In the wake of Covid, travel insurance sales have soared with the rebound in travel as people seek to protect their investments against flight delays and cancellations, extreme weather events and the persistence of the virus. But travel insurance is complicated with a range of benefits, inclusions and prices. Here’s what you need to know before you buy.
Know what is covered
Generally speaking, travel insurance covers unforeseen events, such as family illness, job loss, or natural disaster, that force you to cancel or cut short a trip. It can also apply in the event of a strike in a transport company, a terrorist attack in your destination or the bankruptcy of your tour operator. These are known as covered reasons. Most policies also include medical cover, which is useful abroad where your health insurance may not cover you.
Although policy prices vary depending on age, length of trip and type of cover, expect to pay between 4-10% of your total trip cost to be insured.
Cover non-reimbursable expenses
Travel insurance was designed to protect expenses you can’t otherwise recoup when things go wrong. Think non-refundable Airbnb reservations or the cost of a Galapagos cruise.
If your hotel is refundable and you can recover the value of your flights in credits, you can skip travel insurance.
Buy close to booking
Travel insurers say the best time to purchase travel insurance — which usually takes effect within a day of purchase — is right after you’ve planned your trip to have the biggest window of cover possible. A lot can happen between booking a Europe Christmas Market cruise in June and departing in December.
With many plans, purchasing travel insurance 10-14 days from your first travel payment entitles you to “advance purchase” benefits such as a waiver for pre-existing medical conditions that have a impact on travel. If such a waiver is included, it is usually prominently displayed in a benefits summary, so read it carefully.
“Not all plans have a pre-existing condition waiver,” said Suzanna Morrow, senior vice president of InsureMyTrip.com, an online insurance marketplace. “If I have heart disease and something happens, I don’t want it ruled out, so I should buy a policy within 14 days of the first dollar spent.”
Protect yourself from the weather
You cannot control the weather, but you can insure yourself against its unexpected disturbances. For example, if you’re ready to take advantage of great rates in the Caribbean during the height of hurricane season, purchase your insurance immediately after booking so that if a hurricane develops and your destination is evacuated, you’ll be covered.
“This is probably the biggest use case for travel insurance,” said Stan Sandberg, co-founder of TravelInsurance.com, an online marketplace. He advises travelers to buy early – if you wait and the storm is named, it will be too late to insure against it, as it is no longer an unforeseen event.
Similarly, for winter travel, if you have purchased non-refundable lift tickets and a storm prevents you from reaching the resort, you may be able to claim the unused portion of your ski pass.
This coverage may prove more valuable as climate change exacerbates weather events like hurricanes and tornadoes, which are considered “natural disasters” and are covered by most policies.
Pick up the phone
With the proliferation of automated insurance offers when you purchase airline tickets or tours, travel insurance can seem like a one-size-fits-all product. It’s not. Many policies, for example, exclude extreme sports like skydiving and mountaineering, although there are specialty policies that include them.
If you have a specific concern (a family member is sick or you’re going heli-skiing), the best way to find out if a travel insurance policy will cover you is to call an insurer or the helpline of a travel insurance market for advice.
“Tell them the what-if scenario and then you can get professional and accurate advice,” Ms Morrow said. “Thinking you’re covered and then having your claim denied is salt in the wound.”
Travel insurance does not cover “inconvenience”
What if you were dreading spending a week in a non-air-conditioned rental in England during a heat wave and decided against it? Most standard travel insurance does not cover a change of mind.
“Travel insurance doesn’t cover you for inconvenience,” said Carol Mueller, vice president of strategic marketing at Berkshire Hathaway Travel Protection.
A policy upgrade, Cancel for Any Reason coverage, which is not available in all states, will cover a change of mind, usually up to a few days before departure. Most only reimburse 50-75% of your costs and the purchase must be made within weeks of the initial payment for your trip. This will increase your insurance premium by 40 to 50 percent, according to insurance marketplace Squaremouth.com, which only recommends CFAR to travelers with specific concerns not included in covered reasons for trip cancellation.
A relatively new variant of travel protection, Interruption For Any Reason, works like CFAR in that it reimburses a portion of your expenses and can be relied upon if you decide to bail out while you’re on a trip for a reason that doesn’t. is not covered by standard travel insurance. Normally, you must purchase it within weeks of your initial trip payment and have completed 72 hours of travel before you can use it.
Keep records
If something goes wrong and you need to make a claim, you will need proof in the form of a paper trail. This could be receipts for clothes you bought when your luggage went missing, a hotel room required when your flight was canceled (as well as flight cancellation notices from the airline), or a doctor’s note stating that you have Covid – or another illness – and are unable to travel. (With Covid, a positive test taken at home is not considered an official document for the purposes of a claim.)
Resist the pressure to buy theft insurance
When buying a plane ticket online, most carriers offer travel insurance to cover the cost with some version of vaguely threatening language like “Do you really want to risk your investment?” when you refuse.
Do not fall into the trap. You may want to insure this ticket, but price the policy elsewhere. A recent offer to insure a $428 flight for nearly $28 on an airline’s website costs $12 to $96 with a range of options on InsureMyTrip.com.
The $12 option was closest to the airline’s offer. Caveat emptor.