The Basic Guide To Travel Insurance (It's a Good Time to Start).

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Can we all just agree that navigating travel insurance policies is an absolute pain?

There's so much fine print in them that it can be headache-inducing thinking about whether they’re even worth it. As we've seen over the past six months, we never know when even the best-laid travel plans might go haywire. Maybe paying a small amount of money upfront is just the thing we need to keep us sane in this new world of travel.

Don't make the mistake of thinking that travel insurance is a “get out of jail free” card. Meaning, in this world, travel insurance can be incredibly specific: for instance, the reasons for cancelling and interrupting a trip must be listed to the T under “plan coverage,” such as a death in the family.¹ Point being, if something is not mentioned under the plan, it's not covered.

In many cases, like with Allianz, the number of covered reasons increases with the plan level chosen. So if you're worried about both natural disasters and the possibility of your spouse filing for divorce (actually listed in some of them!), expect to fork out extra cash for a more comprehensive plan.

For short, domestic trips that are mostly unscheduled, it may not even be necessary. However, biting the travel insurance bullet for longer overseas excursions is the smart thing to do these days.

How much coverage do you actually need?

The first thing to do before looking at travel insurance policies is to figure out how much—and what kind of—coverage is really needed. An extraneous policy focused solely on plane crashes is honestly like throwing money away for something that's more than likely never going to happen.

But the possibility of having to cancel a trip because of a sick parent, or a hurricane hitting the U.S. Virgin Islands in the middle of a Caribbean cruise is much more prevalent for most of us, putting policies that cover both trip cancellation and trip interruption at the top of a traveler's list.

Some people may or may not know that some credit cards² like the Chase Sapphire Reserve and the Chase Sapphire Preferred cards are traveler-made, meaning they already cover both of these things, with limits. For the most basic travel coverage (the cards don’t cover things like baggage, medical, and evacuation), credit cards can definitely assist.

For example: Say the flight sits on a busy runway long enough that the crew ends up exceeding their shift hours, and your plane can’t take off until it secures a new crew. This in turn causes you to miss your connecting flight. Travel insurance may not cover this because it's not a weather delay.

(Still, in this case, the airline should take care of it and put you on another flight instead).

For medical needs on the road, everyday U.S. healthcare insurance will cover emergency services across the lower 48 states and Alaska, but for everything else—especially overseas travel—having additional travel insurance can come especially handy.

In most cases, basic travel insurance policies only cover what personal medical insurance doesn't (which is often a LOT) in terms of emergency care, like prescription meds, ambulatory services, and X-rays. Medical evacuation coverage is often extra.³

It is worth noting that most overseas doctors and hospitals require payment via cash or credit upfront in places like Sweden and France, which means you'll then have to file claims for reimbursement.

Since travel insurance policies typically don’t cover items like cell phones and eyeglasses—even if they cover delayed and/or lost luggage—having backup coverage like homeowner’s or renter's insurance is important.

The latter policies usually cover personal belongings even outside of the home, so if you lose a handbag or the camera gets stolen sightseeing in Rome (or Bangkok, or Portland, Maine...) it is possible you can still file a claim through these supplemental insurances.

As an added bonus, most travel policies offer round-the-clock concierge service to help with things like identity theft, reporting lost luggage, and securing an English-speaking doctor who can assist with medical care.

The cost of travel insurance, and more extreme coverage

Expect to pay anywhere between 4 to 10% of the total trip cost for travel insurance, depending on the type and extent of coverage. Factors like age and whether there’s a pre-existing medical condition might come into play. The latter is defined differently with each provider and some won't even cover it, so shop around.

Remember, the more comprehensive the coverage, the higher the cost. If it seems like if you’re laying down lots of moolah for a trip, perhaps make sure it is being invested in a more comprehensive insurance plan, seeing as there's much more to lose financially if those travels go south. (Figuratively, not literally.)

For example, along with standard coverage such as lost baggage, AXA Travel Insurance's Platinum plan also helps with fees associated with boarding pets at home should you be stuck abroad, or having to rent skis or snowboarding gear if your own equipment is damaged on the way to a destination.

For those of us planning on lots of travel next year, some providers offer multi-trip annual policies that can save money, and the time associated with rebooking a new policy each time. One caveat when comparing both single and multi-trip policies is that most providers do not cover places for where the U.S. has issued heightened travel advisories.

There may be exceptions if the insurance was purchased before the advisory went into effect. It's something to be aware regarding, so read all policies carefully before spending the dough.

Many travel insurances also don't cover adventure activities like extreme skiing and deep sea diving. If that sounds like something you'd do, there are plans out there like Arch RoamRight's Pro Plus plan, which includes an optional upgrade for hazardous sports, including skydiving and bungee jumping.

Meanwhile, other providers won't cover lost or stolen musical instruments (though home or renter's insurance should cover these if that's a thing).

Though some policies are starting to introduce COVID-19 coverage—it’s a relatively new thing—if the cancellation is solely because there's a pandemic still happening, chances are you're most likely on your own.

However, cancel for any reason (CFAR) insurance lets travelers recoup up to 75% of their travel expenses for reasons unspecified, including the current crises at hand. It also lets travelers recoup things that typically aren't covered by standard policies, such as an unapproved visa. Most travelers purchase it as a safeguard in addition to their standard travel insurance.

Travel insurance is by no means perfect, but for longer, pricier trips, it is worth laying down a marginal amount of cash upfront. This will keep things from going south should that slip along the Champs-Élysées result in an ER visit, or you end up sharing your Barbados vacation with the hurricane from hell.