Are you buying Travel Insurance for your holidays this time?
Holidays are approaching and we are either finalizing our reservations now or have done that already. Within all this, are you still thinking whether to buy Travel Insurance or leave this again as is and go with your instincts that everything will be alright?
Travel Industry has changed over last 10 years and the change is both good and bad for the general traveler. How this change impacts your decision on buying travel insurance is what I’m going to talk about today. Before coming to change, I would like to get into some basics about Travel Insurance.
What is Travel Insurance?
Simply put, It is the insurance to cover your medical expenses, financial default of travel suppliers (Travel Agent, Airline, Hotel, Car Rental) & other losses incurred while traveling, either within one’s own country or internationally.
What are different Categories of Travel Insurance?
There are two broad categories of Travel Insurance: Trip Cancellation & Travel Medical Insurance
- Trip Cancellation: Most of the insurers offers this as a package policy which includes:
- Cancellation of your trip before departure for valid reasons. This will reimburse you for the pre-paid non-refundable portion of your trip. There are many insurance companies who will let you upgrade to cancellation for any/No reason subject to some conditions like – must be purchased with the trip, must be certain days in advance of your trip start date etc.
- Interruption: Some insurance policies also include trip interruption along with cancellation. This feature is beneficial when you have to return home from your trip early due to covered reasons (natural calamity, medical/death emergency of closed relative etc). This insurance helps you pay for extra cost that you will incur to return home early like flight changes, cancellations etc.
- Baggage: Many policies also cover things as loss of checked baggage, baggage delay up to certain amount etc. Usually policies have pre-set limit for each of such instance and they pay reimbursements accordingly.
- Others: Different policies have different coverages and may include one or more of the following items: Travel Delay, Emergency Medical Expenses, Emergency Evacuation Services, concierge Services, ID theft protection, flight accident and rental car coverage among others.
- Travel Medical Insurance: This insurance focuses less on cancellation benefits as explained above and more on medical benefits. This policy provides better medical coverage than the trip cancellation and is ideal for travelers who are traveling for a longer duration outside from their home country.
Now, real question – Do I need Travel Insurance, why?
In my opinion, you need a travel insurance if your trip cost is:
- More than US$1000
- Have purchased non-refundable travel products
- Going for a longer duration outside your home country
- And your regular health insurance does not cover you abroad, when you are traveling.
Over last 10 years, travel industry has changed a lot. Earlier most of the airlines used to charge US$100 for cancellation of their cheapest air ticket and very rare the tickets were non-refundable. If there were non-refundable tickets, then base fare was usually non-refundable but taxes were refundable. Now, the cheapest fare of most of the airlines out there is non-refundable including most of the tax component and travelers get very little refund if they decide to cancel their trip. Similar story is with Hotels, most of the cheapest or deal/sale price is non-refundable and if we were to buy a hotel room which has either free cancellation or one night retention, the difference is huge between regular price and sale price. Believe me or not, 90% of travelers buy cheapest/non-refundable deals and many times end-up canceling their travel and thus loosing lot of money as cancellation charges.
In all these scenario’s we go by our Instinct that everything will be ok and we will be making our trip as every time in the past. Honestly, Instinct is a poor way to make decision about insurance.
If for a family of 4 (2 AD + 2 CH), traveling on a short break, here’s how their travel cost looks like:
- Air Ticket: US$200 Average per person – Non-Refundable tickets = Total – US$800
- Hotel – 3 Nights – US$200 each night – Non-Refundable Rooms = Total – US$600
- Car Rental – 4 Days – US$25 per day = Total – US$100
- Total Trip Cost = US$1500
If you buy basic trip cancellation insurance, indicative price could be US$20 average per person = Total US$ 80. By spending, this US$80 extra, you are protecting US$1500 of your trip in case you need to cancel it for a reason at last minute.
Shop Around and find out which policy is best for you, which gives you more coverage for the less amount, compare apple-to-apple on different policies and familiarize yourself with conditions, claim process, emergency contact numbers etc.
Many people think it is an unnecessary expense, but consider this if you are traveling away from home and you get into trouble, you will end-up spending more amount on covering up for expenses than the premium amount you would have paid to the insurance company. Let the experts do the talking, let Insurance companies handle your emergencies outside your home country so you have less things to worry about.
Secure your travel, travel peacefully!