Globetrotting: Consider Travel Insurance before You Hit the Road

Whether it's a mini-break or an international tour, taking a trip requires planning and can cost a lot of money. You don't want that trip of a lifetime to be cut short by injury or illness. You also don't want to worry about situations beyond your control, like a delayed flight to cause you to miss your cruise. According to the United States Travel Insurance Association, nearly 17 percent of Americans have had their travel plans impacted by illness, natural disaster, carrier-caused issues or severe weather. If you are planning an excursion, the NAIC suggests you consider the ins and outs of travel insurance to see if it's right for your next adventure.

Do I need travel insurance?

• What are the chances you'll be impacted by severe weather or missing baggage?
• How willing are you to take risks?
• How much are you willing to pay for a back-up plan?
• Do you have questionable health or is a loved one ill?

If you cannot afford to cancel and rebook your trip or your health insurance doesn't cover you abroad, travel insurance may be for you. You typically don't need travel insurance for short trips close to home.

Travel insurance usually costs between 4 percent to 10 percent of a trip's cost. For a trip totaling $5,000, travel insurance could range from $200 to $500 depending on the coverage. Also consider your destination. A traveler hiking in Kenya will have vastly different risks than someone taking in the sights of New York City.

Travel Insurance Basics

There are four main categories of travel insurance:

• Trip cancellation - Reimburses pre-paid travel expenses if you are prevented from taking your trip because you become ill or die.
• Travel medical - Reimburses medical and emergency dental expenses that you incur because of an illness or injury while you're traveling.
• Emergency medical evacuation - Provides emergency transportation to either a hospital in the geographic region where you are and/or transportation back to a hospital near your home.
• Accidental death/Flight accident - Accidental death covers death or dismemberment at any time during a trip while air flight accident covers death or dismemberment during flight only.

Travel Cancellation Coverage

Basic trip cancellation coverage is typically included in every comprehensive policy. This means you'll be covered if your trip is canceled for specific, covered reasons. These may include:

• Unexpected illness or injury of you or a traveling companion that deems you unfit to travel, by order of physician
• Hospitalization or death of non-traveling family member
• Weather or common carrier issue
• Unforeseen natural disaster at home or the destination
• A legal obligation such as being called for jury duty or serving as a witness in court

Check your policy carefully to understand exactly what is covered if you need to cancel your trip. Also pay attention to coverage limitations and exclusions. Exclusions might include canceling your trip due to being detained by customs or having to cancel due a work obligation.

Travel Medical and Major Medical Insurance

You should contact your current health insurance provider to find out if your policy will cover you where you are traveling. Some policies might cover you if you are in the U.S. or Canada, but not Europe. Other major health plans do provide coverage overseas so it's worth checking before purchasing additional coverage.

Travel medical and major medical insurance policies provide protection if you become ill or injured while traveling. Travel medical insurance provides short-term medical coverage lasting anywhere from five days up to one year, depending on the policy. Major medical insurance is for longer trips, lasting six months up to a year or longer.

These plans help you cover medical expenses and find doctors, hospitals and even foreign-language services if you become ill or injured while traveling abroad. Find out if your policy requires you to obtain prior approval before seeking medical care. Also check if any pre-existing medical conditions will exclude you from coverage.

Emergency Medical Evacuation Insurance/Repatriation Insurance

Emergency evacuation insurance provides coverage for services such as air evacuation and medical transportation to the nearest adequate medical facility then home if warranted. This type of coverage is useful if you're traveling to a rural area without easy access to medical facilities.

Repatriation coverage means the travel insurance company will arrange and handle the transportation to return a covered person's body home or to a funeral facility.

Keep in mind that this coverage may not cover you if you're participating in an activity your insurer considers dangerous such as scuba diving or sky-diving so if you plan to engage in these activities, look into specialized coverage. It is important to ask about coverage limitations or exclusions before you commit to buying an insurance product.

Accidental Death/Flight Accident Insurance

This type of insurance provides coverage for any injury or death sustained while boarding, riding, exiting from, being struck or run down by an aircraft. These policies cover the death of the insured traveler, the severance of a limb or irretrievable loss of eyesight, speech or hearing. Note, this coverage does not apply to accidents inside your home country or the transportation of a body back to the home country.

Other Considerations

Travel insurance is intended to protect travelers against sudden and unforeseen events. If you're heading to Florida in two days amid hurricane predictions, purchasing travel insurance at the last moment isn't likely to help you. Typically, if you buy travel insurance after a winter or tropical storm is named, your plan won't provide coverage for claims related to that event.

If your trip is canceled due to your tour operator going out of business, some policies require you to provide thorough documentation for all your trip costs, including any refunds you might have received.

If your flight is delayed, you may or may not be covered. Some policies only cover a trip cancellation claim if you lose more than 50 percent of your scheduled trip length due to a covered delay. You also must make a good faith effort to continue your travels using alternative means.

Most homeowners insurance policies cover personal property lost or stolen during a trip. Check with your home insurer to see what they cover while you are traveling. If you have expensive items, you might want to purchase a floater to add to your current homeowners policy to cover those items.

More Information

When searching for travel insurance, contact your state insurance department to learn more about the company and the person selling you the policy as well as to ensure they are licensed in your state.

If you're planning to travel abroad, register your travel plans with the State Department through the travel registration website. This will allow the nearest embassy or consulate can contact you in the event of an emergency.