapolis, through Chicago to Los Angeles to meet up with me so we could continue on to Sydney together. Of course, it was winter and their flight got delayed in Indianapolis and Chicago. They spent the night at the airport and by the time they reached Los Angeles, not only had we missed our flight, but there was no way we could get to the ship before it sailed. We had to fly to Melbourne instead, but had to spend the night waiting for the ship to dock the next day. Fortunately, we had trip insurance which paid for the hotel in Melbourne, meals in Melbourne, our transportation to and from the airport and the change fees on my flight (the airline covered theirs). Before that trip, I had never purchased trip insurance when I traveled, but that trip made a believer out of me. Now I always purchase it for any overseas travel and whenever a portion of my trip is non-refundable.
Do you need travel insurance? The answer is, it depends. If you are taking a weekend road trip in your home country and have reservations that can be canceled with no penalties, then you probably don’t need travel insurance. If you are traveling overseas and have reservations for airfare and cruise tickets that aren’t fully refundable, you definitely should consider travel insurance.
There are two basic types of coverage — trip interruption and trip cancellation. Trip interruption covers issues that arise once your travel begins. If your flight is delayed and you miss your connection, the insurance will reimburse you for costs like airline booking fees, extra hotel expenses, replacements if your luggage is lost and other costs you incur because of the unexpected event.
Trip cancellation covers events that might occur to prevent you from taking your trip in the first place. You need to check your policy carefully to see what is included but typically things like sickness, death in the family, or work leave cancellation are covered. You can get back the money you have pre-paid for your trip (again subject to the limits of the policy).
Most importantly, trip insurance can provide health insurance and medical transportation if you need to be flown home or to a treatment facility. That alone is worth the cost of the insurance. Most commercial insurance, including Medicare, does not cover medical expenses in a foreign country. Again, you need to check the policy to see what is covered and the coverage limits.
The recent COVID-19 pandemic highlighted the importance of buying insurance that will allow you to cancel for any reason. That would protect you if travel warnings or quarantines are implemented before you travel or if you just don’t feel safe traveling. Since the pandemic became worldwide, most travel insurance is covering COVID like any other illness. If you contract it before your travel, you would be able to make a claim if you have to cancel your trip. If you become ill while you are on travel, the terms of the trip interruption coverage would apply. However, some companies are still considering COVID as a known hazard and it is not covered if you contract it during your travels. Claims due to known, foreseeable, or expected events, epidemics, government prohibitions, warnings, or travel advisories, or fear of travel are generally not covered, and coverage can vary by state. We can help you find an insurance plan that is right for you.
What does it cost? Rates are based primarily on your age, where you live, and the cost of the trip. According to Money, these are the top-rated travel insurance companies.
Most insurance will require you to pay covered expenses upfront. You need to keep all your receipts and submit your claim when you return from your trip.
One thing you need to know is that the trip interruption coverage only starts when your trip starts. If the airlines make changes to your travel schedule before your trip that cause you to incur extra costs like hotel stays, they are not covered by the insurance.
Travel is unpredictable, but with trip insurance, you can at least have the peace of mind that many of your financial and medical costs will be covered should things go wrong.