How Travel Insurance Works
You may be familiar with other policies such as car insurance and home insurance. If you do not travel very often, then you might not have thought about travel insurance before. A holiday can be expensive, and comes with risks, just like driving a vehicle or everyday living in your house. This is where travel insurance comes in as a safety net for financial protection against loss. The guide below explains the ins and outs of travel insurance if you are not sure how it works.
How does travel insurance work?
Travel insurance works similarly to other insurance policies to protect your financial investment. You must purchase a travel insurance plan in advance of going on the trip. If disruptive events occur before you purchase a travel insurance policy, it will not cover you for them. Travel insurance policies can range from specific to comprehensive. It is important to choose the appropriate level of coverage for your needs in case you end up needing to make a claim. If something happens, it is likely that you will need to cover upfront costs yourself and then claim reimbursement from your travel insurance provider. However, in emergency situations, your travel insurance provider may cover the expenses upfront. It all depends on your policy, because claims will only succeed if the circumstances are listed in the cover terms. Most coverage will include emergency medical treatment, loss of luggage, or cancellations. There will be various policies available for single trips, annual multi-trip coverage, backpacking, travel in Europe, or worldwide coverage. Choosing the right one will ensure that you do not lose out if something goes wrong. This might mean paying higher premiums.
What does travel insurance cover?
As mentioned, travel insurance policies can cover a variety of things. Most policies will set the following inclusions and exclusions as standard. The extent of your cover will depend on the terms of the policy. The more that your insurance policy covers, the more it is likely to cost. This can be worth it if you have to recover pre-paid or emergency expenses. The short answer is that travel insurance normally covers interruptions, delays, cancellations, losses, and emergency medical treatment. Travel insurers should operate 24/7 support helplines to provide assistance whenever it is needed.
Travel Insurance Cancellation Cover
The primary reason most travellers pay for travel insurance is in case of cancellations. It can prevent financial loss if your pre-paid and non-refundable bookings are cancelled. You might end up cancelling your travel plans before your departure due to illness, injury, or bereavement. Travel operators might cancel their services due to severe weather, or there may be an incident at your destination such as a terrorist attack, natural disaster, or epidemic. Or you might have to cancel your holiday partway through due to any of these reasons. For package holidays, ensuring they come with ATOL protection will help as well. In some cases, when the service provider is responsible for cancellation, they will also be responsible for reimbursement. This means that you must pursue compensation through them, not through your travel insurance provider. Otherwise, you can claim for expenses for last-minute changes or get a pro-rata refund.
Travel Insurance Delays Cover
Flight delays and missed connections could disrupt travel plans and leave you out of pocket unless you can claim for them on your travel insurance. If there are unforeseen delays due to adverse weather or mechanical breakdowns, your insurance could cover the costs of food and accommodation during the delay. Or if you miss a connection due to such delays, your insurance could cover the additional transportation costs. Again, if the fault lies with the service provider, it may be up to them to reimburse you for such costs. If your travel insurance policy covers the situation, they should reimburse reasonable costs for basic needs. There might be a limited allowance according to the length of the delay.
Travel Insurance Lost Baggage Cover
Another major reason for travellers to purchase travel insurance is to cover the expenses associated with lost luggage. Unfortunately, airlines and other transport services lose passenger baggage all the time. Sometimes it is only delayed and can be transported later, but other times it may not be recoverable. Travel insurance can cover lost, delayed, or damaged baggage. For delays, you could claim up to the benefit limit for purchasing essentials in the meantime. For damage or total loss, you could claim up to the full cost of the items in order to repair or replace them. There is usually a per-item maximum, which may not cover more expensive items. If you are bringing expensive personal belongings, you should insure them under the personal possessions cover on your home insurance policy instead. It may be easier to claim on that policy in the event of theft. Always check your policy’s definition of “valuables” rather than assuming.
Travel Insurance Medical Emergency Cover
Any domestic medical treatment cover that you have in your home country is not likely to extend to wherever you go on travels abroad. Unexpected illnesses or injuries could occur during your trip, but travel insurance could cover the costs of medical treatment for you. Physician, ambulance, and hospital charges can be very expensive if you are not a resident in that country and do not have the relevant insurance. Your coverage may vary from minor dental treatment to medical evacuation (such as an airlift to a hospital or specialized treatment facility). Depending on the severity of the circumstances, you may require medically-staffed transportation back to your home country for further treatment.
Travel Insurance Exclusions
You should never just assume that something is covered by your travel insurance. It may not be unless it explicitly says so in your policy documents. Therefore, it is important to pay attention to the wording and the specified conditions. You may have to pay extra for additional coverage outside of the standard terms. This is usually necessary if your activities while travelling will include adventurous and hazardous sports. Things like climbing, skiing, scuba diving, white-water rafting, or sky diving pose a greater risk. Travel insurance will not cover you for the results of reckless behaviour, such as injuries sustained while under the influence of alcohol or drugs. It will also not cover you for pre-existing medical conditions that you did not declare when purchasing the insurance. The policy is also not likely to cover high-value items or loss of unattended or unprotected belongings. Most policies exclude disruption due to strikes or civil unrest.
How much does travel insurance cost?
The travel insurance premiums that you have to pay for your policy will depend on several factors. These factors will influence the risk of you needing to make a claim, and therefore influence the cost of your coverage. The travel insurer will consider your age and medical history, your destination and planned activities, the length and overall cost of your travel, and whether you need additional levels of cover on top of the standard policy. The greater the risk, the higher the premiums will be. And the more you want the policy to cover, the more it will cost. Annual travel insurance will save you money if you travel multiple times per year. If you only have one annual holiday, a single-trip policy should cover it. You may be able to reduce premiums by increasing the excess, but this could cost you more if you do have to make a claim. The insurer will deduct your pre-agreed excess from any successful claim payment. Excess payments can vary according to the type of claim, however. It can be nothing for a medical emergency, or the full excess for lost baggage.
How do you choose travel insurance?
Sometimes, especially when booking a package holiday, the provider will also offer their own travel insurance policy. However, this type of travel insurance is not always comprehensive, so it is best to check the fine print. It may actually be cheaper and more beneficial to visit travel insurance comparison sites to find the best option for you. That said, it is more likely to cost less if you take out insurance directly from the provider rather than through a third party. You should select and purchase a travel insurance policy as soon as possible after you have booked your trip. This will ensure that the coverage is active as soon as you might have a reason to need it. When you are checking travel insurance quotes, you should ask yourself these questions to determine the levels of cover that you need to look for: who will be going? where are you going? how long are you going for? will you be doing adventurous activities or sports? does anyone have a pre-existing medical condition? how often do you travel? which personal belongings will you take with you?
How do you make a travel insurance claim?
Make sure that you are familiar with the terms of your policy before you leave. If you can, download an electronic copy on your phone or print off a copy of your policy documents to take with you. Make a note of the appropriate contact details if you need to use them. You should then be prepared if something should go wrong before or during your trip. Contact your travel insurance provider as soon as you are able to and they can advise you on what to do. Keep records of everything relating to your claim. You will need to provide evidence like receipts, police reports, and medical notes. The insurer is likely to reject a claim if you cannot provide the relevant documentation to support it. Check that their definition of “valuables” or “close relative” matches your own. Report incidents immediately and ask for written records.