Travel Insurance Coverage

Travel insurance is one of those things that just feels like an added expense on a vacation that you’ve already spent plenty of money on — especially if you aren’t even sure what it covers. But it’s precisely because you’ve already spent that money on your vacation that travel insurance coverage is worth it.

The key is to make sure you’re getting the right travel insurance coverage and cutting costs by skipping coverage you don’t need or you already have through another source.

Levels of coverage

1. Trip cancellation insurance

This is the most common type of travel insurance you’ll see offered. It basically ensures you’ll get your money back if your flight, hotel or activity is cancelled.

Typically, it covers a more generous range of cancellation reasons than a standard refund policy from an airline or hotel.

For example, if you need to cancel due to a medical emergency, but you’re past the airline’s refund deadline, trip cancellation insurance would reimburse you.

While policies vary, most include the following covered reasons for canceling a trip:

• Medical emergencies including illness or injury. This sometimes also covers cancelling due to a death in the family.
• Work obligations or job loss. This includes unexpected work emergencies or having your previously-approved vacation time revoked. It also includes a job loss, but not if you voluntarily resign.
• Jury duty
• Inclement weather or natural disasters. This includes severe weather that causes your flight to be canceled or weather at the destination that renders your hotel or vacation rental uninhabitable.
• Other covered reasons include terrorism, epidemics and other incidents that force you to cancel your trip.

It’s important to note that an insurance policy would only kick in here if the ticket or reservation was nonrefundable.

If you have the option to request a refund directly from the service provider, do that first. If you’re denied and your reason for cancellation is covered by your travel insurance, you can file a claim at that point.

Do you need trip cancellation insurance? Depending on how you booked your trip, you might already have some degree of trip cancellation protection built in. Many travel rewards credit cards offer some trip cancellation protection as a perk, for example. If it is a perk your card offers, read through the fine print to see exactly what it covers and how it works.

Next, check the refund policies of the airline, cruise, hotel or other service providers you book with. Some are more generous than others, especially if you’re paying for upgraded fares or accommodations.

Between the standard refund policy and your credit card’s trip cancellation insurance, you might already have enough coverage for your peace of mind. But for more expensive vacations or times of uncertainty when you think you may need to cancel the trip, it’s worth looking into additional coverage.

2. Travel medical insurance

Travel medical insurance is like a basic health insurance policy to cover you when you travel abroad. It typically won’t cover a routine exam or preventative care – which you’re unlikely to be doing on vacation anyway — but it does cover emergencies, unexpected illnesses or injuries while you’re traveling.

Do you need travel medical insurance? If you’re traveling domestically, probably not. Your own health insurance should be enough to protect you out of state. If you’re traveling abroad, though, it’s a good idea to get travel medical insurance.

But check your existing health insurance policy first. While it’s not common for health insurance to cover you abroad, some policies do offer limited coverage for medical emergencies.

Some travel credit cards also offer travel medical insurance as a perk. Look through the full list of benefits to see if yours does. Again, if it does, call the company to find out how it works.

3. Cruise travel insurance

Cruise insurance is a special type of travel insurance that adds in all the unique circumstances that come with going on a cruise.

Got lost at a port of call and your ship left without you? Cruise insurance will cover you. Need to leave your cruise early because of an emergency back home? Cruise insurance will cover you.

In many cases, cruise travel insurance also has medical coverage rolled into it. And that coverage includes cruise-specific coverage like paying for the helicopter that has to airlift you from the ship to the nearest hospital on land if you suffer a medical emergency that can’t be treated on board.

Do you need cruise travel insurance? If you’re going on a cruise, yes. There are many unique situations that apply to a cruise that aren’t covered by a standard travel insurance policy.

The cruise operator you book with may offer insurance of its own. But it’s a good idea to shop around and compare policies from independent travel insurance companies before buying the cruise’s insurance. You’ll often find more coverage at a lower price by shopping around.

4. Cancel for any reason travel insurance

Cancel for any reason (CFAR) travel insurance is basically an enhanced version of trip cancellation insurance. While trip cancellation insurance will reimburse you for nonrefundable bookings, it only does so for a select range of covered reasons. CFAR travel insurance allows you to cancel for just about any reason at all.

Here are some of the additional reasons you’d be able to cancel your trip for with CFAR travel insurance that would normally be excluded from standard trip cancellation insurance:

• Foreseeable events that you knew about when you booked the trip, like a named storm or a planned airline strike.
• Pre-existing medical conditions (which might otherwise be denied by a standard policy because they are foreseeable).
• Pregnancy
• Fear of travel
• Changing your mind

Do you need “cancel for any reason” travel insurance? This kind of unrestricted coverage is nice to have, but not strictly necessary unless there’s a high risk you might need to cancel a trip last minute. If that risk isn’t related to one of the covered reasons under a standard trip cancellation insurance policy, it might be worth upgrading to a cancel for any reason policy.

5. Annual travel insurance

Annual travel insurance — or multi-trip travel insurance — is a more cost-effective coverage option for frequent travelers, or even those who just have a lot of trips on the calendar this year.

In terms of coverage, it’s almost the same as any other travel insurance, though there may be some special limits and exclusions that apply to a multi-trip insurance policy.

The biggest difference is that it usually doesn’t come with trip cancellation coverage. So it’s a good idea to get a travel rewards card that offers that as a perk to cover that gap if you do get annual travel insurance.

Do you need annual travel insurance? How frequent of a frequent traveler do you need to be for annual travel insurance to make sense? Here are some scenarios where it might be worth shopping around for a multi-trip insurance policy:

• You’re planning to take three or more trips over the next 12 months. With three or more trips a year, an annual policy might be more cost effective than buying separate single-trip policies for each vacation.
• You tend to book spontaneous, last-minute trips. Some types of coverage aren’t available if you buy travel insurance too close to the date of departure, usually within two or three weeks. An annual policy ensures you’ve got full coverage even if you booked the trip last minute.
• You only need travel medical insurance. If you already get trip cancellation coverage through your credit card, you might only need a policy for the medical coverage. In that case, compare the rates of a single-trip policy and annual travel medical insurance.

Follow these guidelines to make sure you’re getting the right travel insurance coverage and that you are not getting coverage you don’t need or that you already have through another source. Besides being worthwhile financially, it will give you peace of mind leading up to and during your trip.

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Rachael Green is a personal finance writer at Kiplinger.com. For more on this and similar money topics, visit Kiplinger.com.

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