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. 

COMPONENTS
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).

TIMING
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.


COST
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.

CREDIT CARDS
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!

Smart Traveler Enrollment Program

Scenario A: At the end of a long day of sightseeing, you're in a foreign country, sitting on your hotel bed with your laptop pulled up and the free WiFi working its magic. You're in a modern city, in a modern hotel, bottled water is at the ready, and all seems right with the world, despite being 12,000 miles from home. When you check your email, you see a message from the US Embassy in the city you're visiting. "Notice to US Citizens," it begins. You are advised that in light of recent political events (which have nothing to do with you or your trip), there might be some local backlash and protests are expected in the vicinity of your hotel. You take a quick glance at your itinerary and see that you're due to depart when the protests are about to begin, and hope that your luck holds out and the airports will remain open. Within days of your departure back to the States, you turn on CNN to see that city erupt in flames, riots in the streets, people gunned down on the sidewalks, the subway system has come to a halt, and the hotel you stayed in has recently been evacuated and the entire neighborhood is shut down.

What would you do if you hadn't left when you did? Where would you go? Where would you stay? How would you contact your family? Would they know where you are, if you're safe? What if the local US embassy had a safe house for you, or arranged transportation out of the city for all US citizens?

Scenario B: You're traveling in a non-industrialized nation and there's a massive earthquake. All standard communications to the US have been cut off. Does your family know where you are? Are you safe? Has your building suffered damage? How do you get word back to the US about your condition and safety? How does the US even know how many citizens are in that country that need assistance and evacuation?

Scenario C: You're hiking along the border of two nations when you're confronted by the local police. They take you into custody and imprison you for an indeterminate amount of time. You're not able to contact your family, and they haven't heard from you in days. How do they know where you are and what happened? They can opt to contact the local embassy and inquire on your last whereabouts and negotiate for your release.

If you register with the US State Department's Smart Traveler Enrollment Program (STEP), your location, contact info, and travel plans would be known only to the embassy, your family, and you can elect to have your itinerary known to your Congressmen and the media (or not). The embassy would know how to find you, and your family could contact the State Department to learn if you were safe or not. They can also issue instructions about where to evacuate, where to find supplies, assistance for citizens, and other useful information in case of an emergency. All of the above scenarios aren't fictional, they've all happened, and the first scenario I was faced with in Southeast Asia. Due to the regular travel advisories that the embassies send, I was able to be more vigilant of our surroundings and was able to make alternate plans if necessary. Likewise, I knew that my family would be notified if I were in an emergency situation and that I wasn't alone in the world.

Consider the STEP program a vital part of your international travel plans. Like packing your passport and earplugs, take a few moments to register your itinerary online for free peace-of-mind.