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Do You Need Travel Insurance? An Overview on Travel Insurance Post-COVID-19 and Why You Should Get It

With COVID vaccination rates steadily increasing, the dream of travelling inches closer. You’ve booked your flights, packed your bags, and now you itch with excitement for your imminent adventure. However, you may have missed one crucial thing – and it’s not a vaccine passport; it’s travel insurance! Here’s an overview of why travel insurance is important and the best companies to purchase it.

What is travel insurance?

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Travel insurance is a type of insurance that protects you against unexpected costs and losses associated with travelling. For instance, it can help with costs resulting from illnesses and injuries, lost luggage or flight cancellations. Where you travel (that is, domestic or internationally) may determine how much cover you need. If you are travelling domestically, for example, you may not need medical travel insurance since you could already be covered under your country’s healthcare system (such as in Australia with Medicare). When purchasing travel insurance, you can select basic, mid-range or more comprehensive levels of cover. With every policy, you can usually pay extra for ‘add on’ protections.

Why you need travel insurance

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Travel insurance is a risk-reduction strategy. Usually, this risk is perceived in medical terms. For example, if you require medical care while overseas, you will likely have to pay substantial out-of-pocket expenses. If you are uninsured, a stomach flu might cost you over US$12,000 in Hong Kong. A broken arm typically costs the uninsured traveller around US$16,000 in America. And a fractured ankle could amount to US$24,000 in Peru. For many travellers, these figures are more than they’ve saved for their entire trip three times over! However, if you have health insurance, the average cost for one month is around $100 – a much more palatable figure.

The risks for uninsured travellers extend beyond the medical realm. Roehl and Fesenmaier (1992) identified risk in seven areas of tourists’ travelling experiences. These risk areas are:

  1. Physical risk: possibility of injury or sickness
  2. Equipment risk: possibility of mechanical, organisational or equipment problems
  3. Financial risk: travel or vacation does not provide value for the money expended
  4. Psychological risk: possibility that travel or vacation does not reflect one’s self-image
  5. Satisfaction risk: possibility that travel or vacation fails to provide personal satisfaction
  6. Social risk: possibility that travel or vacation affects others’ opinions of a person
  7. Time risk: the possibility that travel or vacation will be a waste of time or take too much time.

Travel insurance and COVID-19

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Travel insurance is critical against the backdrop of a global pandemic. Many of you may have cancelled flights and holidays abruptly with unforeseeable restrictions and travel bans.

Cancellations are a demanding issue currently facing travel insurers. Usually, travel insurance policies will provide monetary cover if you need to cancel a trip before the departure date. Nonetheless, most of the time, travel insurance companies hold a minimum requirement that the cancellation is the unavoidable result of an unforeseen event.

Fear of COVID-19 may not always be accepted as an ‘unforeseen event’, particularly if you can still go on your trip. However, if flights are cancelled, the airline itself will most likely refund these costs to you in some way (sometimes via an airline voucher rather than a cash return.)

Travel insurance companies have navigated the COVID space differently. Some consider COVID-19 to be an ‘unforeseen event no longer’, particularly as governments have issued ‘do not travel’ warnings. Therefore, it’s always best to check a company’s COVID policy before purchasing insurance, and do not travel if you have symptoms. 

Main types of travel insurance

The main types of travel insurance are:

  • Trip cancellation or interruption coverage
  • Baggage and personal effects coverage
  • Medical coverage
  • Accidental death or flight accident coverage

Trip cancellation or interruption coverage

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Trip cancellation coverage reimburses you for pre-paid, non-refundable travel expenses. These expenses include things like unused flights and already booked tours. Usually, this kind of cover requires the cancellation to be something out of your control. For instance, if you are struck by illness (particularly relevant in the COVID era), or a natural disaster (and other weather-related issues) hits the place you’re travelling to, you may be able to access cover for your pre-paid travel expenses. Keep in mind that there is no need to seek insurance to protect a refundable airline ticket (always read the fine print when purchasing plane tickets to see if your purchase is refundable).

Baggage and personal effects coverage

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Baggage and personal effects insurance covers items that are stolen, damaged or lost while travelling. Most airlines may provide some reimbursement if your belongings are lost or destroyed, but there are limitations on the amount of compensation. So, if you purchase travel insurance that includes baggage and personal effects cover, you are entitled to an extra layer of protection.

In the event that your luggage is stolen, damaged or lost, insurance companies will determine whether they can either repair the item, replace the item, or pay the amount it would cost them to repair/replace the item.

You should also keep in mind that travel credit cards could provide some automatic protection for delays and lost baggage if used for deposits or other trip-related expenses.

Note: for an interesting take on lost baggage that never returns to their owners, check out the resell, repurpose, recycle process that unclaimedbaggage.com do with misplaced belongings.

Medical coverage

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There are two main types of travel medical insurance: short-term medical and major medical coverage.

Short-term medical insurance policies will cover you from five days to a year (depending on which policy you choose). Whereas major medical coverage offers cover for people who intend to travel for a year or longer.

Medical travel insurance is crucial because it can help you locate doctors and healthcare options overseas. It can also help you obtain foreign-language services. As with most insurance policies, the price will differ depending on the level of coverage and provider. Some insurance companies include airlift travel to medical facilities and extended stays in foreign hospitals, while others do not. Therefore, before purchasing an insurance policy, it’s a good idea to read the provisions and familiarise yourself with any exclusions. Most health insurance companies will pay ‘reasonable’ hospital costs if you become sick or injured unexpectedly while travelling. However, few will cover the costs of medical evacuation.

Accidental death and flight accident coverage

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If an accident causes serious injury or death to a traveller, this policy could pay benefits to surviving beneficiaries.

Flight accident insurance provides coverage for accidents and deaths that occur during flights on a licensed commercial airliner. However, there are some exclusions. For example, death caused by a drug overdose or death resulting from a pre-existing illness are excluded from most flight You may not need accidental death and flight accident coverage if you already have a life insurance policy. However, if you have both policies, your beneficiaries could receive more money in light of an accident.

Domestic versus international travel insurance

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Depending on if you travel domestically or internationally, the insurance you are entitled to may differ.

Most domestic insurance covers:

  • Lost or stolen luggage
  • Sudden cancellation of trip due to illness, accident or natural disasters
  • Legal liability
  • Rental vehicle access

Domestic travel insurance usually does not include medical cover. If you are in your home country, you can probably still access the public health care system (e.g., Medicare in Australia) or use your private health insurance.

Moreover, most domestic travel insurance policies exclude certain types of ‘dangerous’ or ‘hazardous’ activities from your level of coverage. In other words, if you intend to undertake risky things such as bungee jumping, rock climbing or scuba diving while travelling, it’s a good idea to disclose this on your application. Even if you disclose it, however, you still might not be covered if an accident occurs. Many insurance policies exclude dangerous activities, so make sure you carefully read the policy terms and conditions.

Most international insurance covers:

  • Medical or dental emergency
  • Repatriation
  • Lost or stolen luggage
  • Cancelling your trip
  • Legal liability

Insurance policies rarely cover everything. Therefore, it’s important to carefully read the terms and conditions. For instance, some international travel insurance policies may exclude:

  • High-risk countries (government ‘do not travel’ listed places)
  • Engaging in risky behaviour that results in injury (for example, being under the influence of drugs or alcohol)
  • High-value items (some policies have a dollar limit that you can claim for a lost/stolen item)
  • Pre-existing medical condition
  • Notification period (you may have a timeframe within which you have to notify your insurer of an event. Sometimes, you may only have 24 hours)
  • Loss of unattended items (you may not be covered for items left in public areas that you did not keep an eye on. For example, if you leave your wallet in a shared room)
  • Hazardous pursuits (you may not be covered for dangerous activities like bungee jumping and scuba diving. However, these pursuits can sometimes be added to your policy for an extra fee).

Trip specific or annual cover?

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Another thing to consider is whether you will buy trip-specific or annual insurance. If you are just taking one short holiday, you should purchase a single-trip policy. These policies can cover trips that are as short as two days. In most cases, you can visit several destinations on a single trip policy, but your cover will end when you return to your home country.

However, if you go on numerous holidays each year and take out a single policy every time, the cost can add up. Therefore, it might be more cost-effective to purchase annual cover.

Be cautious of loopholes

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There are five loopholes that you need to be aware of when purchasing a travel insurance policy.

Late enrolment

Firstly, you cannot purchase travel insurance when something is already predicted to happen (this comes back to that ‘unforeseen event’ requirement of most insurance policies). For example, you can’t purchase insurance to travel to a country where there is an impending war. Therefore, it’s best to buy insurance as soon as you make the other payments for your trip.

Trip cancellation reasons

Secondly, not all cancelled trips will be covered. For example, the sudden death of a family member is a legitimate reason to cancel a trip and obtain reimbursement. However, a sudden change of mind is usually not a legitimate reason. You can usually add a ‘cancel for any reason’ option to the plan for an extra fee on some insurance policies. In sum, remember to read the policy certificate carefully, and what types of cancellations are covered.

Pre-existing conditions

Thirdly, most travel insurance policies will not cover pre-existing medical conditions because companies recognise how expensive some overseas healthcare is. If you need to get insurance for a pre-existing condition, you must get a waiver.  In the conditions of most waivers, you must:

  • Have purchased insurance immediately after your first trip payment
  • Be healthy when you buy the insurance
  • Have paid the full amount of your trip

If you have a medical condition, it’s best to buy a plan that offers a waiver. Make sure you meet its requirements before you apply.

Coverage exclusions

Fourthly, every insurance policy will have specific exclusions. For example, as mentioned earlier, certain dangerous activities such as bungee jumping or self-inflicted injury may not be covered. Falling off a motorcycle in Bali might not be covered if you are not wearing a helmet. Usually, these exceptions are listed on the policy certificate under ‘general policy exclusions’ – be sure to read this section carefully.

You could add extras to your policy to cover these things. For instance, most international travel policies allow you to add on motorbike or scooter riding cover for an extra fee.

Incomplete documentation

Fifthly, if you have not provided the insurance company with the appropriate paperwork, you may not be able to claim any reimbursement for trip cancellation or injury. You must keep all important paperwork (such as bills) you have acquired throughout your travels.’

Top companies for buying travel insurance

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Below is a list of the highest-ranking travel insurance companies and their most popular plan. The best option for you may differ depending on your travel goals and personal situation.

COMPANY + Best Plan DESCRIPTION PROS CONS
HTH Worldwide

 

(TripProtector Preferred)

 

 

‘Worldwide Insurance Services, LLC (Worldwide Services Insurance Agency, LLC in CA and in NY) offers a variety of travel medical insurance across the U.S. under leading brands.

We offer a wide selection of travel health insurance plans that include coverage for hospital care, surgery, office visits, prescription drugs and medical evacuation.

Travel the world with confidence knowing that you have convenient access to our community of trusted English-speaking physicians in more than 180 countries.’

 

Offers both single trip and multi-trip cover

Excellent medical benefits of $500,000, which includes COVID-19

Top-notch emergency medical evacuation coverage of $1 million

200% reimbursement for a trip interruption

Pet medical expense coverage included

 

Maximum trip cancellation coverage is $50,000, which is sufficient for many trips but lower than some competitors

The plan’s free look period is only 5 days; many competitors allow 10 days

 

AIG Travel

 

(Deluxe)

‘Whether you are travelling domestically, internationally, for the first time or one of many trips, AIG has Travel Insurance for you. While you’re exploring Australia and the world, we want you to return home safely.’

IMPORTANT: As COVID-19 is considered a known event, cover restrictions and exclusions will apply for related events or losses. No cover is provided for any claim arising from travel restrictions due to government orders, advisories, regulations, directives, or border closures. No cover is provided for any losses for trip cancellation, trip delay and/or additional expenses due to COVID-19 unless otherwise specified in the Travel Alert available here.

 

Outstanding emergency medical evacuation benefit of up to $1 million

High maximum trip cancellation benefit of $150,000

Only 5 hours of a trip delay is needed for an insurance pay out

Numerous travel inconvenience benefits e.g., payouts for runway delay, flight diversion, hotel infestation and closed attractions

Offers domestic, international and multi-trip plans for travel insurance

Emergency medical expense maximum of $100,000 is lower than other top competitors

No cover for COVID-19 related losses

 

Travelex

 

(Travel Select)

‘If your trip is delayed, interrupted, or cancelled because of sickness, injury, death, inclement weather, business reasons, pregnancy, or other covered reasons, Travel Select can provide coverage for incurred expenses. Additionally, with the Travel Select plan you also receive coverage for emergency medical and dental expenses, and medical evacuations.’

 

Coverage for a pre-existing medical condition is available if you purchase the Travel Select plan within 15 days of the initial trip payment.

Offered upgrades include car rental collision, adventure sports coverage, and cancel for any reason

Up to $50,000 Emergency Medical Expenses

Protection provided for children 17 and under included (great value for families)

There is a ‘Travel Basic’ plan option for the budget-minded traveller.

 

 

 

Only members living in the same household can be covered under all Travelex plans (excluding Travel America plan)

No multi-trip or annual plans available

Can be more expensive than other travel insurance companies

 

Allianz Travel Insurance

 

(OneTrip Premier)

 

‘One of the world’s largest public companies, and a global leader in insurance.’

 

Offer a variety of plans (domestic, basic, multi-trip, comprehensive)

Offer single cover, duo cover or family cover

Coverage for longer trips

Free coverage for children under 17

 

Low coverage limits

Policies are not flexible

No adventure coverage

 

John Hancock Insurance Agency

 

(Gold)

 

‘This insurance also includes toll-free, 24/7 multilingual emergency assistance services to help arrange any care you may need while you are away from home.

Take a look at our simple easy to read wording to see all the benefits that this travel insurance includes. We offer exceptional products and world-class service to travel with you – every step of the way.’

 

 

Excellent emergency medical evacuation coverage of $1 million

Only 3 hours of a trip delay is needed for an insurance payout

14-day free look period

 

$250,000 coverage for emergency medical expenses is good but not as high as some other top competitors

Baggage delay reimbursement of $500 is lower than some competitors

 

USI Affinity Travel Insurance Services

 

(Travel Insurance Select – Elite)

 

 

‘USI Affinity offers a full spectrum of customized travel insurance policies to help protect individuals and travel organisations who are planning to travel away from home. USI Affinity’s Travel Practice works with over 250 insurance agents and brokers, as well as numerous alumni associations, non-profit organisations, travel agents, tour operators, and business and corporate travel programs.’

 

Outstanding emergency medical evacuation coverage of $1 million

Good missed connection coverage ($1,500 payout)

Includes search and rescue costs

Includes service for tracking and expediting the return of mishandled baggage

Available trip interruption for any reason extra add-on

 

Lower coverage for emergency medical expenses than top competitors at $150,000

No itinerary change or flight-only AD&D coverage

Cannot file or check claim through the website

 

 

 

April International

 

(VIP plan)

 

 

‘With more than 1.5 million travellers insured every year, we specialise in designing distributing and managing insurance and assistance plans for travel professionals, brokers and individuals. We cover events occuring during the entire trip from pre-travel arrangements till your return home.’

 

Outstanding medical and medical evacuation coverage at $250,000 and $1 million respectively

Travel delay reimbursement of $1,500

Baggage delay reimbursement of $750

Provides cancellation coverage for work and business reasons

Coverage for sports equipment delay and damage is available

 

24-hour baggage delay requirement before reimbursement is sub-par to many competitors

 

Nationwide

 

(Prime)

 

‘Whether it’s a weekend trip to a luxury spa, a golf getaway to your favourite out-of-state course or a cross-country tour abroad that’s taken years to save for, travel is a part of your life. Easily navigate travel obstacles with one of our flexible travel insurance plans.’

 

Excellent medical expense and emergency medical evacuation coverage limits of $150,000 and $1 million, respectively

Travelers have 21 days to add “cancel for any reason” coverage after the first trip payment

Good travel delay benefit of $1,500 after five hours

Baggage delay benefits of $1,500 after six hours

Includes coverage for airline change fees and rewards redeposit fees

Includes common carrier death and dismemberment coverage of $500,000

 

Missed connection reimbursement of $500 is lower than many competitors

 

Seven Corners

 

(RoundTrip Elite)

 

‘Seven Corners has specialized in keeping travelers safe from a medical perspective since 1993. Their travel medical plans remain some of the best in the industry. Seven Corners remains an innovator in the industry by delivering the first ever medical tourism protection plan to protect patients from the high costs of medical care due to complications of treatment received overseas.’

 

Excellent emergency medical evacuation coverage of $1 million

Generous missed connection and trip delay reimbursement of $1,500 each

Option to add coverage for lost ski days or lost golf rounds, along with equipment rental reimbursement

There are new plans and services to help with COVID-19 testing requirements

 

$250,000 coverage for emergency medical expenses is good but not as high as top competitors

Maximum coverage of $30,000 for trip cancellation is on the low side among top competitors

Free look period of 10 days is shorter than some competitors

 

World Nomads

 

(Explorer)

 

‘Inspiration, opportunities and travel insurance to help you fuel your curiosity, find your journey and travel bravely.’

‘Some but not all of our policies provide cover for some coronavirus-related events – select your Country of Residence to find out more.’

 

 

Affordable prices

You can extend your policy online

You can make a claim online while on the road (highly accessible)

Fast, 24/7 service

 

 

 

Currently unable to offer travel insurance for Australian residents.

It doesn’t cover people over 69 (66 if you’re from Canada)

Limited gear and electronics coverage (the Explorer plan covers up to $3,000 total and $1,500 per item)

Due to COVID-19, you can only buy policies for up to 180 days.

Still not sure?

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If you’re still tossing up about whether or not to purchase travel insurance, remember this:

The average cost of most travel insurance is around 4-12% of your entire trip. In contrast, if you encounter an emergency situation, it could cost you up to tens of thousands of dollars.

Most travellers will never experience a life-threatening injury overseas. However, if the worst happens without any insurance, the holiday could end up endangering your life and your financial future. Sometimes, it’s better to be safe.

Before, during, after

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Before you go, do these four things. Firstly, it’s crucial you double-check the insurance policy you purchased. Secondly, check what you are covered for and what is excluded. Thirdly, be transparent with the insurance company about any pre-existing medical conditions. And finally, photocopy any insurance policies and receipts to take with you.

During your trip, keep copies of your insurance policy on you, along with any receipts of any newly purchased items (to prove ownership of them). If any of your belongings are stolen, you must report them to the local police within 24 hours, and give a copy of the police report to your insurance provider. Similarly, if you have a medical emergency, call the insurance provider’s medical hotline as soon as you can.

When you return from your trip, contact your insurance provider and complete a claim form. This form should include documents and receipts (such as police reports or receipts for newly purchased items). Then, submit the claim with the insurance company and wait for the settlement. Additionally, it’s a good idea to make a copy of your claim for your personal records.

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