Note on COVID-19 pandemic and travel insurance: According to InsureMyTrip, you should purchase a subscription that includes Cancel for Any Reason if you are concerned about the coronavirus. All travelers are not eligible, so please read the plan details carefully before purchasing travel insurance.
If you are thinking about traveling, travel insurance can be a great way to protect yourself. This type of insurance gives travelers a way to get their money back in case their plans are canceled or interrupted.
The uncertainty surrounding travel during the COVID-19 pandemic has only added to the importance of determining what kind of policy to buy. But there is also the question of whether you should take out travel insurance at all.
In general, the insurance only covers what is explicitly stated in the policy. Many policies rule out pandemics and epidemics, so you need to do your research carefully.
Travel insurance: everything you need to know
This article covers the basics of travel insurance: when to buy it, where to buy it, and how to make sure it covers your specific circumstances.
I have received expert advice from money expert Clark Howard. I also spoke with a representative from InsureMyTrip, a travel insurance comparison site, to learn more about “cancel for any reason” policies.
Clark once ran his own travel agency and he believes almost everyone should consider getting travel insurance.
“I never like people taking out narrow insurance; that’s why I advise people not to buy device warranties. Travel insurance is an exception and the reason for this is that trips can be incredibly expensive and are completely non-refundable. “
Let’s get into some questions and answers about travel insurance.
- What is travel insurance?
- When do you need travel insurance?
- What does travel insurance cover?
- How much does travel insurance cost?
- Where should you buy travel insurance?
- When do you need a cancellation policy for any reason?
- Do you also need medical travel insurance?
1. What is travel insurance?
Travel insurance provides full or partial reimbursement in the event of illness or death of a member of the travel party or close family member.
It can also provide coverage in the event of a cruise, tour operator or airline default and in various other cases depending on the policy.
2. When do you need travel insurance?
Clark believes that you should consider travel insurance as a contingent expense: you don’t need it for all types of travel.
But he says you do need it if you:
- Take a cruise
- Book special trips as part of your trip
- Traveling on an itinerary that requires a prepayment of thousands of dollars
“If you book a tour or book a cruise – those two in particular – if you’re going to lose all your money, no matter why you can’t make it, you have to get insurance,” says Clark.
Clark probably tells you do not need travel insurance if:
- Your trip consists of flights and hotel stays that are fully refundable.
- The costs for changing your itinerary are lower than for rebooking your trip.
3. What does travel insurance cover?
The Travel Insurance Review website lists some of the most normal things covered by travel insurance, including:
- Injury or illness of the policyholder, travel companion, family member or business partner
- Hurricane or natural disaster
- Bankruptcy or financial default of travel company
- Terrorism or mandatory evacuation
- Death or hospitalization of the destination host
- Jury duty, a required appearance in court or military reshuffle
- Victim of a criminal attack prior to the trip
- Traffic accident prior to the trip
- Theft of passport or visa prior to travel
- Legal separation or divorce
- Loss of accommodation abroad due to illness or death of host family or friends
But there are a wide variety of travel policies and coverage, so be sure to check the fine print of any policy you are considering before purchasing.
4. How much does travel insurance cost?
Travel insurance generally costs somewhere in between 4-10% of the price of the total trip.
For example, if you book a trip that costs $ 2,000 in total, you can expect to pay around $ 80- $ 200 for travel insurance.
But this is important: Never buy the travel protection plan from the tour operator or online travel agent. They are designed to protect the business and not the consumer, Clark says. This includes travel booking sites such as Expedia and Travel speed.
5. Where should you take out travel insurance?
If you are not supposed to buy travel insurance from where you book the trip, where are you going?
Clark recommends that you find a travel insurance policy that is right for you at a comparison store InsureMyTrip.
“The reason I like InsureMyTrip is because it’s like an aggregation service or comparison site and you can see all the different choices available,” he says.
InsureMyTrip’s quotation process also has a recommendation tool that guides travelers to plans best equipped to protect themselves from COVID-related travel troubles.
When you visit InsureMyTrip, you will be asked for the following information:
- Country of destination
- Travel dates
- Citizenship of travelers
- Information about age and residence of travelers
- Travel details (flights, hotels, accommodations, etc.)
The site will then recommend travel insurance plans for you and show you the cost, plan details, and consumer ratings for each.
You can compare the available plans and select the one that best suits your needs.
In addition, Clark says, “There are a number of them travel credit cards which include travel insurance with them if you use them to purchase the trip. “
Typically, the coverage of these cards is less comprehensive than what you’ll find in the plans InsureMyTrip, so make sure you’re comfortable with this before deciding to rely solely on the coverage provided by your credit card.
6. When do you need a “Cancel for any reason” policy?
With a “Cancellation for Any Reason” (CFAR) policy, you can cancel your travel plans for any reason and still get a portion of your money back.
Clark says this option is typically considered an upgrade to standard travel insurance coverage, so it costs a little more. However, you should know that it usually doesn’t cover the full cost of your trip.
A CFAR policy “refunds about 50-75% of that travel cost, depending on the plan you purchase,” said Ronni Kenoian, marketing and e-commerce manager for InsureMyTrip. To be eligible for CFAR coverage, Kenoian says you must insure 100% of your prepaid non-refundable expenses.
Here are three important things to know about a cancellation policy for any reason:
Canceling for any reason is a time-specific benefit
According to Kenoian, a CFAR policy is typically only available in the first 10-21 days after you make your initial payment for your travel arrangements.
CFAR is now available in New York State
New York was the only state to ban the CFAR policy. But in March 2020, Governor Andrew Cuomo announced a change to the state’s insurance rules. Because of the pandemic, Residents of New York can now purchase CFAR insurance, even if that reason is the pandemic.
Check with your airline, tour operator or cruise line before purchasing
“Many travel providers take with them [current events] Kenoian says, so travelers should contact them first as you may not need travel insurance. “
“We generally know people are scared, but they need to know they have options,” Kenoian says. “We ask them to please call their travel provider if they have already booked the trip to see what kind of benefits they are being offered.”
Clark.com Travel Editor Clara Bosonetto also recommends calling the issuer of the credit card you booked your trip on to see if it offers refund options.
7. Do you also need medical travel insurance?
Most travel insurance includes some form of medical insurance and medical evacuation insurance. But it’s important to read the fine print to see that coverage is only sufficient if you have a medical emergency during your trip.
The Center for Disease Control and Prevention states the costs of medical evacuation more than $ 100,000. If you are traveling to a developing country, you could think of this type of policy as a safeguard against the possibility of a huge medical bill if you need to be taken somewhere with better medical facilities.
Travel insurance generally reimburses you if your trip is interrupted or canceled for a variety of reasons that are usually beyond your control.
Clara points out that standard travel insurance probably won’t cover you if you want to cancel because of travel advice or simply because you’re afraid of traveling.
In addition, the uncertainty of a medical outbreak is not covered by policies, she says. “And some policies specifically rule out pandemics.”
Given this reality, with travel insurance it comes down to you really having to do your homework. That means taking the time to go through different policies to find one that’s right for you.
Here are the two most important steps to take before purchasing travel insurance:
- Please contact your travel provider for more information on the refund / rebooking policy related to the pandemic.
- Even when shopping online for a travel policy, you can contact an insurance representative by phone to answer your specific questions.
Planning for a trip abroad? Learn about it travel medical insurance here.
And here is a link to the latest pandemic travel guide from the Centers for Disease Control and Prevention.
In the meantime, if you have any questions about travel insurance or any other consumer issue, please contact our FREE Consumer Action Center helpline at 404-892-8227, Monday through Thursday, 10am to 7pm ET, and Friday, 10am to 4pm ET.
More travel resources from Clark.com ‘: