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What is Travel Insurance – How You get Benefit

You’re planning a trip and someone asked you if you have travel insurance. Wait what? Yes, at this point it makes perfect sense to ask (and ask on the internet): What is travel insurance?

For years I knew nothing about travel insurance and went without it. Now that I know what I’m doing, I’ve come to the conclusion that if you can’t afford travel insurance, you can’t afford a trip.

Essentially, travel insurance covers costs arising from unexpected events such as a canceled trip, lost luggage or medical treatment.

It’s important to understand how it works so you can choose the right plan. Ready? Let’s get straight to the details of travel insurance.

How Does Travel Insurance Work?

If you’re just here for a quick and dirty answer, let’s get straight to the point.

When you travel, you take risks whether you know it or not. Spend big on flights, hotels, rental cars and more. But what happens if your trip is canceled? Oops, looks like you’re out of a lot of money.

Also, did you know that regular health insurance companies typically do not provide coverage outside of your home country?

Travel insurance protects you from unexpected events like these. You pay a company a relatively small upfront fee in exchange for guaranteeing that it will cover the costs covered by a particular policy.

Travel insurance typically includes two different categories of coverage: travel insurance and emergency medical insurance.

  • Travel insurance covers travel costs. If your trip is canceled or interrupted (for an insured reason), the company will reimburse the costs. Travel protection can also include reimbursements for lost luggage, delayed flights, rental car damage, and more.
  • Emergency health insurance is exactly what it sounds like. If you become injured or become ill abroad, your regular health insurance may not cover your treatment. Travel health insurance includes medical care abroad or emergency medical evacuation if necessary.

Here it is. These are the basics of how travel insurance works and no, it’s not that complicated. If you want to go into more detail, let’s move on.

Different Types of Travel Insurance

Did you know that there is more than one type of travel insurance?

Yes, it can be divided into different categories, from individual travel insurance to long-term healthcare for digital nomads. The type of insurance you need depends entirely on your trip, your destination, your travel frequency and your personal preferences.

  • Comprehensive insurance for a single trip is often the best choice, but not always. Here you will find the main types of travel insurance so you can choose the right type of insurance for you.
  • Comprehensive travel insurance covers every aspect of your trip, from luggage to trip cancellations to emergency medical costs. For most people, I usually recommend this. I will soon delve into all aspects of comprehensive travel insurance.
  • Travel health insurance only covers medical costs, so you will not receive travel insurance. Travel health insurance ranges from emergency insurance to comprehensive health care for your stay abroad.
  • Travel insurance for a single trip Insurance is exactly what it sounds like: travel insurance for a single trip. Enter your destination and the travel dates to be covered during your trip.
  • Annual travel insurance is, again, pretty simple. Instead of just covering a single trip, annual plans cover all trips for an entire year. Please note that the number of days abroad covered during the year is often limited.

Nomad travel insurance (like SafetyWing’s Nomad insurance plan) is designed for people living outside their home country long-term. The extension generally takes place monthly.

What Does Travel Insurance Cover?

Travel Insurance Coverage

Any travel insurance policy consists of many elements and sometimes the legal terminology can be difficult to understand. The most important thing is to understand what is covered and what is not. After all, you want to know what you’re paying for, right?

There are many types of travel insurance; Essentially, they simply combine different covers. Here are the most common things covered by a plan and how that coverage works.

Trip Cancellation Coverage

If you have a lot of prepaid, non-refundable travel expenses, the thought of having to cancel your trip can be scary. You’ve invested hundreds or thousands of dollars in your next trip and would lose all of that money if your travel plans changed.

But life happens, and there’s always the chance that you’ll get sick, that a natural disaster will happen, that your house will flood, that you’ll be called for jury duty, or that something else bad will happen that causes you to cancel your trip .

This is where travel cancellation protection comes into play. If you have travel insurance, you can make a claim and the company will reimburse you for the total cost of your trip.

Yes, it’s really interesting.

It is important to know that you cannot simply cancel for any reason and expect a refund of the trip price. Most insurance policies pay reimbursements only for “covered reasons.” Examples of covered reasons include serious illness for you or a family member, loss of employment, a natural disaster or terrorist attack at your destination, or other unforeseeable events.

Reasons not covered typically include things that are foreseeable in advance, such as ongoing civil and political unrest, severe weather due to a predicted tropical storm, or “because I want to.”

Cruises are also not always covered by typical travel cancellation insurance. So make sure your plan covers cruise ships if you need it.

Cancel For Any Reason

If you want peace of mind, we recommend getting CFAR (Cancel for Any Reason) coverage. CFAR is exactly what it sounds like: You can cancel your trip for any reason, and the insurance company will reimburse you for any non-refundable costs for hotel stays, flights, and more.

However, keep in mind that CFAR insurance costs more.

Trip Interruption Coverage

Trip interruption is similar to trip cancellation insurance, but it covers travel expenses in case you have to cut your trip short after you’ve already departed (while trip cancelation is for before you leave).

Trip interruption coverage typically has similar rules and limits, so you can just think of it as an extension of trip cancellation.

Good trip interruption coverage also includes coverage for travel costs to return home. That’s a great benefit so you don’t have to pay your own way home if anything goes wrong.

Trip Delay Coverage

In addition to trip cancellation and interruption, comprehensive travel insurance usually also covers travel delays. This means they help cover inconvenience and additional costs caused by flight delays, cancellations, missed connecting flights and other delays.

Typically, this is a daily amount to delay your trip to cover unexpected hotel stays or transportation costs to resume your trip.

Medical Emergency Coverage

Medical Emergency

No one wants to think about a medical emergency abroad, but it’s always a good idea to be prepared.

In my opinion, emergency medical coverage is the most important travel insurance coverage. If you have to pay for a canceled trip, it’s unfortunate, but you’ll get over it. If you become seriously ill or injured while traveling, insurance that covers emergency hospital costs could save your life. At the very least, it can save you tens of thousands of dollars in medical bills.

Travel health insurance covers expenses up to a specific dollar amount specified in the policy. I recommend at least $50,000 in coverage, but $100,000 or more is better.

And yes, virtually all travel insurance covers COVID-19 like any other illness.

Most plans also include protection against accidental death or dismemberment. Essentially, it is a type of life insurance that pays out a certain amount in the event of death or disabling injury while traveling. I don’t even want to think too much about “accidental death or dismemberment,” but it’s nice to know it exists.

Pre-Existing Conditions

Many travel insurance policies have strict limits regarding pre-existing conditions. If you have a condition such as diabetes, heart disease, or another chronic illness, your healthcare costs may not be covered.

If you have a chronic condition, I recommend looking for a plan that excludes a pre-existing condition (such as the Travelex Select plan) to ensure you have comprehensive coverage.

Secondary vs Primary Coverage

If you are looking to purchase travel insurance, you may have come across the terms secondary and primary insurance. These terms seem confusing, but the difference is pretty simple.

  • Primary insurance primarily covers the costs of medical treatments.
  • The secondary insurance only comes into effect once your regular health insurance has paid for the entire insurance cover.

Emergency Evacuation

In the event of serious injury or illness, travel insurance typically covers emergency medical evacuation. This may include transportation costs to the nearest medical facility or evacuation to your home country for treatment.

Here too, I would pay attention to the highest possible coverage limits. Ambulance flights can cost hundreds of thousands of dollars, and you don’t want to be stuck with that bill.

Baggage Loss or Delay

I keep having nightmares about losing my checked luggage on a long international flight. This hasn’t happened to me yet, but I usually only travel with hand luggage anyway. There are few things worse than being stuck in a foreign country without my belongings.

Baggage Loss Protection reimburses the cost of lost baggage up to a certain dollar amount. All you need to do is file a claim for compensation equal to the value of the lost personal items.

Many policies also include coverage for baggage delays or damage to personal property.

Other Travel Insurance Benefits and Options

In addition to medical coverage, trip cancellation insurance, and lost baggage coverage, most travel insurance policies include a number of other benefits that are included as standard in your plan or that you can add at an additional cost.

Here are some of the most common benefits to look for:

  • Rental car insurance in case the BMW you rented gets scratched
  • Adventure sports insurance so your medical bills are paid even if you take part in “risky” activities such as skydiving, skiing or climbing.
  • Protecting the holiday home as accidents happen
  • Electronics protection for all photographers with a lot of equipment

Travel cancellation insurance for cruises and tour operators because you don’t want to be stuck with this bill if your trip is canceled.

How Much Is Travel Insurance?

How Much is Travel Insurance?

Generally, good travel insurance costs around 5-6% of the total cost of the trip. It may seem annoying to pay for something you may not need, but it’s much better than losing tens of thousands of dollars if something goes wrong. Standard plans range from under $100 to a few hundred dollars, depending on the trip.

Of course, the price depends on the respective insurance company and the tariff you choose. I recommend you shop around to find the best travel insurance for your money.

If you really can’t stand paying for comprehensive insurance (and aren’t worried about missing out on non-reimbursable expenses), you should at least get travel medical insurance. Heymondo has a great health insurance plan that’s so cheap you’d be stupid not to get it. This insurance can give you peace of mind during your trip.

One thing to keep in mind: Some credit cards include travel insurance. It’s worth checking with your credit card company to see if your credit card offers insurance coverage.

Is Travel Insurance Worth It?

The answer is short: Yes, it is worth taking out travel insurance.

For the peace of mind and financial protection you receive, the cost of travel insurance is a small price to pay, especially considering what you could lose if something bad were to happen. I don’t like the idea of losing thousands of dollars in out-of-pocket costs or tens of thousands in medical bills.

Still not convinced? You can find out why travel insurance is worthwhile in a detailed article. It’s worth a read if you’re still undecided.

How Do You Buy Travel Insurance?

Luckily, getting travel insurance is easy: you don’t have to deal with pushy travel agents. Simply go to a travel provider’s website, enter your destination, travel dates and age and you will immediately receive a quote for the various plans of your trip. It’s also worth checking with your credit card provider, as some credit cards include travel insurance!

I highly recommend doing a little shopping to find the best travel insurance plan and price for you. SquareMouth is a great website that gives you deals from dozens of different providers so you can compare different plans in one place. However, since not every single company is searched, it’s worth checking a few more places.

List of the best travel insurance companies is a good place to start. We’ve listed each company’s top solutions to help you find the best option for you.

Travel Insurance FAQs

What is travel insurance and how does it work?

Travel insurance protects you from unexpected events while traveling like illness or a canceled flight.

What does travel insurance cover?

Travel insurance covers canceled trips, emergency medical costs, lost baggage, and more.

Why would I get travel insurance?

Travel insurance isn’t expensive and protects you from heavy costs if anything goes wrong.

What is not covered in travel insurance?

Travel insurance typically doesn’t cover cancellation due to foreseeable events.

Does travel insurance actually pay out?

Good travel insurance companies like Heymondo and Allianz have a reputation for paying out claims.

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About author

Articles

Daniyal is an accomplished travel blogger boasting two years of extensive experience. Proficient in captivating narratives, Daniyal unveils the allure of undiscovered destinations and divulges insights into everything regarding traveling. Beyond the prose, he serves as the editorial architect, seamlessly incorporating editing finesse, SEO mastery, and strategic content deployment to ensure a sophisticated and enriching online travel experience.
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