Everything You Need to Know About Travel Insurance

Booking a trip is exciting, but it can also be pricey. So, it is always a good feeling when everything is booked and you have gotten the best deal for what you want.

But then a new expense crops up, travel insurance! Do you really need to pay for that as well?

Yes! Especially today, when disruptions in the tourism industry caused by the pandemic mean that flight cancellations and unexpected issues are more common than ever before.

Travel insurance helps to ensure that you aren’t out of pocket when a flight gets cancelled, or you miss a flight and are forced to find last-minute accommodation. Travel insurance can help you buy the essentials if you show up at your destination a few days before your luggage. The right kind of travel insurance can also cover medical expenses if you are in an accident while away from home.

Finding the right travel insurance means balancing the best price with the things that will help you when travelling. There is nothing worse than having a problem only to realise that your insurance doesn’t cover it.

Read on as we take you through everything you need to know about travel insurance.

How does travel insurance work?

Just like car insurance, travel insurance is a contract between you and an insurance provider. In exchange for a non-refundable premium, if something that you are covered for happens while you are travelling, your travel insurance will cover the cost of the issue up to an agreed amount. But unlike car insurance, it is usually a one-off premium that you pay before you travel.

Terms and conditions vary in relation to whether you need to pay deductibles before your insurance kicks in, whether insurance pays out right away, or whether you need to pay and then claim the expenses.

Alongside overall cost, these are important considerations when it comes to choosing the right insurance policy. It can be a nightmare to learn that you need to pay expenses upfront but don’t have the money to do so.

The best insurance policies offer a concierge service with experts on the line to help you solve problems and book things on your behalf if needed.

What does travel insurance cover?

Travel insurance can cover a variety of things, and you can choose to include or exclude certain elements, which will change your premium. In most cases, you will have the option to cover the following.

Trip Cancellation

Your insurance provider will reimburse you for what you have paid if your trip is cancelled before you leave for an agreed list of reasons. You can be reimbursed for flights, accommodation, car rentals, tours, and more.

There will be a defined list of acceptable reasons for cancelling a trip in your policy. It is likely to include things such as illness, the death of a family member, military deployment, or unexpected civil unrest at your destination.

Usually, you can’t claim on your insurance if you cancel because you change your mind about travelling. However, some providers will let you add a “cancel for any reason” clause to your contract. Though, of course, this pushes up your premiums.

You won’t claim from your insurance if your airline or your accommodation cancels on you, as you will need to approach the provider for a refund.

Trip Disruption

Your insurance will also usually cover you if your trip is disrupted for some reason. For example, if your return flight is delayed by 24 hours and you need to secure accommodation and food while waiting, your insurance will cover those expenses.

There is usually a minimum amount of time before this kind of coverage kicks in. For example, it is reasonable that you will be expected to fend for yourself for 3-6 hours, but if the delay is longer than that, your insurance will kick in.

There is usually a cap on how much your insurance will pay out. You can expect a daily cap of $150-$250, and an overall trip cap of $500-$2,000. You can usually raise or lower your cap depending on your premium.

This same insurance will pay out if your trip is disrupted for a reason agreed in your contract. For example, if a close family member suddenly becomes sick and you need to fly home immediately, your insurance will cover a flight home.

Medical Expenses and Emergency Evacuation

While many people assume that medical expenses are included as standard in travel insurance, it is not always the case, and if it is something that you want, you should double-check that it is included. You should probably only forgo this part of the insurance if you already have international medical coverage, or you are travelling within your home country where your medical expenses are already covered. Remember, your national medical insurance will not cover you in a foreign country.

Your travel insurance should cover you for treatment of any sickness or injury that you sustain while travelling, such as doctors’ fees, hospitalisation, and medications.

Your insurance will usually include a clause that covers emergency medical evacuation and transport costs. This can be very important depending on where you are travelling, as in some cases, you simply may not be able to get the medical treatment that you need where you are. For example, if you are on a remote island getaway, you may need to be flown to the mainland for care.

Medical evacuation coverage will have a cap, usually somewhere between $15,000-$200,000. This may seem like a lot, but a medically assisted airlift is expensive. How much coverage you choose affects your premiums and should depend on where you travel. You probably won’t need high coverage if you are travelling in western Europe, but you may need it if you are on an African safari.

The medical coverage in your travel insurance usually does not cover you if you injure yourself while engaging in extreme sports like snowboarding. This is an extra that needs to be added to your insurance. When you add this, you will probably also get coverage for your sporting equipment.

Baggage and possessions

It is not only you that is at risk when you travel, but also your baggage and possessions, and your travel insurance should cover them as well.

If your baggage is lost or stolen, your insurer can cover the cost of reimbursement for the value of the items. Again, there is usually a cap on how much your insurer will pay out, and you can push this cap up or down depending on the value of what you are travelling with, and this affects your premiums.

While your smartphone and your laptop are usually included in your coverage, cash, jewellery, art, and heirlooms are usually not covered, and you need special insurance to cover these items.

Your insurance will also pay out if your baggage is delayed and you don’t have the things you need when you arrive at your destination. A capped daily allowance will kick in to help you buy clothes, toiletries, and other necessities.

How much should travel insurance cost?

Travel insurance providers determine the cost of your insurance premium based on a variety of factors. The principles among them are:

Where are you travelling? This indicates risks in terms of theft and medical evacuation. The cost of medical treatment where you are travelling is a significant factor.

How much was your trip? This is a good indication of how much they are likely to pay out in cancellations or emergency flights home.

How old are you? This is used as a general indication of your health and fitness to travel.

How long is your trip? The longer your trip, the more likely you are to encounter an issue.

You can expect travel insurance to cost between 4-10% of the cost of your overall trip. Additions such as “cancel for any reason” clauses, extreme sports coverage, and coverage of valuable items will push your premium up.

Single vs. Multi-Trip Travel Insurance

Most people take out travel insurance on a per-trip basis, which makes sense if you only take one holiday a year.

But you can also get multi-trip travel insurance that will cover you for a year and will cover you wherever you travel during that period. This is valuable for people who travel frequently.

You will usually need to choose which countries you are likely to travel to. For example, if you choose North America and Europe, your premium will be lower than if you choose the entire world. 

Many credit cards also offer you free travel insurance when you make relevant purchases on your cards, such as flights and hotel bookings. It is important to research what exactly is covered and to make all of your travel-related purchases on your credit card.

You can also choose between personal travel insurance and couples or family travel insurance as required.

Premiums tend to go up when you are over 65, but there are also specialist insurers for older people. You can usually get lower premiums if you share additional information about things like your medical history.

The Verdict

While there are many things to consider when choosing the right travel insurance, it is actually pretty simple to find the coverage you need. 

But before you start looking, it is important to know what is covered, and what you need to be covered and to what level. Travel insurance is a personal contract between you and the insurance provider, so you should be able to tweak elements of your contract to get the exact coverage that you need.

A note on COVID! During the pandemic, insurance coverage for COVID-related issues was complicated. Today, most travel insurance policies will cover you for COVID-related expenses, such as testing positive and needing to self-isolate, but only if you follow all the required procedures, such as being vaccinated and taking tests before travelling.

Also, insurance will not usually cover COVID-related issues if you choose to travel to a “red-listed” country where COVID is known to be a major issue. If you choose to travel here, then you are “accepting the risk”.

At TravelTank, we offer the best travel insurance policy for our customers. For more information on our, Travel Insurance Policy send a mail to extras@traveltank.com!