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Travel Insurance
DEFINITION of ‘Travel Insurance’

An insurance product designed to cover the costs and losses, and reduce the risk associated with, unexpected events you might incur while traveling. It’s often pitched as the best protection for those traveling domestically or abroad. Many online companies selling airplane tickets or travel packages allow consumers to purchase travel insurance (also known as travelers insurance) as an added service. Some travel insurance policies cover damage to personal property; rented equipment, such as a rental cars; or even the cost of paying a ransom in the case of a kidnapping.

BREAKING DOWN ‘Travel Insurance’

According to the Insurance Information Institute – an industry organization dedicated to improving the public’s understanding of insurance – the main categories of travel insurance include:

  • Trip cancelation/interruption
  • Baggage/personal effects coverage
  • Major medical expenses
  • Accidental death/flight accident

Travel insurance is frequently purchased as a package that includes several different types of coverage. Many travel insurance plans sold in the U.S. also include 24/7 emergency travel services, such as replacing lost passports, cash wire assistance and re-booking canceled flights.

Trip cancellation/Interruption

As its name implies, trip cancellation insurance (sometimes known as trip interruption insurance or trip delay insurance) reimburses you for prepaid, nonrefundable travel expenses if you have to cancel the trip due to an illness, a death in the family or another mishap listed in the policy, or if you or one of your immediate-family traveling companions is forced to return home earlier than planned. This type of policy also kicks in if your vendor (airline, cruise line or tour operator) goes out of business. The insurance pays the difference between the refund you get from the vendor and the amount you originally paid for the trip.

Policies differ in terms of which reasons are acceptable, but it’s fairly typical for this insurance to cover cancelation or interruption for the following reasons:

  • Sudden business conflicts
  • Change of mind
  • Delay in processing your visa or passport
  • Illness or injury
  • Weather-related issues

Some policies may include additional coverage, which would insure you against one or more of the following events:

  • An act of terrorism
  • An accident on the way to the airport
  • Fire or flood in your house
  • Jury duty

And some policies offer “cancel for any reason” coverage for an additional cost.

Baggage Insurance/Personal Effects Coverage

This provides coverage if your belongings are lost, stolen or damaged during your trip, including while you travel to and from your destination.
Medical and Major Medical

This insurance can help you cover medical expenses and locate doctors, healthcare facilities and foreign-language services. It covers you if you need to be airlifted to a medical facility because of an accident or sudden illness, if you are sick or injured and have to spend an extended time in a foreign hospital, or if you need to be flown home to receive proper care – something known as a medical evacuation (all of which can easily reach $10,000 out-of-pocket). There are two basic types:

  • Travel medical insuranceprovides only short-term medical coverage; the duration can be anywhere from five days to up to one year, depending on the policy.
  • Major medical insuranceis for travelers who are planning to take longer trips of six months to one year or longer.

Whether you purchase health insurance separately or you already have it, find out if you will need prior approval from your insurance company for any type of care. Be sure to you read all the fine print to see what preexisting medical conditions, if any, are excluded before you sign up; don’t assume the coverage is the same as that of your regular health plan.

The U.S. government urges Americans to consult their medical insurers prior to traveling abroad to determine whether a given policy applies overseas. For example, your medical insurance may cover you in the U.S. and Canada, but not Europe.

Also, when traveling, always register your travel plans with the State Department through its free online service Travel Registration website; this way, the nearest embassy or consulate can contact you if there is a family emergency or a state or national crisis while you’re traveling.

Accidental Death and Flight Accident

Similar to life insurance, in the event of an accident resulting in death, disability or serious injury to the traveler or a family member traveling with him or her, this type of policy pays benefits to surviving beneficiaries.


Original Resource: Investopedia

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