What Is Travel Insurance Really and Should You Be Paying for It?

There’s a good chance that around the time you received the vaccine, you, an optimist, booked a trip or two. Now said trip might be on the horizon, and you may have some things to think about.

I’m talking about cancellations. Trepidations. Literally not being able to travel because of a positive COVID test. These are all issues that can hypothetically be mitigated by travel insurance, which is not as much of an undertaking as you (read: I) may think. It is, however, important in the current climate. And just in general.

Laura Heidt is the Travel Insurance Desk Manager at Brownell, the oldest luxury travel agency in North America (est. 1887). Heidt has worked in insurance for more than 20 years, and is an expert on the topic of travel insurance, particularly where COVID is involved. Heidt unsurprisingly has more than a few suggestions for today’s traveler. Chief among them is purchasing “cancel for any reason” insurance with every booking. According to Heidt, most medical claims submitted for COVID-related reasons have thus far been covered, but travelers’ policies often don’t include travel disruptions due to government-mandated travel restrictions.

Additionally, Heidt advises travelers to purchase insurance at the time of deposit, and then to “insure as you go.” According to Heidt, most travelers wait to purchase their insurance policy until closer to their trip. However, if you wait, you lose your pre-existing waiver for medical issues for all immediate family members, as well as financial default should the travel company get into money trouble. Instead, travelers should purchase a minimal insurance policy (e.g., $500 per person) at the time of deposit, and add more coverage to that existing policy closer to the trip.

For further clarification, I asked Heidt what else travelers should keep in mind when booking, both this year and beyond. Below, the highlights.

InsideHook: Let’s assume I know nothing about travel insurance. What exactly is travel insurance, and what does it cover?

Laura Heidt: Travel Insurance offers protection for travelers when they are at least 100 miles away from home in case of unforeseen circumstances. It protects the investment of the trip, and it provides coverage during travel. If you had to cancel your trip due to medical reasons, whether for the travelers themselves or their family members who are not traveling, you would receive your loss back in cash, and not a voucher. The policies are comprehensive, and not only do they have cancellation, but also: Trip Interruption, Travel Delay, Baggage Coverage, Medical, Evacuation and Repatriation.

How many types of travel insurance are there? What are the best policies?

There are many types of policies. For Flight Only, it can be post-departure, cancellation or cancel for any reason. The best policies are comprehensive plans that provide coverage for unforeseen circumstances.

How does it work? How do you provide proof of travel insurance?

When a policy is purchased, the traveler receives a confirmation of coverage that provides proof as well as emergency assistance phone numbers while traveling.

Some credit cards offer some protection — how does travel insurance differ?

Credit cards do offer protection, but you must be careful. For example, if the entire trip cost is not on one credit card, the claim could be denied. Also, the benefits are not as robust on credit card coverage. For example, medical coverage is capped at $10K. Third-party carriers offer $50K and up.

Are there any circumstances under which I would be required to have travel insurance?

Some destinations require proof of medical insurance and trip delay coverage in the event of being quarantined or hospitalized.

What reasons for canceling a trip are covered?

There are many reasons for cancellation: medical, death in the family, work reasons, destination or your home being uninhabitable, strikes, natural disasters and more.

What COVID-related expenses are covered, if any?

Travel insurance provides cancellation if you test positive prior to your departure, and it is seen as any other illness. In addition, If you test positive while traveling, it offers quarantine benefits under trip delay and trip interruption for lost prepaid, nonrefundable expenses, and assistance with obtaining new airline tickets to bring you back home.

There’s been a lot more emphasis on getting travel insurance over the course of the past year and a half — is it actually more important than it previously was?

Travel Insurance rose in emphasis with 9/11 and has been an important factor since. In the past 18 months, it has significantly impacted travelers’ peace of mind, especially during travel. One key point to remember is that travel insurance doesn’t automatically offer “fear of travel.” [For that], you have to purchase a “cancel for any reason” policy, which offers 75% of your investment back.

How do policies offered by airlines work? Are they all the same?

The airline policies are referred to as custom policies, and they are tailor-made between the airline and the underwriters.

Are there any circumstances under which my travel insurance would be invalidated?

Policies are not valid when traveling to North Korea, Iraq and Iran. If you are traveling solely for securing medical treatment, mental disorders and attempted suicide, war or government restrictions, or participating in professional athletic events.

Can you give me an example of when travel insurance probably wouldn’t be necessary …

Since the policy does not cover trips within 100 miles of your home, it is not necessary. If a person is flying on a private plane and going to a home they own.

How much should I expect to spend on travel insurance?

The insurance cost is determined by the trip cost and the travelers’ ages, and can range from 6% to 12% of the trip cost.