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What Does Travel Insurance Really Cover?

Many travelers purchase short-term insurance before they leave on their vacations in order to have coverage in case of unforeseen emergencies.  However, these quick-fix travel insurance plans don’t always leave you as well-covered as you would like.  We looked at Travel Insured, Travelguard, and Allianz Travel Insurance to see what travel insurance actually covers, and what may fall through the cracks.

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Cancellations

People are forced to cancel their vacations for any number of reasons.  The major travel insurance companies offer cancellation coverage, generally up to the trip cost, with exceptions.  The more expensive plans offer more cancellation coverage, including if your partner becomes pregnant between purchase date and travel date.  Aside from the fine print, cancellation insurance is fairly straightforward.  Optional Cancel-For-Any-Reason coverage (including work-related, which is not covered) costs extra.

There is also trip interruption coverage, where you have to leave your vacation part-way through for some reason.  The more expensive plans cover these situations up to 150% of trip cost, with exceptions.  If you purchase a Platinum, Gold, or another-precious-metal Plan (Rhodium, perhaps?), you should be covered up to the cost of the trip in case of most emergencies, but the less expensive plans have less coverage for cancellation scenarios.    Read the fine print!

Medical and Auto expenses

Many Americans think that their PPO or Medicare coverage will help defray costs of seeing a doctor in another country.  They are in for an unpleasant surprise, as American domestic health insurance does not cover you once you leave the country.  To be medically insured abroad, you will need additional medical insurance coverage.

The medical coverage offered by travel insurance companies is less straightforward.  Some travel insurance companies will get around covering pre-existing conditions if your doctor has advised you to not travel.  There are caps to your medical expenses abroad, and they don’t cover accidents related to sports or recreational activities, unless sports coverage is purchased separately.  Some list many general exclusions, from specific ones like the inclusion of alcohol use when the injury occurred, to the vague “expected or reasonably foreseeable events or problems.” Read the fine print!

They will also offer very comprehensive automotive insurance coverage, usually up to $25,000.  Wish we had those rates for that price back home!

Evacuations

Events that require emergency evacuation, such as natural disasters, political uprisings, or medical emergencies, are rare, but costly occurrences.  Evacuation insurance coverage is standard in most packages, and for good reason.  Costs for evacuations of American citizens are ridiculous, as in costing thousands of dollars for short flights.

Loss of Personal Items or Luggage

Loss of personal items through the airline or theft is a common concern of most travelers.  However, it appears most insurance companies have not caught up with our modern, expensive and techno-centric times.  Most travel insurance covers loss or theft of luggage for up to $2500, with per article limits of $250.  So your MP3 player, smartphone, laptop, or tablet computers are individually un-coverable.  There are also limits like a “combined maximum limit of $500 for valuables”.   The definition of valuables varies from company to company, but at least one includes cameras, computers, cell phones, and other electronic devices under its $500 cap.  And if you want to claim individual items were worth over $150, you’ll need receipts as proof.

So, what are you really paying for when you purchase travel insurance?  Basically, along with many things that are rarely used, you’ll get cancellation coverage, evacuation coverage, some medical coverage, and a pittance if your expensive items are stolen or lost.  We’d recommend reading through travel insurance plans carefully and early, selecting one based on your intended destination and activities, and leaving your valuables at home.  Safe travels!

Photo Credit w4nd3rl0st (InspiredinDesMoines)

Thierry Godard Thierry Godard is former Editor at SmartAsset who writes on a variety of personal finance issues. He is an expert on topics including home buying, saving money and budgeting. Thierry has a degree in Journalism from CUNY Baruch College.
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