The Truth about all Types of Travel Insurance

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.

Medical Insurance

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.

Consider

• 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.

Watch-out for

• 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.

Consider

• 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.

Watch-out for

• 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.

Consider

• 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.

Consider

• 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.

Consider

• 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/

Aggregate:
Money Supermarket: http://www.moneysupermarket.com/
Travel Insurance Center: http://www.worldtravelcenter.com/eng/

Comments

 

#8 JessicaM 2013-10-30 19:48

Hi Nathalie,
Sorry for the slow reply, I didn't see your comment come in. The only place I know of that insures vehicles in Central and South America is ICI. http://www.mxici.com/CSAVI/Default.aspx We paid $1800 for 12 months of coverage that got us to the Mecrosur countries. We bought new insurance in Argentina that covered us down there. Cost was about $250 for 6 months, with some limitations. Good luck! Jessica

 

 

#7 Nathalie McNabb 2013-10-02 02:21

Any suggestions for car (liability and Damage) insurance- we'll be traveling through Latin America - So far Insurance Consultant International but kinda a steep (1500$ for 6 months excluding Belize, Costa Rica and Mexico).

Thanks, Nathalie

 

 

#6 Jessicam 2012-12-27 14:58

Credit card coverages are amazing. We recouped nearly $10K worth of stolen camera equipment that our renter's insurance refused to cover. Yay for Visa!

Extensions are a huge problem. We just renewed our health insurance for a year, and they didn't have any issues. But in the past, we were denied coverage (this is why we switched from Seven Corners to IMG). With the new healthcare laws in the US things are becoming even more difficult and expensive!

 

 

#5 Juergen 2012-12-27 04:10

Very good list! 2 things to add:
If you pay major travel expenses by credit card many cards offer a basic travel insurance for a limited time (usually 90 days) - check this out before you sign another policy, as even cancellations are often included in this. In most cases paying the flight by card is enough to get this cover!
Almost all companies do NOT extend policies beyond ONE YEAR. That's the catch, and once on the road it can be more difficult to find a new policy, specially if they suddenly request some written "history" or doctor's certificates.

 

 

#4 Naomi 2012-07-17 09:28

I've been on 7 corners almost a year and was recently able to renew it for 364 days. I think you can renew several times. It's also worth looking into what happens when you need to make a claim. In 2006, I was hospitalized in Peru and the medical center demanded payment when I was released. When I filed the claim with International SOS, the money went to the medical center and not me. It was, fortunately, only about $350 for 2 days' stay, but I never got the money back.
Also, some credit cards offer travel perks/coverage. I know someone whose credit card covered an accident in a rental car with very little work on his part. Some cards (like VentureOne) offer coverage for things like missing bags and flight cancellation (plus no foreign transaction fees), and they shipped a new card overseas for free when there was fraud on our account. I haven't scrutinized the trip coverage details, and they're more applicable to flights, but it's worth looking at what your credit card covers.

 

 

#3 JessicaM 2012-03-06 02:24

Thanks Wendy,
I'm just about to update this blog post. We recently changed our insurance to IMG http://www.imglobal.com/index.aspx.
We found out that the Seven Corners options either didn't cover us for more than a year, or were not valid for residents of Washington State. Why I do not know! Best of luck with your search.

 

 

#2 wendy pearson 2012-02-10 07:15

Great post guys! I am just going thru this evaluation for our trip and have come to the same conclusions. Like the tip about Liberty Mutual however for my computer stuff. We had not quite figured that one out yet. I'm looking at IMG, 7 corners and HTH and going for the expat policies for full coverage. One thing also that irks me is all the pre-existing clauses. If you've ever had an illness consider it not covered. And if you DO get the dreaded "C" - cancer, they'll likely say you had it before you joined. Whatever! anyway at some point you just have to go for it. Thanks and look forward to catching up with you more.
Wendy & Jim

 

 

#1 jiya 2012-01-20 10:29

yes I agree with you most companies are not rust worthy so its better to search and get details history of the companies from the previous clients

Annual Travel Insurance

 

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