In this blog post The Professor covers the basics of travel insurance. In follow-up posts, he will talk about where to buy travel insurance, what kind of coverage is recommended, how to use travel insurance, and how to file a claim.
For now let's examine the basic types of travel insurance coverage.
Medical Coverage: This type of travel insurance does exactly what the name implies. It covers costs for care of illness or injury while traveling. Most domestic policies do not cover illness/injury overseas, and if they do, it is at the rate of an out-of-network provider. Overseas medical costs are not covered by Medicare.
Trip Interruption/Cancellation: Provides reimbursement for non-refundable trip payments and deposits if a trip needs to be cancelled/delayed for covered reasons such as illness or illness/death of a family member. Some policies provide reimbursement for reasons such as loss/change of job or jury duty. Trip interruption reimburses the insured for increased transportation costs to return home or continue a trip due to covered reasons. For instance, we had a traveler lose their passport in Peru. They need to return from Cusco to Lima immediately to replace their passport then re-join the tour. All costs were covered including the cost to replace the passport, flights, special concierge services, and hotels. A more common reason for cancelling a trip might be because of an injury or illness. Another example of where trip interruption insurance came in useful to me was when my flight from Boston to Iceland was delayed because of bad weather. An overnight stay was required at a hotel until my flight could be rescheduled for the next morning. No reimbursement was provided by the airline. However, trip interruption insurance covered the cost of hotel plus meals. Some policies covered lost/delayed baggage expenses and rental car insurance. Here is a tip: if a flight is cancelled and an overnight stay is required at a hotel, call the hotel to book a room first, then call the airline to re-book. Experience tells me that there is always a scramble for hotel rooms when flights are cancelled. Quick action can make the difference in getting a room or not.
Emergency Evacuation Insurance: If a traveler needs to be evacuated back to the U.S. or Canada for medical treatment, these costs can easily reach $100,000 or more. These costs are probably not covered by a domestic insurance policy and they are definitely not covered by Medicare. However, a separate emergency medical evacuation policy may cover some or all of these costs.
Medical and Emergency Evacuation policies can be purchased separately from a Trip Interruption/Cancellation Policy. However, medical and emergency evacuation coverage is almost always covered with a Trip Interruption/Cancellation Policy. Travelers can decide whether or not they want to purchase Trip Cancellation and Interruption insurance. However, a traveler assumes great risk when not traveling with medical or emergency evacuation insurance, especially when traveling overseas.