One thing people completely forget to do before going on a trip is buying travel insurance. You may think this is just a gimmick from insurance companies to make you spend your hard earned buck on something that you don’t actually need. Personally I think travel insurance is like buying peace of mind for a very low price, insurance that can save you from paying up to a few year’s savings on something you could have easily avoided in the first place. It’s a no brainer to me.

Types of travel insurance

There are many types of trip insurance policies you can purchase and there’s no standard, which makes deciding on the right one a pretty tough job sometimes. Most insurance companies offer a few types of insurance packages, from the least expensive to ones that make a difference on your budget. As you’ll see the coverage differs greatly from one to another. Don’t think about travel insurance as a checkbox, as the small differences make all the difference. All cars have engines and wheels, but that’s where similarities stop, so don’t buy insurance just for the sake of being insured.

Anyway, enough with my ramblings, so let’s see what kinds of incidents are covered typically by travel insurance policies:

1. Injuries – this is one of the most known type of incident people chose to be insured when they travel. Accidents happen in every country, that’s a given and medical expenses abroad can be extremely high, especially in western countries, especially emergency related procedures. One thing you need to know is that extreme sports usually fall under a more expensive insured package, because of the higher chance of being injured if you’re skiing, rafting, scuba diving and so on. Make sure you know what kind of injuries are covered by your policy and don’t assume everything is covered.

2. Urgent health problemsand related expenses to overseas treatment, including repatriation

another popular incident covered by insurance policies are urgent health problems. Ranging from teeth problems to a sudden disease that needs treatment there are plenty of things that can happen that don’t fall into the “injuries” category. Due to fraud, insurance companies are very careful to check facts in this case, as some people with known health problems are trying to get treatment abroad at the expense of the insurer. Sometimes, your insurance company can decide it’s cheaper for them to fly you back home than paying for the medical expenses, so don’t be surprised if that happens.

3. Lost or stolen baggages and papers – lost luggage at the airport is a nightmare, especially on your flight out of the country. It can ruin your holiday big time, that’s why some insurance policies cover this, up to a certain amount. Some even cover stolen goods. Make sure you gather supporting documents for your claims, of you won’t see a dime. Local authorities are your best bet in this case. In most cases the airline is required by law to refund you in case of lost personal effects, but if you know your stuff is worth more than their limit you may want to buy additional insurance.

4. Cancelled Trips or Flights – sometimes the weather doesn’t follow your plans, flights get cancelled, the travel agency you booked with goes bankrupt, so coverage of this kind is something you might consider. Your airline may cover sometimes the part that’s related to the flight itself, so check with them what happens if there’s a delay, or if you miss your flight and it’s not necessarily your fault. Some policies in the more expensive bracket even cover the situation where you are not admitted onboard the airplane or you you can’t leave the country.

5. Liability damage – this kind of coverage is especially useful if you’re driving in another country. I’ve seen a lot of cases where rental cars don’t come with insurance by default. It doubles the cost and doesn’t look good on the flyer you’ve just picked at the airport on your way out. If you cause an accident you will be liable to paying for the damage you cause, and since bodily harm costs can jump in the millions territory I’m guessing you don’t have this kind of cash at your disposal.

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I believe I’ve covered the most important types of events covered by travel insurance policies, but you may find additional ones with the company you’re working with. If you think I’ve missed something leave a comment below so I can update this article.

Hidden insurance traps

This is the interesting part, I believe. There are always hidden terms and conditions in insurance policies, not just the ones covering travel. By hidden I don’t mean someone is trying to screw you, but things you need to be aware of, not written on the brief front page description of the insurance package. Some agents walk you through everything that might concern you, but that’s not always the case, and in the end you’re all by yourself.

Terms and conditions you have to be aware of:

1. Specifics of what is insured – this is probably the most important thing to consider: what exactly is defined as an injury, medical emergency, cancellation and so on. Again, don’t think about incident categories as checkboxes. If it’s not written in your policy it’s probably not covered.

2. Maximum covered expenses per type of event – yeah, you’re insured for something that just happen, but there’s a limit the insurance company will pay you back. If might seem adequate to be covered in medical expenses up to 20.000-30.000 $, but medical costs can skyrocket in some cases, so make sure you get a policy with a higher limit if you’re traveling to a wealthy country.

3. Actions that constitute an exception, thus don’t fall under your coverage – you may be covered for liability damage if you get into a car crash, but if you were driving under the influence the insurance company doesn’t cover any kind of expense. Make sure you don’t break any of the rules linked to covered events in your policy. If expenses are high you can bet the insurance company will try and find a way not to pay.

4. Procedures that need to be followed when something happens – even if you’re having a medical emergency, your insurance company may demand you call them first, so they can approve a certain expense in advance. Doesn’t seem fair, I know, but that just the way it is. Read and remember the few steps written on the insurance policy flyer you get from your agent. Needless to say these documents need to be with you at all times, as the first thing they’ll ask you will be the policy number. If you don’t want to carry the papers with you at all times you can use your smartphone to photograph the front page of four policy confirmation form. That’s what I do with a lot of important documents.

5. Don’t lie on your application form – nobody will check what you state on the application form before selling you an insurance package, but they’ll check everything if you make a claim, be sure of that. Even minor honest mistakes can get your claim denied if the insurer finds about them, and as sums get higher be sure they’ll check more thoroughly your application form.

Where to buy?

There are so many ways you can buy insurance these days, and that’s a good thing, as you can get things done without leaving the chair in front of your computer. There are also plenty of online comparison tools you can use to narrow your options list.

Most insurance companies have online application forms for travel insurance policies. You can usually pay online and get a confirmation in the same day. Travel agencies will sell you insurance from their partners if you book a trip with them. Even banks sometimes offer insurance packages, at an extra cost, so there are plenty of sources to buy from. Just make sure you do a little bit of research before.

What I always recommend and do myself is buy from companies I’ve had good experiences before. Even if sometimes this means paying more I’m doing it for my own peace of mind, and there’s nothing more

frustrating that believing you’re insured and then hitting a bureaucratic wall when you have to get your money back.

An advantage of buying from a company you are already insured with, for your car, home of something else, is that you can get a nice discount. Don’t be surprised if your other insurance policy also covers holiday trips. Also check with your employer, as some companies tend to offer benefits that include medical and travel insurance.

In case you find yourself insured by your employer, the bank that provided you with the loan to buy your house and the leasing company, make sure everything you fear is covered. It’s always better to have more insurance protection than having none.

What do I do if something happens while I’m abroad?

Now that you ran out of luck you can only do one thing: call your insurance company. On the flyer you’ve received after purchasing your policy there’s a non-stop number you can call. Some companies have local offices, so if you’re in the same country you may have a chance of reducing your roaming charges.

Once you get in touch with them they’ll try to identify you, so keep your policy number close. They’ll direct you after that. Most companies insist you let them know first hand when something happens, as they want to approve every expense in advance. You don’t want a technicality make you pay from your own pocket, I’m sure of that.

Read all documents!

One thing is for sure, you need to read carefully everything you sign. The insurance agent presenting you with the options might be a nice person, but he works for the company and he’s interested in making sure you buy a policy from them.

I’m aware of cases in Canada, presented on the news, where agents were ill-advising buyers, not always on purpose, reassuring them about terms they didn’t fully understand themselves. The end result? Expenses not covered by the insurance policy, paid by the insured party, even if he or she did his best to complete the application form, following the advice of the agent.

You can avoid a costly trial, which you might even lose, if you pay attention to what you’re actually buying, and the terms of the travel insurance policy. If you don’t fully understand the contract your best option is to walk away and go fish somewhere else. There are so many places out there happy to sell you trip insurance. Oh, and don’t blindly believe the nice advertisements that paint a nice picture in just a few words. Contracts behind any kind of insurance are full of fine prints. Ask for a contract draft if you can and read these documents before you sign.

I hope this article helped shed some light on the whole trip insurance business, but it’s not the definitive guide. If you know something not covered by this article, or if you’ve been in a delicate situation, please leave a comment below, so that fellow travelers can learn from your experience.

Image credit: Alan Cleaver (CC 2.0)

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