Those that have followed this blog for any length of time know I love to travel. By now you also probably know I like to mitigate risk. How do you mitigate risk while traveling? Well a big way is to buy travel insurance.
What is Travel Insurance?
Travel Insurance comprises a broad range of products. These can really be grouped into 3 main categories:
- Those that cover reasons for canceling or cutting short your trip. These are commonly referred to as Trip Cancellation Insurance.
- Those that cover medical issues while in locations where your regular insurance is not active, often delineated as travel medical insurance.
- Finally there are plans that cause death, injury or becoming disabled during travel. These are a fairly broad category including Accidental Death and Dismemberment, funeral expenses, and general life insurance.
These 3 categories are separate from the rental car insurance we previously talked about. Let’s take it one at a time regarding options, impact, and things you should consider.
Trip Cancellation Insurance
Let’s start with Trip Cancellation Insurance. Trip Cancellation Insurance covers prepaid and contractually obligated charges where you cannot use those services due to trip cancellation. The first thing to understand about this insurance is what counts for valid reasons for cancellation differs by policy. Depending on policy it could be anything from Death, Illness, Jury Service, Disease, death/illness in the family, or a disaster in the intended area of travel. Other reasons can be insured against using specialty policies. Each policy is different. They do typically exclude countries with major existing travel issues or high risk countries.
How to Purchase Trip Cancellation Travel Insurance
Trip Cancellation Insurance can be purchased per trip or as a general purchase. Some credit card companies even throw coverage in for free. In general you are probably best off considering either general insurance booked separately from your travel carrier, not buying coverage, or the free credit card insurance. Shopping around for insurance will ensure you get the best coverage for your money, rather than just throwing in with whatever over priced option is available. Still the cost of a cancelled trip is a defined cost, not open ended. At worst it can only cost you the amount of your trip. If you recall from my post on insurance I tend to insure only those costs that are unbounded. So my personal choice would be to skip this coverage or get the credit card coverage.
Travel Medical Insurance
Travel Medical Insurance as noted covers medical issues or transportation for medical reasons incurred during travel. Obviously this often comes with several exclusions. This can include pre-existing conditions, elective surgery, war type exclusions, or exceptionally reckless behavior. But ignoring the obvious exclusions that apply to any medical insurance this is probably the most important travel insurance you can buy. Still the value can vary for an individual.
Travel Medical Insurance Needs Depend on Existing Medical Coverage
To understand how important travel medical insurance is you must first understand your existing medical insurance. There are multiple types of medical insurance. The two most common are PPO and HMO. The real difference is an HMO typically requires you to go to doctors in network and get your primary care physicians approval before most care. A PPO meanwhile has both in network and out of network coverage. Typically a PPO does not require a referral from your primary physician before coverage.
No doctors out of network can often means no coverage away from the location of the network. Also getting in touch with your primary care physician remotely might be difficult. With an HMO you might not even have coverage outside your region. It is very important you understand your existing coverage if you have an HMO. That being said even though PPO has out of network coverage it may not cover you in other countries. It’s best to check your personal medical insurance for policy coverage out of country before making a decision on travel medical insurance.
Medivac and Travel Medical Insurance
My personal PPO covers medical expenses in most countries. However I have to pay for the care up front and am later reimbursed. Provided I can front the money that’s not all that bad a deal. But even coverage in these countries is not the end of the decision. You see the second major piece of travel medical insurance covers transportation. When you travel there is always the potential you could be in a location without sufficient medical facilities. If these facilities are insufficient then the transportation portion of this medical insurance will cover transporting you to a facility with sufficient medical care. Not all policies cover this transportation.
Not all Travel Medical Insurance Transportation Coverage is Equal
Even medical travel insurance policies that do cover transportation don’t always cover it in the same way. You see, some travel insurance policies allow you to make the decision on whether to be transported elsewhere. Others require it be made by the local doctors. Still others only allow the insurance company to make the decision.
The ramifications of the latter two can be significant on your well being. Say you have to stay in a hospital to recover from a travel related incident for months. The later two mean you’ll be spending your days away from home and your family so long as the defined group decides the medical care at your present location is sufficient. This is before you think of the incentives the insurance company and local doctors might have for keeping you remote. The last thing you probably want is to be stuck abroad for months in a foreign hospital. Still as you’ll see I have chosen to accept this risk aspect.
Transportation as an Unbounded Risk, What I do
Paying for transportation on your own should can be a massive unbounded cost. As such I always try to insure myself for medical transportation in some way. I still must admit most often I use policies where others control the transportation decision despite the risks. Typically credit card insurance of this type does not leave the decision in your hands. Before my current PPO provider I tended to utilize card policies.
These days I use my regular medical insurance for this coverage. As with other travel insurance you can also typically purchase this insurance on a per trip or general basis. I do buy a separate rider if I feel I am going to a higher risk area or participating in a higher risk but still covered activity. Currently I also have special coverage as provided by my employer for work travel.
Accidental Death and Injury Insurance, I’m not a Fan
Finally we have accidental death and injury type travel insurance. I’ll be honest, I don’t really see the point here if you have existing life and disability insurance. Like life insurance tied to your mortgage it seems like a solution looking for a problem that does not exist. Unlike medical insurance your existing life insurance is active regardless of where you travel. So there is no special reason to insure for anything else.
Travel Insurance Options
In addition to these major groups there are a few additional insurance options available for purchase. For example you can insure for issues caused by your airline or other carrier like loss or delayed baggage. Nice addition, no doubt, but I wouldn’t be too concerned with ensuring your policy has this. After all with enough of a delay the law requires airlines to reimburse you for lost or delayed luggage. The limits of the law will be much less than a purchased policy, but again you are still talking about a bounded liability. Also some policies offer emergency assistance via staffed call centers. I suspect in any real emergency I’d rather talk to someone on the ground rather than in some remote call center. I consider these options nice to have.
The Value of Travel Insurance Depends
So in summary, I feel you should never travel without travel medical insurance if you go somewhere your insurance is not active. However it is extremely important to understand if your existing coverage is active and what the policies you are purchasing cover. Meanwhile you can skip travel cancellation insurance and death/injury type insurance. Do you purchase travel insurance? If so what types?