Zach Stovall
Family trips should be fun, not worrisome. Travel insurance provides peace of mind.
By
updated 1/9/2007 4:50:21 PM ET 2007-01-09T21:50:21

It could be the best impulse buy Lezlie Holden ever made. “An offer for travel insurance popped up while I was ordering plane tickets online for my daughter and me, and I thought, ‘What’s $12 each for the peace of mind?’” she says.

Turns out her prudence paid off to the tune of $2,800 in lost baggage and airfare when Hurricane Wilma blew apart their trip to Cancun in October 2005. Beyond money, the insurance company saved them countless hours of scrambling to locate emergency transportation in a country where they didn’t speak the language.

When the Category 5 storm turned its deadly eye on the Yucatan Peninsula, Holden and her family were evacuated from their resort. Shortly after that, her mother fell and broke her hip. Holden’s sister accompanied their mother in the ambulance, but ended up in a shelter because the hospital would not allow her to stay. The family was split up, none of them sure exactly where the others were.

After driving 300 miles inland to Merida to escape the hurricane, a desperate and frazzled Holden called her insurer, Travel Guard International. The company’s emergency-call-center tram helped locate and reunite her family, and assisted in making arrangements to get everyone home – including an air ambulance for her mother, who wasn’t even insured.

“It was such a secure feeling, knowing that I had someone looking out for me,” says Holden. “I’m forever sold on travel insurance. For the price, it’s well worth it.”

Holden had purchased a comprehensive policy from one of America’s leading providers of travel insurance (Travel Guard insures more than 6 million people each year). Her plan included trip cancellation and interruption insurance, medical and health expenses, lost baggage, and 24-hour “911” assistance for trip changes and emergencies. In her case, all the bells and whistles came in handy.

But travel insurance is more complicated than a one-size-fits-all policy. What type of coverage to get and where to buy it are just two of the questions that face indemnity-minded travelers. And while there is no hard and fast equation for deciding what kind of insurance is right for you, there are some things that every traveler should know.

Slideshow: Caribbean way of life The standard travel insurance menu includes five items: trip cancellation, baggage, medical, evacuation and accidental death. These are normally sold as a “bundle.” If you want one type in particular, like medical, ask for a policy that focuses on that coverage – though it may also come with trip cancellation and accidental death. The whole package is called comprehensive insurance.

Travel insurance plans are sold per trip or as annual policies that provide coverage for multiple (but not unlimited) trips. Unless you anticipate making three or more excursions in a year, stick with single-use policies; these cost 5 to 10 percent of the trip’s total price, depending on your age and destination. Rates for annual policies are dictated by coverage and coverage limits.

Travel insurance is available through most travel agencies, cruise lines, tour operators and other travel vendors, or it can be purchased from a third-party travel-insurance company. Buying insurance from a travel vendor may be hundreds of dollars cheaper than buying from a firm like Travel Guard, but be aware that benefits and restrictions vary widely. Travel vendors may not cover you right before departure – the time when most people cancel – and they may provide vouchers rather than cash when settling a claim. And in most cases, travel vendors won’t cover you in the event they go bankrupt.

Whichever policy and provider you choose, always read the fine print so you know the covered perils and exclusions. Make sure you’re protected for everything you want to do. And don’t dally: Many travel insurers require that plans be purchased within one or two weeks of the initial trip deposit in order for you to get full coverage.

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Trip Cancellation/Interruption Insurance
If a trip is cancelled or interrupted for reasons including weather, illness or death in the family, trip cancellation/interruption insurance will cover nonrefundable payments and deposits. Other covered reasons for trip cancellation vary by company, and may include an accident en route to the airport, jury duty or terrorism.

Travelers to the Caribbean face one big unknown: natural disasters. You’ll likely be covered if your destination is uninhabitable – your hotel is flooded or the airport is closed. However, a policy will not cover you based on what might happen, so you’re out of luck if you cancel a trip because a hurricane might hit the island you’re headed to.

Three travel insurance companies, M.H. Ross, Travel Insurance Services and TravelSafe, offer “cancel for any reason” policies that refund 75 percent of a vacation’s cost if you decide not to go. Rates for these plans run about 40 percent higher than standard trip-cancellation insurance, but they add a layer of flexibility.

Before you sign on the dotted line, confirm that all your carriers are covered, as some insurers exclude certain airlines or tour operators. Also be sure to disclose any pre-existing medical conditions; many policies include a clause that denies coverage if a loss is related to a known health problem, but this may be waived if the condition is reasonably stable.

Baggage Insurance
Most travel insurance plans cover expenses related to items that are lost, stolen, damaged or delayed during a trip. That’s great, as long as what you’re taking is fully protected. High-ticket items like computers, cameras and jewelry may be excluded, and policies put a strict cap on reimbursement – anywhere from $500 to $2,500. It’s in your best interest to find out what your cap is by reviewing your policy.

If you check your baggage for a flight, it’s already covered under the airline’s stated luggage cap (read your ticket or check your carrier’s website). If your suitcase and its contents are worth more than the cap, you can buy excess-valuation coverage from the airline when you check in. It costs about $10 to $20 per $1,000 of coverage, up to a maximum of $5,000.

For those who frequently travel with high-ticket items, a more cost-effective option is to purchase a floater to their homeowner’s policy. The price to insure a $1,000 item would be between $10 and $40 annually; this would provide year-round coverage for the item, anywhere in the world.

Travel Medical Insurance
These policies typically cover doctor, hospital and dental expenses resulting from an accident or illness while traveling. Before you buy, it’s critical that you know if your regular health insurance extends to foreign soil. Most large health-insurance companies like Aetna and Blue Cross/Blue Shield will cover you for emergency care no matter where. Medicare, however, does not provide overseas coverage.

Many travel medical policies act as secondary insurance, picking up whatever expenses your primary insurance doesn’t – non-emergency care, deductibles and co-pays. Always travel with a high-limit credit card, because hospitals in other countries often require foreigners to pay on the spot; you bring home documentation to be reimbursed later.

Keep in mind that travel medical insurance may not cover you for “extreme” sports like white-water rafting and surfing. Some third-party companies sell supplementary adventure-sports coverage, and vendors such as Divers Alert Network and PADI specialize in scuba diving, which can require expensive stays in recompression chambers.

Medical Evacuation Insurance
In the case of accident or illness, this insurance covers ambulance and/or air transportation to the nearest appropriate hospital or medical facility. In a worst-case scenario, this can mean a $10,000-plus flight aboard a medically equipped jet, so definitely read your policy’s guidelines for injuries and exclusions before you go.

The caveat here is that you must contact your travel insurance provider before the evacuation, not after. Many third-party companies have their own emergency medical services and evacuation carriers, and may not cover others.

Almost without fail, when a medical evacuation is required, further medical attention and expenses will follow. Your regular health insurance will not cover non-emergency after-care overseas.

Accidental Death Insurance
As its name implies, this insurance provides coverage if you or a family member die on the trip. If you already have a good life-insurance policy, this may be duplicate insurance.

Furthermore, you probably already have some coverage under the credit card you purchased your airline ticket with. Most airlines also offer some flight accident insurance – from $100,000 to $500,000. As always, ask for detailed terms and conditions before setting out on your trip.

Travel Insurance: Crash Course
Sure, it can save you beaucoup bucks if something goes wrong. But do you really need travel insurance? Here are the main points to consider.

Trip cancellation/interruption insurance: This is the most-used type of travel insurance. It’s a good idea if you’re paying a lot of money up front, if a loved one at home is in frail health or if you’ll be traveling during hurricane season.Baggage insurance: It comes in most travel-insurance packages whether you ask for it or not. Unless you’re traveling with expensive items, the standard protection should suffice.Travel medical insurance: Your regular health insurance should cover emergency care, though you may want to consider a minimum of travel coverage for non-emergency but nevertheless urgent needs like dental work, eyeglasses or medications.Medical evacuation insurance: Your regular health insurance doesn’t cover this. Get it.Accidental death insurance: It’s unnecessary if you already have decent life insurance.

Caribbean Travel & Life is the magazine for anyone in search of the perfect tropical getaway. Each issue presents expert insider’s advice on where to find the Caribbean’s best beaches and attractions, its finest resorts and spas, liveliest beach bars and activities, and its friendliest people.

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