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How to shop for travel insurance
Whether you're a seasoned globetrotter or it's your first time you've ever considered travel insurance, it can be a challenge to compare trip insurance companies. However, don't let that discourage you from getting travel insurance coverage.
Travel insurance can’t prevent unfortunate events from occurring, but it can reduce the inconvenience and financial pain that follows them.
This guide will help you compare travel insurance companies so you can get the best coverage at the most competitive rates.
What is travel insurance?
Travel insurance protects you from certain financial risks and losses that can occur while traveling. These losses range from minor matters, such as a delayed suitcase, to major issues, like a last-minute trip cancellation or a medical emergency.
Another important benefit of travel insurance is obtaining access to a team of travel and medical experts who can, among other things, arrange medical treatment in an emergency, monitor your care, serve as interpreters, or help you replace lost passports.
What does travel insurance cover?
The coverage and benefits of travel insurance policies vary by plan. It’s important to understand what types of coverage are available so you can choose a plan that fits your needs, budget, and travel plans.
Here are the most common travel insurance coverages:
- Trip cancellation
- Trip interruption
- Supplier/itinerary change
- 24-hour hotline assistance
- Pre-existing medical conditions
- Emergency medical & dental
- Emergency medical transportation
- Primary insurance coverage
- Secondary insurance coverage
- Baggage loss or damage
- Baggage delay
- Baggage insurance
- Collision damage waiver
Some travel insurance policies provide additional services that go beyond the basics. Such services vary by policy and may not be applicable to all types of trips. They include:
- Car rentals
- Travel companion benefits
- Free child coverage
- Legal referrals and bail bond assistance
- Emergency evacuation
Travel insurance can’t cover every possible situation. Most travel insurance companies offer named perils travel insurance. That means only the specific events mentioned in the travel insurance policy are covered. Make sure that includes the coverages and benefits that matter the most to you.
Travel medical insurance comparison
Many travelers are surprised when they learn that their domestic insurance policies don't cover the cost of medical care abroad.
Other domestic policies do provide travel health insurance – but only as a reimbursement. This requires individuals to make the initial payments out-of-pocket. Travel insurance policies that cover medical emergencies provide up-front payment for medical treatment, sparing policy holders the need to pay large medical bills. If you are confined to hospital, some policies will even pay for a friend or family member to travel to your location to assist you.
Travel medical insurance, also known as international medical insurance, can also be purchased as a stand-alone policy without trip cancellation coverages. It is designed for people traveling overseas who want coverage for medical emergencies and evacuations. Typically, they cost $40 to $80 for a short trip. Cost is based on the age, coverage limits, and length of the trip. Expect to pay a few dollars for every day you're insured.
What types of travel insurance plans are there?
When shopping for travel insurance policies, check you are comparing the same type of plan. Travel insurance plans are typically divided into the following types:
- Annual coverage
- Single-trip coverage
- Long-term international
- Group plans
Do you need travel insurance?
It depends on your risk tolerance and the total cost of your travel plans in relation to your income. There isn't a fixed rule, but it usually makes sense to purchase travel insurance if you are traveling overseas or have booked a domestic vacation with a total cost of more than $5,000.
The limitations and exclusions associated with many travel insurance policies make such policies less worthwhile for low-cost domestic flights, unless coverage specifically includes reimbursement for nonrefundable fares.
Read your travel insurance policy documents carefully before you travel. Note that you have 10 days to request a refund if you are not happy with the coverage of your travel insurance plan, as long as you haven't started your trip or made a claim.
How does travel insurance work?
Typically, travel insurance reimburses you for your covered financial losses after you file a claim and the claim is approved. To file a claim, you need to provide proof of your loss. Once the insurance company verifies the event was covered and falls within the conditions described in the policy, they reimburse you for your covered losses. You can file a claim online or over the phone.
Here are two typical scenarios of how a travel insurance claim can play out.
Let's say you purchase a travel insurance policy that offers trip cancellation benefits. A day before you leave on the cruise of a lifetime, you get so sick you have to cancel the trip. You call the cruise line and they let you know it's too late to get a refund. Thankfully, a disabling illness is a covered reason for a trip cancellation on your travel insurance policy and you receive a full refund for your all your travel expenses.
Sometimes, you can make a claim and get your expenses paid up front. For example, maybe you are in a foreign country and you need emergency medical treatment and transportation to a hospital. With some travel insurance companies all you need to do is call, explain the situation, and they will take care of the rest.
How to choose travel insurance plans?
The secret to getting the best deal on your travel insurance plan is to compare multiple travel insurance companies and only pay for the coverage you need. Follow these steps when comparison shopping travel insurance policies.
- First, determine the coverages and benefits you need and what deductibles you can live with. Continue reading for guidelines on how to determine the coverage and limits you should choose.
- Second, check which travel insurance companies offer the coverage you want and filter them by financial ratings and travel insurance consumer reviews.
- Ask for at least three travel insurance online quotes using the same coverage, limits, and deductibles.
- Compare the cost, benefits, and customer satisfaction reviews of each travel insurance company.
Here are some guidelines to help you decide the type of coverage you may need and the limits you should get when comparing travel insurance quotes.
- If you are on a budget and traveling in the U.S., you may want to consider a basic travel insurance plan that offers trip cancellation, trip interruption, and trip delay benefits.
- If you are budget conscious but you're traveling overseas, compare travel insurance plans that include emergency medical and emergency transportation benefits, as well as other post-departure benefits. However, you can save money by dropping the trip cancellation/interruption.
- Of course, if you want the reassurance of carrying substantial travel insurance benefits, you can have it all and include pre-departure, post-departure, and full medical coverage. Some travel insurance plans will even cover minors for free when traveling with an insured parent or grandparent.
Compare travel insurance cost
The cost of travel insurance plans varies by lender but you can expect to pay something between 4% and 10% of the total cost of the trip. The main factors that determine the cost of travel insurance are:
- Your destination. The cost of living -- particularly the cost of medical care -- of your travel destination will affect the cost of your premium.
- Age. In general, the older you are, the more expensive it is to buy travel insurance.
- Length of the trip and travel expenses. The longer you plan to travel and more expensive the trip, the higher the cost.
Frequent travelers should consider an annual travel insurance policy. This gives you affordable protection for a full year and will typically include benefits for trip cancellation and interruption, emergency medical care, lost or delayed baggage, and rental collision damage.
How to compare travel insurance coverage limits?
When shopping for travel insurance companies make sure your coverage limits are high enough to pay for the entire cost of the trip and cover emergency healthcare. The maximum coverage most travel insurance companies will offer is $1 million, which is probably excessive in the majority of cases.
However, you don't want to be cheap either, especially when it comes to travel medical insurance and emergency evacuation. In most cases, it makes sense to get between $100,000 and $300,0000 in coverage. The goal is to have enough coverage to provide emergency medical treatment and get you home where your regular medical insurance will foot the bill. You could easily exceed low coverage limits of $10,000 or $20,000 if you break a leg or need emergency transportation back home.
Travel insurance company reviews
SuperMoney's travel insurance company reviews provide travelers with an easy way to compare travel insurance plans and request online travel insurance quotes. When reading travel insurance reviews focus on company ratings and customer satisfaction reviews.
Travel insurance company ratings
Travel insurance company ratings describe the financial stability of a carrier. This is important because the best coverage and benefits are useless if a company can't afford to pay for your claim. Avoid buying insurance from a no-name company that doesn't have a solid financial stability rating.
There are five main insurance company rating agencies: A.M. Best, Fitch, Kroll Bond Rating Agency (KBRA), Moody’s and Standard & Poor’s. Rating methods vary by agency and they all have their own list of rated companies.
SuperMoney's travel insurance reviews provide a financial strength rating that combines available ratings to help you determine the reliability of an insurance company. However, these ratings could change at any time so it's smart to check with the rating companies directly before making a decision.
Travel insurance customer reviews
Travel insurance reviews tell you about other people's experiences with a company's attention to customer care. Look for companies with predominantly positive travel insurance customer ratings. Although it's unrealistic to expect a travel insurance company to not have any negative reviews, avoid travel insurance companies with a pattern of unresolved complaints.
The bottom line of shopping for a travel insurance company
As soon as you make a travel purchase, you are nearly always prompted to buy trip protection on the spot. Don't fall for it. It is always best to seek options and comparison shop before you choose a travel insurance policy.
Timing is another important consideration. Waiting to the last minute to buy travel insurance may trigger exclusions. For example, if you buy travel insurance because you hear a hurricane is heading toward your hotel, it's unlikely the travel insurance company will consider it a covered event.
In general, don't wait to the last minute to buy travel insurance coverage because you will probably only qualify for basic coverage, such as emergency medical coverage and lost baggage protection.
Examine your existing insurance coverage, the cost of your trip, and your financial situation. Determine what package of travel insurance benefits makes sense for you.
Use travel insurance comparison reviews and tools to filter companies by the coverages, benefits, and limits you need. Compare prices for similar packages from three or more carriers. Then use travel insurance consumer reviews to check on their financial stability and customer care ratings.
Although buying travel insurance is a complicated topic, everyone can plan ahead before traveling. By shopping and comparing travel insurance policies before your trip, you can get the right amount of travel insurance coverage at an affordable price.