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Travel Insurance: The Benefits and Limitations
The different types of travel insurance and what they cover.
Montezuma's revenge? Broke your arm bicycling through the Swiss
Alps? Wear your travel misfortunes like badges of honor -- your
friends will call you a hero just for coming home alive.
As for the financial details of your troubles while on the road,
that's the job of travel insurance. If you need to cancel or interrupt
your trip, or if you become ill during your journey, travel insurance
will reimburse you for the expenses you incur due to your bad luck.
Many travelers, however, purchase insurance that they do not need.
Many standard homeowner's or health insurance policies, for instance,
cover lost luggage or accidents abroad.
Trip cancellation and trip interruption insurance are generally
the most useful types of travel insurance, because they cover losses
that are usually not covered by most travelers' existing coverage.
These two types of insurance are often bundled and sold as a package.
Trip Cancellation Insurance
Trip cancellation insurance covers you for the period of time before
you travel. It reimburses you for any prepaid, non-refundable expenses,
such as airline tickets or hotel rooms, that you cannot use because
you had to cancel your trip.
Trip cancellation insurance generally kicks in if the cancellation
is due to an unforeseen accident, illness or other specified event
that affects you, a close family member or your traveling companion.
Obviously, many terms are open to interpretation: "unforeseen,"
"other specified event," and "close family member"
are not always self-explanatory.
For instance, if your chronic back problem flared up and forced
you to cancel your trip, your policy might not reimburse you because
your illness was foreseeable. Many policies, in fact, specifically
exclude pre-existing conditions. Injuries sustained during high-risk
activities such as sky-diving are also usually excluded. And, strangely
enough, almost every insurer excludes pregnancy from coverage. Be
sure you know what reasons for cancellation will be accepted.
Similarly, be aware that your insurer may define "close family
member" differently than you do. If you plan a trip with your
live-in partner, for instance, and your partner falls seriously
ill before you leave, you might not be covered for canceling your
trip if only spouses are included in the definition of close family
member.
Terrorism or political unrest in the country where you are headed
may be an allowable reason to cancel, but they are sometimes specifically
excluded from coverage.
Finally, keep in mind that trip cancellation insurance covers you
before your departure, not during your trip. But when does your
trip actually start? Be sure that your policy covers you while you
are on the way from home to your departure point. If you have a
car accident on the way to the airport, for example, your insurer
might consider you to have already departed and refuse tocover your
cancellation. Make sure you are covered for the entire period of
time before you actually set sail, so to speak.
Trip Interruption Insurance
Trip interruption insurance covers you during your trip. If, while
you are travelling, an injury, illness or other event prevents you
from continuing, trip interruption coverage will reimburse you for
expenses you incur because of the accident. Some policies also reimburse
you for any unused prepaid expenses. Most commonly, trip interruption
coverage is used to cover expenses for returning home early. Or,
if you are delayed during your trip and wish to catch up to your
original schedule, this type of coverage will often pay the economy
fare to rejoin your itinerary. Additional living expenses may also
be reimbursed if caused by a coverable delay.
Many trip interruption policies also cover medical evacuation costs,
such as transporting you by helicopter to the nearest medical facility
if you are injured while mountain climbing. Like trip cancellation
policies, however, these policies generally exclude pre-existing
conditions, so be careful not to aggravate your chronic back problem
while hundreds of miles away from civilization.
Finally, some trip interruption policies cover expenses in the
event that you die during your trip. If you like to prepare for
every possible contingency, you might inquire about this coverage.
Other Types of Travel Insurance
Other kinds of travel insurance are generally unnecessary because
standard health, homeowner's or renter's insurance covers the same
ground. For example, travel accident insurance covers medical expenses
stemming from accidents during a trip, but the coverage is usually
quite small and is often already covered by your health or automobile
insurance. The same is true for sickness-hospitalization medical
insurance. (But check your health insurance policy if you plan to
travel in a foreign country. Not all policies cover medical expenses
incurred abroad.) And with both, beware of pre-existing conditionexclusions.
Accidental death and dismemberment (AD&D) insurance covers
injuries that result in severe maiming or death. Again, most standard
accident, disability or life insurance policies cover these accidents,
which rarely happen during travel.
Finally, baggage insurance is usually unnecessary if you already
carry homeowner's or renter's insurance. And it usually contains
a significant number of exclusions, so the amount of coverage is
usually quite limited.
Coverage when you use your Union Plus
Credit Card
Did you know that you can get free car rental insurance if you
use your Union Plus Platinum or Gold Card to reserve your Union
Plus discounted rental car with Avis or Budget? It’s true.
Also, calling or ordering online in advance means you pay less at
the counter. And if you order online, you can print out your confirmation
for your records.
If you purchase your airline tickets with your Union Plus Credit
Card, you are automatically covered, at no charge, for $250,000
travel accident insurance - good on any common carrier. Click
here for more about the Union Plus Credit Card.
For information on rental car insurance, see Rental
Cars FAQ
Source: Reprinted with permission from the publisher, Nolo,
Copyright 2002, http://www.nolo.com
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