TRAVEL INSURANCE 101

Imagine you have planned the trip of a lifetime – a family cruise to Antarctica. You booked the trip months in advance; you have every detail memorized and you’ve looked at the cruise line’s instagram a thousand times, picturing yourself in each and every photo (OK maybe that’s just me!). But seriously, you have all the gear including that extra telephoto camera lens, you’ve learned every type of penguin… and then, a day before your flight, your son gets the flu, or you break your leg… and you can’t go on the trip… your bucketlist adventure that you’ve been saving up for and planning for years! 

This is where travel insurance comes into play. It’s not a fun topic – it’s complex, there’s a lot of fine print and it only helps you in [insert crises here] scenarios that you don’t even want to think about in the first place. But insurance is a necessary evil – it’s there for our own protection. We know this and understand it when it comes to our health, our homes, our cars… so why are we so reluctant to protect our investment in our precious vacations, our time off?

Now I’ll admit to you, before becoming a travel professional, I didn’t always purchase travel insurance. But now, with the stories I’ve heard and instances I’ve dealt with for clients personally, I always, always recommend that clients consider travel insurance for every trip and in fact, more often than not, I purchase a policy for my own travel as well. 

Here’s a true story to give you an example of something that actually happened to clients of mine that you probably never thought might happen to you. My clients were headed to Africa for their honeymoon – a trip of a lifetime – Cape Town, safari, the coast – 2.5 weeks to kick off a lifetime of marital bliss. We had every detail planned down to their dinner every night. Then, two days before their departure date, the airline they were flying announced a strike… and cancelled their flight to Africa – the only direct flight option available from their departure city. Now, in order to avoid losing the first few days of their honeymoon (or cancelling all together!), our best bet was to get a refund from Airline A and rebook them on Airline B – this time a connecting flight through Europe. The good news was that they could still leave everything as planned for their honeymoon. The bad news was that the new tickets (purchased 2 days before departure) were double the cost. As you can imagine for a honeymoon, this was already a pricey trip and this huge last minute flight cost was causing a lot of stress and anxiety. Enter our preferred insurance partner, Travelex, with whom my clients had purchased a full coverage policy. By the time they returned from their honeymoon, they had a check for $12,000 waiting for them in the mail – fully covering the incremental cost of the last minute flights. Now if they hadn’t had this policy, they wouldn’t have seen a dime of this money, and perhaps, if money was really tight, would not have even been able to move forward with this alternative plan and would have been forced to delay or cancel their honeymoon with no recoup on the costs. Now this is not a situation we think of often, maybe ever. But the reality is, these things happen!! Even if insurance only comes into play on 1 out of every 10 trips, that’s still worth it in my opinion. 

Now, hopefully I’ve convinced you that insurance is important and should be considered with every trip. The next step is to evaluate your options and to fully understand what’s covered and what’s not. Here’s what you should consider when evaluating travel insurance:

1 – Where are you going? Are you staying local or traveling far abroad? Is this a safe country or one that’s prone to unrest?

2 – How much did you spend on the trip? Are you prepared to sacrifice that money if something happens? 

3 – What’s the fine print? Look at everything you’ve booked for your trip – flights, rental car, hotels – what is the cancellation policy on each item? What penalty will you incur if you cancel or change your booking last minute? Again, are you prepared to sacrifice that money?

4 – Do you have cancellation coverage on your credit card? Many premium credit cards have some level of trip cancellation coverage included with your annual fee. Check the fine print on this – what is covered and for what reasons? How does this compare to a third party insurance provider? It’s also important to note that even if you do have a cancellation coverage clause under your credit card plan, your credit card typically does not include protection for other unexpected travel expenses – lost baggage, medical expenses abroad, trip interruption, etc. – all things that are covered under a traditional travel insurance policy. So it may make sense to purchase a smaller travel insurance policy for coverage in these areas with cancellation covered under your credit card company. 

There are many great travel insurance companies to consider, but our preferred partner is Travelex and I’ve been really pleased with their offering. You can review their full policy with a quote from me, but there are a few things I’d like to call out here:

  • The insurance premiums for Travelex are a function of travelers’ age and trip cost. So in order to pull an accurate quote I need to know your birthday. Travelex offers all Travel Edge (ATLAS + VALISE) clients their advanced policy for the cost of their basic policy. Another great value, is that children (under 18) are covered completely for free when traveling with a parent (one free child per paying adult), which is amazing for families!
  • It is really important to read the fine print when it comes to cancellation coverage. If there is an illness of someone in the traveling part and they have a Doctor’s note preventing them from travel, or death of an immediate family member, you can cancel your trip for a full refund. If you simply decide not to go due to a minor issue or inconvenience, that would not be a covered reason unless you purchase the “Cancel for Any Reason” add-on. This comes at a premium cost and allows you to cancel your trip for any reason up until departure date for a percentage back on all non-refundable costs (Note that the percentage refund varies by state). In order to include this add-on you must purchase your policy within 21 days of making the deposit on your trip. As of writing this post, the CFAR add-on is no longer available from Travelex for NY residents.
  • You can really purchase travel insurance at any point prior to departing for your trip, the only instances where timing comes into play are if: (1) you want to purchase the ‘Cancel for Any Reason’ premium, (2) you have a pre-existing medical condition that needs to be covered for cancellation reasons or (3) you want to be covered in case of supplier bankruptcy. In all three cases, the policy must be purchased within 21 days of making the deposit payment on your trip
  • Regardless of what level of coverage you purchase for cancellation, the advanced policy covers up to $50,000 worth of medical expenses incurred abroad (over 100 miles from your primary residence) during your travel window. This is a huge safety net and peace of mind if anything unexpected does come up while you’re traveling.
  • When purchasing the insurance, you also have the option to add additional rental car coverage (some countries excluded) and to add an “Adventure Sports” option which would cover accidents from many adventurous activities you may enjoy on a luxury vacation (example: ziplining in Costa Rica, whitewater rafting in Canada or bungee jumping in New Zealand). Depending on your trip, you may consider adding these options. 
  • As I said, credit card coverage typically does not cover much beyond some level of cancellation protection. With a traditional third party travel insurance provider, you’ll be covered for trip interruption, lost baggage and many other unexpected things that can happen on a trip. For instance, if your bag is lost and you need to purchase new clothes and toiletries for a few days… or if you miss a connecting flight and have to pay for an extra night at a hotel in some city you didn’t expect to spend the night in – those would all be reimbursable expenses through your policy.

Two special cases to discuss:

  • Medjet – Medjet is not insurance, its an annual membership program that offers you hospital-to-hospital medical transfers if illness or injury occurs during travel over 150 miles from home. While travel insurance typically transports you to the “nearest acceptable facility” if “medically necessary,” a Medjet Member is transferred to their home hospital of choice, regardless of medical necessity, for the cost of the membership and nothing more. You may also be surprised to know that Medjet memberships are fairly affordable. A family can purchase a Medjet membership for 1 year for just $399. This gives additional peace of mind that should something happen abroad, you can be transported to your home hospital for no additional cost. Please contact me to inquire about applying for Medjet membership at special rates. 
  • Coronavirus – I’ve been meaning to write this blog post about insurance for a while and it wasn’t meant to cover coronavirus at all. But with the recent “crisis” going on, I know there is a lot of confusion out there and so I wanted to mention how travel insurance comes into play specifically with coronavirus. The fact of the matter is that fear of a viral outbreak is not a covered reason to cancel your trip. This is covered under the force majeure clause that is typical in most insurance policies. If you purchase the “Cancel for Any Reason” premium coverage (within 21 days of your deposit) then you could cancel and receive a percentage refund on the cost of your trip (again varying by state). In general, I am seeing that tour operators and suppliers truly step up in situations such as this, waiving change fees to the extent possible for any concerned travelers that want to postpone their trip. Were you to travel and become sick or hospitalized on your trip, then your travel insurance policy would still help with the associated medical expenses.

Now I must remind you that I’m not an insurance expert! The above is what I’ve learned from working with travel insurance in my professional capacity and is meant to be a helpful, yet not comprehensive guide. Please do contact me with any questions about travel insurance or if you’d like to see a quote for your trip. Or you can feel free to reach out to any travel insurance provider for more information.

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