Rudimentary, my dear Watson.
But really, here are our four guidelines we pretty much stick to for whether or not we purchase travel insurance. Notably, we are young, healthy 30-somethings (well, I’m soon to be 30), that do have some cushion in our budget for the unforeseen. However, neither of us have a significant tolerance for watching our money go down the drain due to the unforeseen. So we do get travel insurance with some frequency. I also (unfortunately) have a terrible knack for having my luggage lost or pillaged, so trip insurance is good for that, too.
1. If the total trip cost is more than $3500, we usually get trip insurance. This is pretty simple. While trip insurance won’t likely reimburse the whole cost of the trip, and while it’s highly unlikely we’d ever have to completely cancel, it’s nice to know that I’ll get approximately 2/3 of that back, depending on the coverage that I choose. Yes, losing 1/3 is still a lot of money, but it’s better than losing it all. If you have a lower tolerance, you might opt for higher coverage. If you can’t afford to lose anything and still are going on a big trip…well, you are braver than we are! I should note, that while I’m relatively averse to risk, I’m not averse enough to pay for the “any-reason” cancellation coverage.
2. If we are going to a destination where proper medical care is not available, we usually get trip insurance. While we don’t always “stock up” on secondary medical insurance, or medical evacuation coverage, when we are going to a country that does not have a single hospital that is recommended for anything other than mild conditions, we get medical coverage. We also get medical evacuation coverage. Sure, it brings the price up, but it’s a price we are willing to pay for peace of mind. Lots of comprehensive insurance policies will come with sufficient coverage built in; more can usually be purchased. A good example of where I felt this was probably a good idea was our forthcoming trip to Bhutan. Most policies also provide a 24-hotline for medical information and advice, in many cases, if all you need is a prescription, they can find a way to get you what you need or talk you through your health issue.
3. If the trip is more than 6 months in advance, we usually get trip insurance. A lot can happen in six months. This is where travelers really think about how much coverage they need for “cancellation”. Again, while I don’t usually get the cancellation coverage for “any-reason”, typical coverage includes cancellation for reasons like sickness, injury, or death to myself, my traveling companion, or a family member. If available, I do try to choose cancellation coverage which permits cancellation for terrorism in either the departure or the destination city, issues beyond my control (jury duty, for one) or other unforeseen events (like disease outbreaks or tsunamis). Most of these policies also include things like your home becoming uninhabitable due to flood or fire.
4. If the trip includes scheduled activities, or a pre-paid hotel stay, which we could miss because of flight delays or other issues, we usually get trip insurance. Private transfers to catch up with a group tour can cost a lot…like $700 or more, depending on the remoteness of the area. For example, our flight to Johannesburg was delayed, causing us to miss a flight to Windhoek. Said flight to Windhoek was subsequently delayed over 6 hours the following day. Our group–even though there were only 3 people besides us–left Windhoek without us. Trip insurance reimbursed us for a 5-hour private transfer. Additionally, you may need insurance to be reimbursed for the activities that you missed while you were delayed, and possibly hotel nights. Many companies and hotels have at least 2-3 day cancellation policies, if not more. Travel insurance, with appropriate disruption and delay coverage, can reimburse you at a set rate for these items.
Those are our four general guidelines, and I’d also just offer five tips to those that might be looking at travel insurance for the first time for an upcoming trip:First, I think it’s really important that you carefully read the coverage to know exactly what you are getting. You don’t want any surprises when you think you are covered for something and submit a claim only to find out you aren’t! This also goes for coverage you may get through a credit card or other company policy. I’m always shocked at how many people just never read the fine print, in general. It’s all in the details.
Second, don’t rely on coverage. Don’t schedule your flights in a precarious manner just because you have travel insurance that will pay for trip delays. Don’t do stupid things because you have medical evacuation coverage. Travel insurance should not impact your behavior. Many policies have specific exemptions for things that happen while sky-diving, etc. If you are doing dangerous activities, be sure to read the policy.
Third, look beyond your tour company for coverage. Many tour operators offer their own coverage, though it is almost always underwritten by an actual firm. It may or may not be the best deal for you. If you are young and healthy, it’s probably not. Shop around. We use www.insuremytrip.com, and have had good results. There are lots of reviews, and while we’ve usually chosen a CSA policy, there are lots of options at various price points.
Fourth, keep your receipts. This will increase the speed with which your claims are processed, and in most cases, are absolutely required. If you buy expensive gear for the trip, keep those receipts too, in case things are stolen (I unfortunately didn’t have a receipt for a stolen raincoat and was reimbursed only about 40%). You may be able to call around to get the paperwork you need, but don’t chance it: keep the receipts you receive while traveling.
Five, analyze your individual requirements. Some people are really risk-adverse, and want to buy as much coverage as possible for every possible contingency. We usually–for two people–don’t spend more than $500 for insurance. At $250 per person, I consider that worthwhile just so I worry less. You may not have this same cost benefit analysis, and that’s fine! Additionally, choose the coverage you really need. If it’s only medical evacuation you’re concerned about, don’t bother with other coverage. The length of your trip, style of your trip, and destination will also all impact your decision.
Though I do understand risk and insurance quite well from many a health economics course, I am not an insurance salesman! If you are an expert and think I’m wrong, for goodness sake, leave a comment!
