You may have heard different horror accounts related to lost baggages, delayed flights, accidents while overseas. You may have experienced some of these before too.

To take worries off your mind, you may buy travel insurance for every trip you make, or get an annual travel insurance plan to cover multiple trips. That’s a good thing, but are you very sure that the policies offer the right coverage in unique situations? If you’re not sure about what to look out for, fret not. Here‘s a guide to what to look out for before buying your next travel insurance.

1. Study the Fine Print

Let’s face it. Most of us skip the fine print, especially when it’s less than a day to our overseas trip. “Travel insurance is a ‘named peril’ insurance policy, in that it specifically states what is covered,” explains Damian Tysdal, founder of TravelInsuranceReview.net.

The key here is to understand the fine print and it will pay off well if you can spare some time reading it. Why? If an event or calamity isn’t spelled out in the policy, don’t expect to be covered if it occurs.

For example, just because your insurance reimburses you if you get sick before your trip and can’t go, it does not mean that you’re also covered if you fall ill while you’re traveling. That’s a different type of coverage, and while insurers may bundle them into packages to make it easier for travelers, it’s not a given that any policy you buy will include both.

A little time taken to do this can save hours or even days of frustration if there are any hiccups while you’re overseas.

2. What Exactly Does It Cover?

Not all insurance policies are the same. From basic to premium, you might have witnessed different tiers of travel insurance plans when making your purchasing decision. But what exactly is the difference between them, other than their pricing and fancy names?

Here are some of the coverage types included in travel insurance plans:

  • Trip Cancellation and Interruption Insurance

This is the main reason behind why most people buy travel insurance. This can reimburse you on non-refundable travel costs if your trip is cancelled or severely delayed due to illness, natural disaster, etc. The coverage in this area varies by who you get it from as well as individual policies that you may have purchased.

  • Baggage and Personal Items Coverage

From the stage where your baggage goes into the check-in counter at your local airport to showing up at the rotating belt of your destination airport, mishaps, whether big or small, happens more often than you might think. If your baggage is stolen or damaged, travel insurance will usually reimburse up to $500 per lost baggage and $100 to $300 for baggage delay. Even the most basic travel insurance in the market will give some degree of coverage in this area.

  • Emergency Medical Insurance

This could well be the number two reason why people travel with insurance policy to cover them in case of accidents. It’s the same reason why people are covered by medical insurance in everyday life. The extensiveness of the coverage often varies widely, so be sure to check out the fine print!

  • Accidental Death Insurance

This type of insurance offers payouts of differing amounts depending on the situation, if you or a loved one dies on the trip or suffers a life-impairing accident, such as losing the sense of sight. The extensiveness of the coverage often varies widely and it can also coincide with individual life insurance plans.

Overall, travel insurance is meant to protect you against unforeseen travel misfortunes, such as sudden flight cancellations due to unfavourable weather, or your baggage getting lost, delayed or stolen.

3. What Doesn't It Cover?

Found a travel insurance that seems to be the one that will suit your travel needs? It’s good to also consider the limitations of the travel insurance policy that you are considering. What the plan does not cover depends on the individual package purchased from the provider, so it’ll be great to do some research in this area before committing.

For example, cancelled trips are a primary concern for most travelers. As such, most travel insurance provides coverage for cancellation and interruptions, but the reason for the cancellation makes a difference because not everything is covered. It’ll be good to run through scenarios which you might encounter and see if the policy can provide adequate protection in that area.

Likewise, most travel insurance policies will provide a list of covered reasons for trip cancellation. If your reason is not on the list, it means that you will not be covered.

Lastly, any cancellations for medical reasons need to be recommended and documented by a certified doctor. This means that one cannot simply cancel a trip because a family member has fallen ill without proper recommendation and documents from a doctor.

4. How Much Should It Cost?

Expensive doesn’t necessarily better. To figure out how much travel insurance policies should cost, we have to first look at how the cost of the plan is being calculated.

Usually, providers will utilise a few pieces of personal information, other than the cost of your trip, to calculate the cost of a plan. Here are some of the factors that they will include in their calculations.

  • Age of the travelers

The age of the traveler is considered one of the most important of the four factors. Generally, a traveler who is over the age of 65 can expect higher rates. If you are traveling with young adults or children, you may be able to add them to the plan at no additional cost, or at a lower rate. This really depends on the travel insurance company and the fine prints spelled out in the policy.

  • Number of Travelers and Length of Travel

The number of travelers and length of travel can often affect the rates of the plans. This is because with more variables, there will be more risk attached to the plan. For instance, if you are traveling overseas for three weeks days, as opposed to only one, there is a higher possibility of medical risks and travel interruption. Therefore, these are two good reasons to use your plan. The same can be said if you are traveling with four to five people, as opposed to just two.

  • Type of Coverage

The type of coverage you choose will also influence the cost of the insurance policy. A basic, no-frills comprehensive plan will naturally cost less than one that includes a myriad of optional benefits, such as Cancel for Any Reason or rental car collision coverage. Similarly, higher coverage limits for medical expenses or medical evacuation will equate to higher cost.

5. What's the Biggest Mistake People Make When Choosing a Policy?

One of the most common and biggest mistakes people make when choosing a policy is not giving the policy document a thorough read. It’s very common to see your friends buy the same travel insurance for all of their trips, without considering the different types of risk the trip may present. With that said, failure to read the policy document can put possible future claims at risk. It’s important to take note of the schedule of benefits, as it details essential information such as the terms and conditions of cover, limits of payout and the procedures of claims submissions as well as emergency contact numbers.

Another important thing that travellers overlook is the need to get extra coverage if they are on an thrill-seeking trip. Adventure holidays are gaining popularity as holidaymakers source for exciting new ways to experience their first bungee jump. This, however, also means that the likelihood of accidents occurring will be higher. It makes reasonable sense to get adequate emergency medical coverage when out of the country, especially if you’re planning to engage in sporting activities considered extreme. Activities such as sky diving or mountaineering can mean any medical expenses and evacuation from remote areas to adequate medical facilities are not covered.

6. Is Travel Insurance Worth It?

Two rules of thumb: Travel insurance is well worth it when you're going overseas and your health insurance does not cover emergencies outside of your country or when a large portion of your trip is non-refundable. That being said, travel insurance costs just about 5% of your total trip expenses and it gives you a peace of mind and cushions the impact unforeseen travel misfortunes. But in the case if any unforeseen travel misfortunes and you have to survive an airport layover, here are some tips that may come in handy.

This point to serve as article conclusion, containing an aggregation of the above tips, along with the claim that travel insurance is a worthwhile expense to be undertaken before any overseas trip. 

NOTE

The links to the external publications on this page are provided purely for your information and educational purpose only. Tokio Marine Group does not guarantee the accuracy, completeness or suitability of the contents of these external publications.  We are not endorsing any of the external products or services which are stated in these external publications, and do not attempt or intend to influence the purchase or sale of any such products or services. It should not be implied that the products, services or activities published in these external publications may also be covered under our insurance policies. Should you require more information on our products, please refer to the respective product summary or contact us.