A newbie’s information to journey insurance coverage

Travel insurance is becoming increasingly important as people want to book future trips during this uncertain time. Whether you want to learn more about the type of policy or are just new to the concept of travel insurance, we’ll walk you through the basic insurance options, including travel cancellation, travel interruption, travel health insurance and cancellation. coverage for some reason.

What is travel insurance?

Travel (or travel) insurance covers unexpected events that could go wrong before or during your trip, such as: B. bad weather preventing you from leaving on a ski trip or breaking your leg and flying home early.

According to the US Travel Insurance Association, around 65.8 million people had travel insurance coverage in 2018, up 49% from 2016. Due to the COVID-19 pandemic, these numbers are likely to increase further.

Many companies not only offer certain premium travel credit cards, but they also offer travel insurance plans. Insurance policies can vary from state to state. Therefore, choosing a plan can be confusing.

As part of NerdWallet’s Best Of Awards for 2021, we rated various travel insurers in several states, taking into account individual and annual trips. Based on our analysis, the World Nomads Explorer Plan was the winner with its robust all-round coverage for both pre- and post-departure benefits.

What does travel insurance cost?

Based on data from the US Travel Insurance Association, the price of travel insurance is typically between 4% and 8% of the travel cost. The cost of the policy is usually based on the following factors:

  • Duration and costs of your vacation: the more expensive and longer the trip, the higher the price of the policy.
  • Local Health Care Costs: High health care costs in your travel destination can add to the cost of travel insurance.
  • Scope of coverage: Policies with higher limits and more events covered are more expensive.
  • Your age: In general, the older you are, the more expensive the policy is.

Travel cancellation and travel interruption

Trip cancellation insurance is a pre-trip benefit that covers prepaid, non-refundable reservations such as flights, hotels and other bookings as long as the trip is canceled due to an unforeseeable event. The amount covered is usually 100% of the total travel expenses. In order to qualify for coverage, the cancellation must be made for a valid reason (e.g. jury duty, termination of employment, extreme weather).

Imagine you booked a non-refundable two-week vacation to Costa Rica for $ 3,000 ($ 800 flight, $ 1,700 hotel, and $ 500 excursions) and were injured in a car accident three days prior to departure. You are spending two days in the hospital and your doctor advises you not to travel. If you have purchased a policy that includes cancellation insurance, you will receive a full refund for the prepaid amount as accidental injuries resulting in medically imposed restrictions confirmed by a doctor are considered a covered reason.

However, travel interruption cover is a post-departure benefit that covers prepaid, non-refundable reservations when part of a trip is missed or a traveler has to return home due to an exceptional circumstance. Similar to travel cancellation insurance, the reason must be unforeseen in order to be covered.

Imagine flying to Costa Rica and, on the fourth day of your trip, falling while running, injuring your foot and being barely able to walk. An X-ray visit to the hospital will show you have a fracture and the doctor will advise you to stay away from your feet. When the pain gets worse, choose to fly home. If your travel insurance includes a break in travel, you will be reimbursed for the unused portion of your hotel stay, your unused return flight and the new return flight. Depending on the plan, travel interruption coverage can range from 100% to 200% of travel expenses, which can be extremely helpful as the cost of a last minute flight home can be quite high.

With both benefits, it’s important that you only get your money back if you cancel your trip for a reason. If you want more flexibility, you should familiarize yourself with Cancel-from-Any-Ground Coverage (CFAR).

Cancel for any reason

Thanks to CFAR coverage, you can cancel your trip for any reason and receive a partial refund of your non-refundable deposit, provided the cancellation is made at least two days before the travel date. This benefit is an optional add-on that is available when purchasing travel insurance. Not all plans offer it.

For example, suppose you are booking a trip and fear that COVID-19 may make you fearful of traveling as the date approaches. In this case, most standard travel cancellation insurances will not consider cancellation as a covered reason. If you want that layer of protection and want the freedom to cancel your trip and get some of your money back, you want to get a policy that the CFAR add-on offers. The CFAR reimbursement is typically between 50% and 75% of the total travel cost, which can be significant for an expensive trip.

Travel health insurance

The independent travel health insurance specifically protects you in the event of unexpected injuries or illnesses abroad. The benefits covered usually include medical evacuation / repatriation in an emergency, accidental death and mutilation, as well as 24-hour assistance. Other travel insurance coverage is limited and the policy is cheaper than full travel insurance because of the lower coverage for other events.

If you already have travel cancellation and interruption insurance through a premium travel credit card, or are not concerned about insuring your flight or hotel because reservations are refundable, purchasing standalone medical travel insurance may be your best bet.

The final result

Knowing you have travel insurance gives you peace of mind in case something goes wrong on an upcoming trip. Travel insurance has many important benefits, and if you familiarize yourself with them, you can make the right choice which type of insurance to consider for your next vacation.

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Elina Geller writes for NerdWallet. Email: [email protected] Twitter: @elina_geller.

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