Travel Insurance: 4 questions to ask before you buy

10 Nov

After my escapades in Nicaragua, I’m a huge fan of travel insurance. I used to think nothing bad could happen to me, but now I realize that if you travel enough, it’s only a matter of time before lose your bag, end up in the hospital, or have your flight canceled by an erupting volcano.

However, insurance polices are never as straightforward as they seem, and before buying one for your trip, it’s a good idea to read through the fine print and ask yourself the following four questions:

1. What does the policy cover?

This should come as no surprise–different travel insurance policies cover different things. Some will replace your luggage if it’s lost or stolen. Others will reimburse you if your hotel or flight reservations are canceled. Still others pay for medical expenses or, worst case scenario, to repatriate your remains in the event you die. More comprehensive policies cover a combination or even all of these things. Read your policy, and make sure it provides the types of coverage you need.

2. What are the coverage limits?

“Coverage limits” are the travel insurance company’s fancy of way of saying, what’s the most they’ll payout if things go wrong? Priceline’s Flight Protection Plan, for example, covers up to $1,500 in medical expenses. Go beyond that, and you’re on your own.

It’s hard to say exactly how much coverage you should get. In Nicaragua, for example, my three day hospital visit cost a mere $600, well under my policy’s $2,000 medical expense limit. An emergency medical evacuation, however, can sometimes exceed $100,000, even though many travel insurance policies only cover up to $50,000 for such expenses.

Ultimately, it’s up to you how much risk you want to assume. But whether you like to play it safe or live dangerously, carefully review the coverage limits so you can at least make an informed choice. And if the limits aren’t as high as you would like? See if you can pay more to raise them.

3. Is anything excluded?

Travel insurance companies are out to make a buck, so like their health industry counterparts, they may refuse to cover things that would put them at an “unfair disadvantage.” Your travel insurance policy might not cover medical treatment for a pre-existing condition, for example. Or it may not reimburse you for lost camera gear, if you’re a photographer by trade.

You probably can’t do anything to change the exclusions, but it does help to know them before something goes wrong. You might decide to do things differently, like maybe take a cheap point-and-shoot instead of your Canon 5D.

4. What are the claims procedures? And how long do I have to give notice of a claim?

If tragedy does strike, you usually have a limited window of time to report it to the travel insurance company. Some policies are really vague and say to provide notice “within a reasonable period of time,” but most will give a certain time frame–like 30 or 90 days. Notify the company of your loss after their stated period is up, and they may not reimburse you.

So what should you do? First, before you leave on your trip, see how long you have to report a claim. Second, find out what constitutes a “Notice of Claim.” That is, what’s the official way to notify the company that something happened to you? It may be as simple as a phone call (although this means you won’t have written record that you submitted your Notice of Claim), or you may have to fill-out a form online or jump through who knows what other hoops.

Most travel insurance policies allow for a reasonable time frame to do all this, but just in case you’re incapacitated for several weeks, for example, it would be good to let your companions know how to get in touch with your travel insurance company on your behalf.

Disclaimer: I’m not a lawyer or an insurance broker, and this post is not intended as any kind of legal advice. It’s up to you to make your own travel insurance decisions, and I’m just pointing out some things to consider. It’s not an exhaustive discussion of travel insurance pitfalls, and I’m not responsible if you run into trouble with your policy. Thank you for not suing me.

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