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What type of insurance protection is necessary?

Even if you're flying on a free ticket, you still might need insurance protection for other aspects of your travels.

Be sure that your travel insurance covers the risks you need covered, and also be sure you're not buying unnecessary additional coverages you don't need!

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Travel Insurance - What Type Do You Need?

No need to just 'cross your fingers and hope' if you have chosen travel insurance wisely!

Part 2 of a series on Travel Insurance - please also visit

1.  Travel Insurance - Yes or No
2.  What type of travel insurance do you need
3.  Ten things your travel insurance may not cover




There are many different types of travel insurance, and it is important to understand what sort you’re getting and what it does and does not cover.

For example, some credit cards boast that they provide ‘free travel insurance’ but when you work your way through the fine print, you find that all they offer is to pay some small sum of money to your estate if a plane that you’re on crashes and you’re killed!

The first part of this two part article talked about the different sellers of travel insurance, this part looks at the different types of travel insurance that they sell.

Types of Coverage Offered

The ‘big two’ risks that are covered to some extent by most travel insurance policies are the costs of changing or canceling your travels, and the cost of any medical care and emergency assistance while on your travels.

Many travel insurance and holiday insurance policies also include small amounts of other coverages - perhaps a few hundred dollars for baggage delay/damage/loss, loss of travel documents, and other small sums for flight delay or interruption. These are relatively trivial amounts of cover and trivial risks. Some also include some nice extras like paying the cost for someone to fly out to be with you if you are required to be hospitalized for more than two or three days.

One other potential major coverage can be supplier bankruptcy, but many times the company that sells the policy to you is unable to have the policy also cover their own personal bankruptcy. This can be a good reason to buy an independent policy, not one issued by the same company as is arranging your tour.

Most policies also include a large amount of air death insurance, but this is a very low value item – it only costs about 25c to buy $100,000 of cover ‘wholesale’ for air death insurance! I guess this is a reassuring reminder of how safe air travel is. :)

Some travel policies will offer to cover rental car CDW/LDW risks, for an extra cost per day of coverage. These rates (typically less than $10/day) are usually very much less than what you'd pay to the rental car company. If your regular car insurance policy doesn't include coverage for when you drive rental cars (most do!) and if you don't have some type of protection through a credit card, then this is a much better way to cover yourself than to buy the expensive cover from the rental car company.

Trip Cancellation/Change Coverage

You should try and understand what your possible costs might be if you end up needing to change or cancel your travel plans and then decide if you actually need to insure against that risk, and, if you do, how much coverage you should have.

For example, if you’re flying on an unrestricted first class fare, you might not need any cancellation/change coverage at all because your ticket can be changed at any time, for free, and, if cancelled, you’d get a full refund.

It seems a contradiction, but often the cheapest least expensive fares have the most ‘risk’ associated in terms of change and cancellation fees, and it can cost more to change a discounted fare and return home on a different flight than the ticket cost in the first place!

Some insurance policies say that they’ll pay ‘up to your total trip cost’ in change and cancellation fees. You might think that this is a full 100% cover with no remaining risk, but that isn’t necessarily the case! For example, if you are on a restricted airfare that cost $600, and have a total package that cost $900 per person, then if you need to come home due to a family emergency, you might find that the cheapest urgent return air ticket costs more than the entire package cost to start with – maybe you’ll have to pay $1000 for the no advance purchase one way return ticket!

Some insurance policies will pay for change and cancellation fees ‘for any reason’ and actually mean it, others have various restrictions in terms of what circumstances would justify, in their mind, your canceling/changing your trip.

The more restricted policies typically exclude any circumstances 'under your own control', and perhaps unreasonably deem work related issues to be circumstances under your own control - if your boss says to you, the day before you leave - 'sorry, but we've got a crisis on at present and need you to defer your vacation' then the travel insurance policy will probably not pay you a penny to refund your cancellation or change fees!

Medical Care and Emergency Assistance

As regards medical care and emergency assistance, some people think that their personal, at home, medical insurance covers them everywhere in the world, and then get a nasty shock when either they find it doesn’t cover them, or that the deductibles are much higher, or perhaps their medical care is covered, but not related costs such as transportation.

Some people also don't realize that, although most cruise ships have onboard doctors, their services are not free but are offered in exchange for fees, same as any other doctor, anywhere else.

If you have to be flown back home on a stretcher, that can require the airline to take out a block of nine coach seats to make space for the stretcher, and that is a very expensive exercise indeed that you’d definitely not want to have to pay for personally. ‘Emergency assistance’ usually covers these types of situations, and other situations such as, if you’re out in a remote area and break a leg, or on a live aboard dive-boat off the coast, it should cover the cost of sending a helicopter to rescue you.

You’d probably want to have at least $10,000 worth of medical cover and emergency assistance on any travel insurance policy you bought.

Pre-existing Conditions

Usually the biggest ‘gotcha’ with these insurance policies is a waiver which denies coverage if the loss was related in part to a pre-existing medical condition. This means if you already have some type of medical problem, if something reasonably related to that medical problem causes you to have to cancel your travel plans, change them, or to experience an illness during your trip, the insurer can decline to make any payment to you due to it being related to the pre-existing condition.

However, some insurers now agree to not worry about this if your condition is stable and you buy the insurance as soon as you book your travel (ie pay a deposit, typically). This means that it is important you consider travel insurance at the very start of your travel planning process, not as an afterthought at the end, when it might then have become too late to get a policy that doesn’t exclude pre-existing conditions.

Terrorism Coverage

A lot of people had problems, when canceling or changing their plans after 9/11, due to finding that their insurance policy did not cover them for terrorist acts. A few policies - notably some issued by Travel Guard - provided coverage, but most other policies did not.

And, since that time, coverages have changed - be sure to check your policy for what is and is not now covered.

Travel Delays

Normally, travel delays are typically short and often an airline will pay for the cost of an overnight hotel in the case of a delay.  For this reason, travel insurance policies usually provide only a very small amount of travel delay coverage.

But as the extended flight cancellations due to the Iceland Volcano eruption in April 2010 vividly demonstrated, there can be exceptions to this situation.  You do not need to overreact or to overinsure, but do be aware of this issue when specifying and comparing insurance policy alternatives.

How to Comparison Shop for the Best Insurance

As mentioned last week, insurance premiums can vary tremendously as a result of their administrative and sales costs more than as a result of the underlying ‘value’ of the coverages they offer. However, the claim history (ie the true 'cost' of the insurance' does also influence the rates set. To add to this confusion, some types of coverage are very much more expensive to provide than others.

The best thing to do is to work out exactly what you must have in the way of coverages, and then compare policies against these requirements. If a policy offers more coverage than you really need, good, but don’t pay extra for additional coverage you don’t need. If a policy is less expensive but doesn’t have the coverages that you do indeed really need, don’t consider it – being half insured is false economy – either buy full travel insurance or none at all.

Perhaps the best aid to comparing different policies is (of course!) on the Internet. The website offers comparisons between 100 different policies offered by 18 different insurance companies, and you can match this information alongside any additional insurance policies offered by your travel agent or tour operator and make the best decision accordingly.

A similar insurance shopping service is offered by

Other Issues

If you have any questions about whether something would be covered or not covered by a travel insurance policy, don’t try and figure out the fine print of the policy (And don’t ask your travel agent, either. They are a travel agent, not an insurance agent!) . Simply telephone the insurance company at their toll-free number and ask them. That way you get the most accurate answer possible, and if your advice was wrong, you have a better chance of then embarrassing the insurance company into honoring what their own employee told you than if you’d just assumed something yourself or if a travel agent had made an error in interpretation.

When is payment due, and when does coverage start – at the time of payment, hopefully. When does coverage finish? What happens if your trip is delayed or extended by a day or two?

Make sure you understand how to file a claim. Most policies require you to notify the insurance company as soon as possible, and before you start incurring costs that you'll be seeking subsequent reimbursement on.

Most states have an Insurance Commissioner or in some other way regulate the sale of insurance, and so if you end up feeling unfairly treated, you have the ability to complain to these state officials and they might be able to help you resolve the dispute.

Having said that, in fairness to the insurance industry, in my ten years of selling insurance policies to travelers, I never once saw a genuine case where the insurance company we worked with (Travelguard) was being unfair or uncooperative; indeed I was consistently delighted with their speedy response, and whenever we had a complaint, it inevitably turned out that the reason for the delay was because the complaining client (or their doctor!) had yet to fill in the claim form correctly.


So - is travel insurance for you? Here's an easy way to answer that question. Look at what the 'worst case' scenario could be - total cancellation of your entire plans, with full cancellation penalties and no refunds, or a sudden accident requiring costly medevac and local care, or something else horrible like that. If you can afford to 'self-insure' and don't mind potentially having to cover these costs yourself, then you don't need travel insurance.

But if the thought of suddenly having your travel plans destroyed by some unfortunate circumstance, and then having to absorb the thousands of dollars of associated cost, is both unwelcome and inconvenient, maybe the cost of a travel insurance policy (usually under $100) is valuable peace of mind.

To close this subject, may I wish most sincerely that you never get good value from your travel insurance! I hope you buy it as appropriate, but never use it - it is one of those things that you definitely hope you never have to use, and which you should never complain about not having made any claims on!

Read more in Parts 1 and 3

Part 2 of a series on Travel Insurance - please also visit

1.  Travel Insurance - Yes or No
2.  What type of travel insurance do you need
3.  Ten things your travel insurance may not cover

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Originally published 18 Oct 2002, last update 21 Jul 2020

You may freely reproduce or distribute this article for noncommercial purposes as long as you give credit to me as original writer.



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