Why You Need Travel Insurance

Coverage for Your Health, Flight, and Property

By Volker Poelzl

Don't forget health insurance while overseas.

The decision to buy insurance for your trip is a very personal one. Some travelers never consider insurance for their travels, while others want to ensure they are covered for every imaginable incident. Basic travelers' health insurance is advisable for most travelers. Still, other benefits, such as theft or flight delay coverage, depend on the type of trip you are taking. Budget travelers rarely get insurance coverage for their baggage. However, suppose you are traveling with a laptop computer, an expensive camera, or other valuable items. In that case, it might be a good idea to purchase insurance.

Age and previous travel experience no doubt influence travelers' decisions about getting insurance. I have met a few travelers in their twenties who are concerned about travel insurance. I have realized that the more I travel, the more likely it is to lose a bag during a flight, have items stolen, or have unexpected medical expenses. Over the years, I have suffered the loss of two laptop computers, three SLR cameras, various backpacking gear, stolen credit card information, and minor bouts of illness. These experiences haven't made me a cynical traveler. Yet, they have made me realize that accidents can happen to anyone and that some basic travel insurance can be valuable.

Finding the Right Coverage

Insurance for travelers can be a confusing issue. There are so many types of coverage and policies, and prices vary so drastically that it is difficult to make the right choice. It is best to choose from one of the larger travel insurance companies with a good reputation, or someone you know has recommended. It is also a good idea to compare different types of coverage and prices so that you know you are getting the best possible policy at the best price for your particular needs. Unfortunately, there is no way around reading all the fine print since this is where you find out your coverage. Also, try to find out the company's other services, such as 24-hour Travel Assistance or Emergency and Medical Assistance by telephone or online. Such phone or online services can be beneficial, especially when you cannot make arrangements for medical treatment on your own or need other travel-related help, including emergency funds. Some insurance companies will even arrange for direct medical treatment or hospitalization payment if you contact their emergency service, in which case you won't have to front the expenses. In most cases, you can only file a claim once you are back home. So, you must ensure that you fulfill all the requirements for filing a claim, such as receipts for medical treatment or police reports for stolen items.

To determine the type of insurance you need for your trip, you should first find out what coverage you already have. Find out the details of your health insurance and your homeowner's or renter's insurance. Your health insurance company may reimburse you for medical expenses abroad, and your homeowner's insurance may already include theft coverage. Also, check the benefits of your credit cards, such as flight delay, trip cancellation, lost or delayed baggage, collision damage waiver for rental cars, accidental death and dismemberment coverage, and purchase protection. American Express, for example, offers a Global Assist Hotline that provides destination information and helps with emergencies when traveling, such as lost baggage, medical prescriptions, emergency cash, etc. Sometimes, it is cheaper to add coverage such as traveler's health or baggage insurance to an insurance policy than purchasing coverage from a different company.

When You Need Travel Health Insurance

There are many types of health insurance policies for travelers. The kind of trip you plan determines the type of health coverage you should get. You should first assess your needs and sort through the maze of available policies. How long will you be traveling, and what are your primary activities? Many specialized policies are available, such as insurance plans for couples, families, or small groups and policies for extreme sports and athletes. Suppose you plan hiking, mountaineering, or descending a jungle river in a canoe. In that case, getting comprehensive health coverage that includes Air Ambulance and Emergency Medical Evacuation might be a good idea.

To select the traveler's health insurance policy that is best for you, it is likewise necessary to clarify the often vaguely described details by carefully reading the contract. Call the company before signing up if you are in doubt, and ensure all your questions are answered. Most insurance companies provide a variety of plans that offer you a choice of fees, deductibles, and covered services. Typically, the higher the deductible in your insurance plan, the lower your cost for the coverage, and vice versa. Find out how to proceed in case of hospitalization or emergency evacuation. In such an event, you must notify the insurance company immediately. Ensure you get all the documentation you need for your insurance claim, such as medical treatment and medication bills.

Assume you are traveling to a country with few health threats. In that case, consider a policy that only covers medical emergencies such as hospitalization. On the other hand, if you are planning a trip to a tropical or developing country where many infectious diseases are present, consider a type of coverage that includes doctor's visits and medication in addition to medical emergencies. I have traveled within many tropical countries, and several times, I had to see a doctor for minor health problems. Consider your insurance does not cover a doctor's visit. In that case, you can go to a clinic in the public health system, where treatment is usually very affordable. But suppose you prefer seeing a private doctor or a specialist while traveling. In that case, the cost of treatment will go up significantly, and you should choose a policy that includes doctor's visits as well.

Trip Cancellation Insurance

You can sign up for a trip cancellation policy to be covered for an unexpected trip cancellation and have your expenses reimbursed. Travel agents routinely offer this type of insurance. Still, you can also choose it with a comprehensive travel insurance package. Some credit card companies also provide this type of coverage for a low fee if you charge your airline ticket to their card.

Flight Delay or Lost Baggage Insurance

Such policies will pay you a lump sum if your flight is canceled or delayed or your baggage is delayed or lost. Flight Delay or cancellation coverage is handy for short-term travelers who will lose a day or more of their vacation if their trip is interrupted by a delayed or canceled flight. Delayed or lost baggage coverage is also helpful since it reimburses travelers for the cost of items they had to purchase while waiting for their delayed baggage. Keep in mind that the airlines' liability for delayed or lost baggage is very minimal, and only additional insurance can guarantee that the total value of your lost items will be replaced. Many comprehensive travel insurance packages include this type of coverage and health insurance. Even if you pack and travel lightly, the replacement cost of lost baggage and its content is usually quite a bit higher than the compensation offered by airlines. A nice backpack or suitcase can easily cost several hundred dollars. Adding the replacement value of clothing and personal items can easily exceed the amount airlines pay. Airlines in the U.S. have a much higher liability limit for domestic flights than international flights. The limit for lost, delayed, or damaged baggage is US$3,800 per passenger on a domestic flight, compared to US$1,700-$1,800 on international flights. You can buy excess valuation insurance from airlines, but it only covers the loss of baggage and not damage. As with standard airline liability, cameras, computers, jewelry, etc., are not covered.

Baggage and Personal Effects

In contrast to the Lost Baggage coverage, which is only valid for flights, this coverage is much more comprehensive. It covers your baggage and personal belongings against loss, damage, and theft. At the same time, you travel, including items not covered by the airlines' lost baggage liability, such as laptop computers, cameras, etc. Ensure you get enough coverage to cover all your valuable personal items. Read all the fine print to find out what items are covered before you buy a policy. This may take some time, but it is worth it. Keep in mind that there is often a deductible for this type of coverage.

To make it easier to file an insurance claim, you should document any valuable items you are taking using photographs. Gather the original purchase receipts and keep them handy when you return them. While traveling, collect the receipts of your purchases and keep them with you (don't check them with your baggage). Also, determine precisely what additional documents you need to file your claim. Be prepared to travel to the local police station to file a theft report. Ask the local tourist information center where you can file a report, or read the section on travel safety in your travel guide. For example, Brazil has three police forces, but only one handles theft.

Budget Considerations for Levels of Insurance Coverage

For short-term travelers, comprehensive travel insurance is varies in affordability, with many taking chances in not calculating the risks versus the peace of mind. Those who travel for several months may consider medical coverage with lower benefits and a higher deductible to keep costs down. Basic medical coverage with a US$500 deductible costs US$25-100 per person per week depending upon your age, (but do check the ever-increasing insurance rates offered). Still, any additional coverage will significantly raise the cost of insurance. For example, a premium travel insurance package, with comprehensive trip cancellation or delay, baggage delay or loss, theft, accident, and sickness medical expenses for a two-week trip to Europe can cost US$100-600 depending upon age, and the same coverage for a three-month trip is often offered in the US$4,000-US$12,000 range, roughly calculating 5%-10% of the cost of the trip.

Short-term travelers generally have a job to return to when on a paid vacation. In contrast, long-term travelers often don't have as much disposable income and must budget their expenses more carefully. There are also low-cost insurance policies specially tailored for students. If you fall into this category, you should contact student travel agencies to learn about the types of insurance they offer. For example, a three-month travel insurance policy for Europe offered by Worldnomads starts from anywhere from US$430 for a standard plan to $660 for additional assistance services, depending upon your destinations and other factors. Worldnomads also offers a comprehensive set of travel insurance policies for long-term travelers at a reasonable price, and is a favorite for many taking around-the-world-trips.

The best travel insurance coverage is the one with which you feel safe and comfortable. There is no point in saving a few dollars on coverage only to spend your trip worrying about health and belongings. If you take a little time and research the different options, finding coverage for your insurance needs and your budget should be easy enough.

For a list of companies that offer travel insurance, see our Insurance for Travelers and Expatriates directory, where you can find articles on various aspects of important and often neglected insurance.

Volker Poelzl is a Living Abroad Contributing Editor for TransitionsAbroad.com. He has extensively traveled around the world and has been lucky to return in good health and with most of his belongings.