“Twenty years from now you will be more disappointed by the things you didn’t do than by the ones you did do. So throw off the bowlines, sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover.” -Mark Twain

Monday, March 14, 2011

What is Trip Insurance and Do I Need It?

Got approved time off work and your boss decides they need you in the office instead?  Airline cancel your flight or bump you?  Stranded overnight on an airport floor due to a snowstorm?  Earthquake?  Tsunami warning?  Civil unrest?  Mexico is "closed" due to the swine flu and it's during your family's spring break?  Chances are if you've had to pay out-of-pocket to address any of these game-changers, then it's likely travel insurance would reimburse you, or at least help you navigate a way out of the mess.

If you have to ask if you need it, you probably do.  If you have never asked, it's worth reading on to decide.

Actually, a few of the above have actually happened to me in recent months, and some have happened to other people.  If you're throwing down a few thousand dollars for a trip and something goes awry before or during it, you would probably want the piece of mind to know that you could at least get a refund on your money, or some cash back on some of the extra expenses you may have to incur due to a delay.  But travel insurance goes above and beyond these events.  If your luggage is lost, stolen, or delayed, think about how much money you'll spend to try to replace these items.  Or for instance, you're not even sure what could go wrong, but all you know is that the $9000 you're spending to fly your family to the Europe for a week and rent a house in the countryside better all be worth it because Murphy and his Laws are perpetually following.

A good starting point is before you book anything, visit the State Department's travel page and if you're leaving the country, check to see if there are any travel advisories, alerts, or warnings.  Sometimes your insurance won't cover an "existing" event.  However, if an advisory is issued after you purchased your insurance, then you may be covered, but the reimbursement may not take affect until there's an official government-imposed warning.  Sometimes your own judgment or discomfort won't be legitimate enough for you to cancel your trip and get reimbursed.  Think of this as a sort of "pre-existing condition."  This blog displays some of the current alerts and warnings for quick reference. 

Let's back up and talk about the components of trip insurance.  First, there's Trip Medical coverage.  Last year I ended up in an ER in Bangkok.  Luckily the bill with Rx was only $40 so it was hardly worth filing a claim (it likely fell below my deductible).  But what if I had a more serious issue and incurred $1000 worth of fees?  What if while I was kayaking, a huge wave toppled us over and I broke an arm when crashing into a rock?  Sh!t happens.  Meanwhile, some friends of mine ended up in a Hanoi ER for 3 days.  Poor honeymooners.  I'm not sure what their bill was, but from what I hear, I would have paid to be evacuated back to the swank ex-pat hospital in Bangkok.  Sometimes the care you need isn't available where you're injured, and there may be expenses to get you to the treatment you need.  It all adds up.  Trip insurance to cover medical needs will take care of these costs, and in most cases, will help handle the logistics while you're face-up on a gurney.  Sh!t happens everywhere and NOT when you expect it to.  Be ready.  For a minimal cost of a policy, it could save you from a large credit card bill, or worse, bankruptcy.  On top of that, just how much coverage do you want or need?  Ask yourself, are you - or any member of your family - in poor health?  Have a pre-existing condition that might flare up or environmental factors affect it?  (My travel medicine doctor always provides me with a list of the best hospitals in the region where I'm traveling.  Sometimes those hospitals are in other countries = another plane ticket!)

Then there's Trip Coverage, period.  This encompasses all the other logistics: lost luggage, stolen cameras, lost passports, evacuation due to natural disaster, missing a flight/connection, extra hotel for flight delays, vacation canceled because your kid got sick, etc.  However, for coverage, there are different levels and different amounts of coverage.  If I purchase basic insurance that will reimburse me if my trip is canceled because Godzilla just ate Tokyo before I even got on the plane, then fine.  Or if I have to rush home early because a family member passes away.  But if I decide to cancel my trip because my workload at the office is too large or my boss says so, that won't be covered unless I buy an add-on for "100% Trip Cancellation - Covered for any reason" or something to that effect.  Or if I want my luggage insured for $1000 instead of $250, or for a lower deductible, then I have to add on or increase coverage.  This goes on for all sorts of scenarios, delays, deductibles, etc.

If this all sounds very confusing, there is help!  One of my favorite travel resources is squaremouth.com. It's much like buying car insurance or plane tickets - Enter the total cost of your trip, your age, the dates, and destination, and the results show an array of polices and it allows you to compare side-by-side each element of every policy, and at what cost.  It's a fantastic way to break down what each level of coverage includes, doesn't , and compares the bottom lines.  You also can purchase travel insurance on a per-trip basis, or look into annual subscriptions, as well, if you're a frequent traveler (even if it's for domestic weekend jaunts).

Let's say you're planning a trip to Mexico for spring break.  You've already put down your deposit for the all-inclusive resort, and you may have paid in full by now.  You haven't yet bought trip insurance.  News hits the airwaves that swine flu is rampant in the country and most business are closing until it passes.  The State Department then issues a travel warning to avoid non-essential travel to Mexico.  You decide to buy trip insurance.  Sorry pal, you're out of luck.  You won't be covered because of this "pre-existing condition" that the country now has, and you didn't buy insurance at the same time (or in a lot of policys' cases, within 30 days of making your first payment) as booking.  You would have been covered to cancel this trip if you already had insurance before the warning was issued.  Travel insurance most often covers you for unexpected events, not expected events, as in this case.  So take note, when you book your trip, or even just pay for the plane tickets, get on that travel insurance quickly so you're covered now until the end of your trip.  Just note that if you want total coverage of your trip, that you should book within 30 days of when you make your first payment for anything on the vacation, as some companies may not cover you if you booked more than 30 days ago.

So what does trip insurance cost?  Not much, really.  That is, not in the grand scheme of your trip.  What is the cost of piece of mind?  Cost will vary by your age, where you live, where you're going, how much your entire trip costs, and how much (or little) coverage you want.  I tend to buy in the middle of the road: not the basics, a few more features, but not the high-end policies.  For example, a $1500 trip to Peru with average coverage is costing me $67.  The $2000 trip to Southeast Asia cost $90.  A first-class 2 week luxury trip to Egypt was about $120.  But this depends if you want to add "cancel for any reason" coverage, lower deductibles, higher reimbursement rates, and so on.  Again, squaremouth.com is a great site for comparing different plans across different companies.

Book your trip with a credit card.  Most credit card companies offer some sort of travel protection on plane tickets, delays, lost luggage, or other resolution for other difficulties if you've paid for that amenity on their card.  I don't leave home without an American Express Platinum card because of their worldwide travel protection, 247 assistance, and concierge service in case of emergency.  Check your credit card terms before booking.  You may want to only purchase a basic travel insurance plan if your credit card already covers a large portion of trip delay.  Credit cards and trip insurance can be used in concert with a purchased policy to provide the best coverage.  Just remember which credit card you're using for which purchase so you know who to call.

Lastly, research the web for reviews of some companies.  Although prices and policies may be attractive, it's possible that some companies may be non-responsive, may not reimburse quickly, and some might have excellent customer service.

If you have any further questions, information, or if anything posted here is incorrect, please email me!