Travel insurance: Just the faqs

I’m not making it up. It happened a few weeks ago at hotel in the Caribbean. No one ever likes to imagine the unimaginable, but sadly enough, it happens all too often.

Americans have some of the best medical care in the world and it’s sorely missed when we’re traveling internationally. But when things go wrong abroad, there are some things you had better not leave home without, and the American Express card is not at the top of the list.

While most people don’t think twice about the necessity of other types of insurance, travel insurance somehow falls way off the radar screen. According to the Centers for Disease Control and Prevention in Atlanta, one out of every two travelers in a foreign country will experience some health problem. While most are minor ailments that can be treated with a trip to the pharmacy, there are times when it is not as simple.

Sometimes a domestic trip might not require insurance, but rarely is there an international one that does not. Here are some of the questions I am frequently asked:

I already have health insurance, why do I need travel insurance?
Read your fine print. A lot of insurers will not cover you in a foreign country. Also, many foreign hospitals will not let you leave without payment arrangements in place. Be sure to check your policy very carefully.

In the event of a severe emergency, you may want to be airlifted to quality medical facility. Trust me, you do not want to be treated in a third-world hospital. While immediate care is critical, sometimes it just makes more sense to wait until you can get qualified care.

Travel insurance will cover you. Since medical treatment is an immediate need, most insurers will require documentation to support the claim. Be prepared and keep all invoices, notes, and receipts. Check with your travel insurance policy for their procedures—many require a toll free call to them prior to any treatment being initiated. It may be a hassle in the end; but the main point is that you received the proper medical attention.

Well, I’m healthy, is that all it covers?
Not really. While you may be healthy, accidents do happen. Stupidity happens. Ask my cousin who had the urge to become an Acapulco cliff diver in Bermuda. The coral scrapes healed, but only after an unscheduled trip to a local emergency room, a first class flight back to Philadelphia, and 3 days in a hometown hospital. Don’t forget those you leave behind as well. Travel insurance policies will cover you if you need to return to take care of an ill or dying relative.

How much coverage do I need?
Policies vary in their coverage, but most of them include some sort of trip delay insurance (missed the flight), baggage delay insurance, supplier bankruptcy, terrorism incidents and trip cancellation insurance. You can even be covered for pre-existing conditions under certain policies. Be sure to read the complete list of coverage before agreeing to purchase a policy so you know what is covered and what is not. Ask your travel professional to review the benefits of all policies for you if you are unsure. In most states, the sale of travel insurance is regulated and your travel agent is required to have a license to sell the product.

So how much is this going to add to my trip?
Not nearly as much as it will cost if you need it and don’t have it. Most policies are based on your age and the cost of the trip. Full coverage policies range from 7 percent to 10 percent of the cost and limited policies are much less. When you consider the costs of a medical evacuation or the loss of a trip when a family member becomes ill, the investment is well worth the cost.

Do I always need insurance?
If you are willing to assume a financial risk (the cost of your trip), you can probably forego insurance for your domestic travel. Your health insurance should cover you in the United States, and the level of care is more than adequate. However, if you are traveling internationally, insurance should be seriously considered. The less industrialized the country, the greater the need.

My vacation package has insurance built in. Isn’t that enough?
Maybe. A lot of “insurance policies” packaged with a vacation are not insurance at all but merely a trip-cancellation waiver. A trip cancellation waiver usually allows you to cancel your trip for any reason (insurance policies need a covered reason) and receive a full or partial refund — sometimes in funny money to be used with the travel supplier within one year.

This is great for those “my girlfriend dumped me and I ain’t taking her to Cancun” stories. You can usually identify a trip cancellation waiver by the low price (typically $50 to $75 per person) and the price not being tied to the cost of the trip. However, some of the policies offered through the travel supplier are indeed a form of travel insurance. Again, read the fine print. Most policies issued by a travel supplier do not cover financial insolvency on the part of the supplier. In some cases, it might be your best option to purchase a trip cancellation waiver and a third party travel insurance policy.

If you are comfortable in deciphering insurance policies, you can purchase these directly from the insurers. While insurers do pay a commission to your travel professional, you will not pay any more by using your agent. Your travel professional is familiar with you and your needs, as well as the requirements of the policies and the way the company handles claims. Inside insight is a valuable tool. Your travel agent (depending on the state) may be required to be licensed to sell travel insurance. If you are not confident that your agent knows the details, don’t be afraid to ask to speak with someone who does. A denied claim is a nightmare for everyone and you deserve to have a knowledgeable professional explain the different programs and coverage for you.

Regardless where your travels may take you, consider insurance. While not needed in all circumstances, it is desirable in many. Each situation is unique, but you will do yourself a disservice if you don’t at least take a look.

March 21, 2005

John Frenaye is the president of JVE Group, Inc., a diversified company which operates the Carlson Wagonlit Travel associate office in Arnold, Md. With a background in business management, he writes about the travel industry as an insider with an outsider's perspective.