Travel Insurance

What it protects against

Financial loss due to cancellation of a trip, loss of baggage or personal belongings, emergency evacuation or medical assistance due to injury or illness, and accidental death.

How it works

You can buy a comprehensive policy or only the coverage you think you need. For example, trip cancellation or trip interruption insurance reimburses an insured for nonrefundable trip payments or deposits. Trip cancellation coverage can be triggered if you become sick, a family member dies, your home becomes inhabitable, or if any other calamity listed in the policy occurs. Coverage is also available for when a travel provider fails to provide the service, for delays and missed connections, terrorism, baggage delays, and rental car protection. Finally, insurance can cover accidental death and dismemberment, or losses while on a common carrier - plane, train, bus, ship.

Who needs it

Anyone who wants the protection offered. Your comprehensive health insurance may not cover treatment in a foreign country, and emergency evacuations and transportation can be costly.

Who may not need it

People who already have coverage with life, credit card, auto or homeowners insurance policies. If you are affluent, you may choose to self-insure.

When to buy it

Before leaving on a trip. This can be far in advance; some policies cover an entire year of travel or multiple trips.

How to pay for it

Generally a single payment at the time of purchase. Trip cancellation insurance usually runs 5% to 7% of the cost of the trip. Other considerations may be used to determine prices of other coverages.

Terms to Know

  • In property insurance, requires the policyholder to carry insurance equal to a specified percentage of the value of property to receive full payment on a loss. For health insurance, it is a percentage of each claim above the deductible paid by the policyholder. For a 20% health insurance coinsurance clause, the policyholder pays for the deductible plus 20% of his covered losses. After paying 80% of losses up to a specified ceiling, the insurer starts paying 100% of losses.
  • A business or agency that is available to the public for transportation of persons, goods or messages. Common carriers include trucking companies, bus lines and airlines.
  • The geographic region covered by travel insurance.
  • Amount of loss that the insured pays before the insurance kicks in.
  • Bungee jumping, scuba diving, horse riding and other activities not generally covered by standard insurance policies. For insurers that do provide cover for such activities, it is unlikely they will cover liability and personal accident, which should be provided by the company hosting the activity.
  • A coverage limitation included in many health policies which states that certain physical or mental conditions, either previously diagnosed or which would normally be expected to require treatment prior to issue, will not be covered under the new policy for a specified period of time.
  • A type of travel insurance that will pay to prepare and return a person's remains to their home country if they die on a trip.