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If you’ve never looked into travel insurance before, you may not realize that you can customize a policy that reimburses you when covered events go wrong on a trip, from big disasters to little annoyances:
- Big problem: For example, getting an injury or illness while traveling is a big reason to buy travel insurance, especially considering the potential expense of medical care abroad.
- Little problem: A flight delay at an airport is annoying. So is having to spend extra money because of the delay on expenses like restaurant food and toiletries while you wait it out.
Travel insurance can reimburse you for all that if you buy the right policy.
Here are top tips for buying travel insurance—along with some of the gotchas to watch for.
Trip Cancellation Coverage Is Key, but Read the Acceptable Reasons
A good travel insurance plan will bundle a variety of valuable benefits. One of the most popular components of travel insurance is trip cancellation coverage. This reimburses you for prepaid and non-refundable fees you paid if you need to cancel your trip.
The catch here is that it provides reimbursement only if you cancel for a reason listed in the policy. These acceptable reasons often include:
- A serious injury or illness of you or a family member
- A recent terrorist incident at your destination
- A job lay-off
- A natural disaster, fire, flood or similar problem that makes your destination uninhabitable
- A natural disaster that has hit your home
- Being in a car accident on the way to your point of departure
Read the fine print for the reasons covered by your policy, and also look at the specific rules for each. For example, terriorism at the destination might be an acceptable reason to cancel only if it happens within 30 days of your arrival date. Or, if you’re heading to the Caribbean, you can’t purchase trip cancellation insurance if a hurricane has already formed.
What if you’ve suddenly developed a fear of traveling? That won’t be covered by standard trip cancellation insurance. But for those willing to spend more on their travel insurance (about 40% more), there’s “cancel for any reason” coverage. With this travel insurance add-on you can cancel your vacation on a whim and still get partial reimbursement of your non-refundable trip costs.
The fine print here is that your reimbursement will top out at 50% or 75% of your trip costs, not 100%. Still, it gives you the option to cancel no matter what your reason is and get some money back.
Buy Ample Medical and Emergency Evacuation Benefits
Another top reason to buy travel insurance is for travel medical insurance and emergency medical evacuation coverage.
When you travel, you always take the risk that you could become injured or ill. Medical bills can quickly mount to exorbitant out-of-pocket expenses.
It’s important to know that your U.S. domestic health insurance coverage is generally not accepted in foreign countries. Nor is Medicare. Because you will likely have no health coverage outside the U.S., a travel insurance policy provides a safety net. The medical expenses component will cover doctor visits, urgent care visits, surgery, prescriptions and ambulance transportation.
Beyond customary medical care, if your condition warrants a transfer to a specialized hospital, emergency medical evacuation coverage will be a literal life-saver. During this type of emergency, you don’t want to have to figure out your game plan in unfamiliar surroundings or a remote location. If you are in need of very serious medical attention, this benefit can include airlift to a specialized treatment center or even evacuation back to the U.S. If you paid this cost yourself it can easily be upwards of $100,000, or even $250,000 in remote locations.
The most generous travel insurance plans will provide $500,000 for medical expenses and $1 million for medical evacuation.
Look at Rules for Travel Delay Benefits
Sometimes a vacation can hit some serious speed bumps. Another important benefit of a travel insurance policy is travel delay reimbursement. If there’s an unforeseen delay that keeps you from reaching your destination, you can receive reimbursement for related expenses.
For example, if you’re delayed due to weather or mechanical issues with an airplane, travel delay insurance can reimburse you for lodging, meals, medicines, transportation or even re-booking your flights.
It is important to know, however, that there may be a required delay time before benefits start, such as six hours of delay. There is also a cap on daily limits for reimbursement, which can be $150 a day or more per traveler who is covered on the policy.
If the delay causes you to miss activities that were pre-paid and non-refundable, you can also be reimbursed under a trip delay benefit, so long as the reason for delay is covered by the policy.
Know the Boundaries of Baggage Coverage
If your bags are delayed or, even worse, get lost in transit to your destination, it’s both an upsetting and an expensive problem. If you need essentials like clothing, medicine and toiletries your travel insurance plan can reimburse you under baggage coverage.
Experts warn to be careful when packing expensive jewelry, electronics or valuables because travel plans generally have a “per item” limit, such as $250 per item, up to a total maximum such as $2,500 per person. If your lost baggage had light clothes and swimsuits, this cap won’t be an issue.
The fine print here is that you need documentation in order to file a claim. You’ll need to provide a list of the lost or damaged belongings and their value, and provide receipts for certain items. It’s important to be very diligent and save your receipts, including receipts for vacation purchases that were packed in the lost luggage.
In addition, reimbursement is based on “actual cash value,” meaning the depreciated value of the items you’re claiming. So if your baggage contained five lovely dresses that you bought three years ago, you won’t be paid for new lovely dresses.
Finding the Right Travel Insurance Plan
If you’ve never bought travel insurance before, don’t be scared off by coverage types you may not be familiar with.
Work with a travel insurance agent and tell them your main concerns about potential trip problems. They can find a policy that has the best coverage for your trip.
Erica Lamberg is a personal finance and travel writer based in suburban Philadelphia. She is a regular contributor to USA Today and her writing credits include NBC News, US News & World Report, Business Insider, Oprah Magazine and Creditcards.com.