Written by Jessica on March 19, 2011
Travel insurance comes in many different varieties. It’s like a box of chocolates, only the consequence of picking the wrong policy is much worse than getting caught putting half eaten candy back in the box. This article reviews the types of insurance that are commonly associated with “travel insurance”.
Keep in mind that most travel insurance isn’t really for travelers. It’d be better to call it vacation insurance. It’s designed for cruises or other package vacations where a lot of money is spent up front. Most of travel insurance policies aren’t going to help a backpacker who doesn’t have an itinerary or a digital nomad who doesn’t have a permanent address.
I’ve broken so called “travel insurance” into 5 categories: medical insurance, emergency evacuation / repatriation, accidental death and dismemberment (AD&D), trip cancellation, and property / baggage insurance. My recommendation is to buy separate policies that cover exactly what you need, rather than trying to buy an all-in-one policy that costs too much and includes a bunch of stuff you’ll never need. I mention companies I use at the end of the article, but I encourage you to check many options as all these policies change quite often.
Standard health insurance. You aren’t home, you need to go to the doctor because you ate bad food, tripped on a pile of ruins or otherwise did something that requires the assistance of a medical professional.
- Do you already have a health insurance policy? If so, see if it usually covers you worldwide.
- Are you traveling to a place where medical care is relatively cheap? If so, is a health insurance policy really necessary?
- Deductibles, maximums and co-pays. If your office visit costs $2000, and you have a deducible of a $1000 and a copay of 50%. You’re out $1500. Ouch. Consider what you want covered. I opt for high deductibles and zero co-pay, because my biggest concern is a catastrophic event. If I’m looking at a $20,000 medical bill, I’d rather pay the deductible and know the insurance will cover the rest.
- Is dental covered? That is a big bonus is some places.
- Some policies only cover emergency (read: life threatening) situations.
- Are the countries you are traveling to in the “excluded countries” list. I’ve seen “worldwide coverage*” advertised where the * denotes a few dozen countries apparently not included in the world.
- Most policies don’t cover you in your home country. Meaning, if something terrible happens and you need to be flown home, everything that happens once you’re home is not covered.
- Activities that aren’t covered. Climbing over 20,000 feet? Mountain biking? Scuba diving? Flying in a small aircraft? Chances of being covered = Zero. Some policies offer an add-on for hazardous sports.
- Anything preexisting or self-inflicted is usually not covered. That includes pregnancy, anything drug or alcohol related and almost all mental disorders.
Emergency Evacuation / Repatriation Insurance
Generally related to health issues. If you hurt yourself bad enough that your current location cannot provide adequate care, the cost to move you to a better location or bring you home is covered. If you die, repatriation insurance covers the cost to return your remains home.
- Your mother. No, seriously. The only thing that sucks more than something terrible happening to your kids in a foreign country is having to also foot the bill to fly them home.
- Is this already covered through another policy? This insurance, like AD&D, usually comes with a medical policy.
- Will it pay to fly just you home? If you’re traveling with friends or family, there’s likely to be more than one person on that emergency flight.
- All natural disasters, wars, terrorism, and other typical reasons why you’d need to be evacuated are usually not covered.
- Some insurance companies must “authorize” your transport. This is an insanely stressful situation. When your life is on the line, who is going to take the time to find a phone, call the insurance company, find an English speaking doctor, and let the two chat about how to transport you to the hospital? I’m just saying... if it was me, forget the insurance, start a savings account called “the shit’s gone south” and when you need to get to a hospital there’s no bureaucracy in the way.
Accidental Death & Dismemberment
It’s like life or disability insurance. If you are killed, lose a limb or go blind while traveling, the insurance company will pay a flat amount to you or your next of kin.
- The same things you would for life insurance and disability insurance at home. If you already have these, it’s likely you don’t need another policy just for travel.
Watch out for
- All the limitations that apply to health insurance usually apply to AD&D too.
Trip Cancellation / Interruption
If, for a limited number of reasons, you have to cancel your amazing adventure, the insurance company will pay the deposits that are not refundable. Events like losing your job, becoming sick, a death in the family and inclement weather allow you to cancel your trip and get your deposits back.
- What expenses did you pay in advance? If you didn’t book a tour, cruise or stay at a fancy resort, it’s usually not worth getting the extra coverage.
- What events could cause you to cancel? Are those covered? Medical emergency for you, family members, or traveling companions are always covered. But losing your job, having a visa denied, an airline going bankrupt, running out of money or having to go to your BFF’s last minute wedding usually don’t count.
- Trip delays and missed connection coverage are sometimes included. If you’re delayed and have an unused hotel room, or the ship leaves without you, the insurance will reimburse up to a certain amount.
Watch out for
- What percent is actually covered? Some companies only cover a percentage of your non-refundable deposit.
- Did you buy insurance within the allotted time? Most policies require that your trip deposit is paid around the same time you buy insurance.
Property / Baggage Coverage
Coverage for loss, theft or damage to all that great stuff you are carrying with you.
- Do you have a renters or home owners insurance policy? Most of these standard policies cover your stuff no matter where it is in the world. They also tend to be cheaper.
- Driving a car? Maybe your auto policy covers everything.
- How much is your stuff really worth?
- Do you have receipts for all your junk? Most companies require that you have original receipts.
Watch out for
- Limits on electronics. Most policies max at $500. That doesn’t even cover a quarter of my laptop.
- Exclusions. Read the list (I’m not kidding). All types of things are left out: bicycles, eye glasses, jewelery, computers, sporting equipment, telephones, anything left in a vehicle, in rental property, keys, passports, consumables, and there’s many, many more.
- Business exclusions. Do you have any type of business? All that equipment won’t be covered.
- Loss versus theft. Unless it’s actually stolen (and reported to the authorities as stolen), you don’t have a chance of making a claim. Some companies allow you to add extra insurance for loss. Because I’d be mortified if I accidentally dropped my wedding ring while swimming in the ocean, I pay extra for “oops I lost it” coverage.
What I buy
In case you’re wondering what I do, here’s the run down:
Updated October 2011: We recently changed to IMG's global medical plan because we couldn't find a Seven Corners policy that was both valid for Washington State residents and would cover us while traveling for more than a year. So far, so good with IMG. In the past I have used Seven Corners travel medical that covers basic evacuation and AD&D. It also covers almost all type of medical aid overseas. I always buy the extra hazardous sport coverage.
All my non-business stuff is covered by my renters policy. I list one of my parent's addresses so it covers whatever I have in storage and they bags I’m carrying with. Then, the kicker, I have a business insurance policy, underwritten by Liberty Northwest, that covers all my computer equipment and camera equipment worldwide. This policy sets me back about $200 a year, but it’s well worth the money, and it’s cheaper than most “commercial” policies. I never buy trip cancellation insurance. It’s a waste of money.
Companies to consider:
IMG (International Medical Group): http://www.imglobal.com/index.aspx
Seven Corners: https://www.sevencorners.com/
STA Travel: http://www.statravel.com/
Travel Guard: http://www.travelguard.com/
World Nomads: http://www.worldnomads.com/
ihi Bupa: http://www.ihi.com/
HTH Worldwide: http://www.hthtravelinsurance.com/
Money Supermarket: http://www.moneysupermarket.com/
Travel Insurance Center: http://www.worldtravelcenter.com/eng/