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  • Travel Insurance: Protection for That Dream Vacation

    image for business overview Going on a vacation or an extended business trip? You've probably bought some new things to take with you. But have you considered buying travel insurance?
    Although many travelers are unaware of its existence, today you can buy insurance to cover the cost of many of the things that can go wrong on (or before) a trip. Offered through travel agents and insurance agents, policies are sold either for a flat, per vacation price, or on a per-day-of-travel basis.
    Some policies allow you to purchase coverage against specific risks, while others "package" together coverage against the cost of a number of exposures that can occur on or before a trip or vacation.

    Types of Available Coverage

    The risks that can be insured against include:
    Trip Cancellation or Interruption
    This coverage insures you against the loss of your deposit or prepaid expenses in the event your trip or vacation is canceled or interrupted due to illness or injury, or due to the default or bankruptcy of a company (eg, cruise line, tour group) with which you're scheduled to travel. In addition, depending on the policy, coverage may apply to a number of other reasons for your trip's cancellation or interruption, including:
    • Injury, illness, or death of an immediate family member or of a traveling companion.
    • Hospitalization or death of your host at your travel destination.
    • The hijacking or quarantining of you, a family member traveling with you, or a traveling companion.
    • You, a family member traveling with you, or traveling companion is subpoenaed; required to serve on a jury; or is involved in an auto accident en route to departing on the trip.
    • You are required to move due to relocation by your employer.
    • You're a teacher and the school year is extended past the time you're scheduled to leave.
    Vacation Delay
    This coverage insures you against the loss of your deposit or prepaid expenses in the event your vacation is delayed (generally, for 12 hours or more) due to a number of causes, including:
    • Equipment failure or a strike.
    • Inclement weather or a natural disaster.
    • Loss or theft of money, passports, or other travel documents.
    Baggage Travel Insurance
    Airlines only cover baggage while it's in their possession, and most cruise lines, tour operators, and hotels offer little or no coverage. Baggage travel insurance covers your belongings that are lost, stolen, or damaged at anytime throughout your trip.
    Medical Travel Insurance
    This insurance generally covers two expenses:
    Medical Evacuation
    The cost (which can be quite high) of an ambulance, medical helicopter, or other transportation (including, in some cases, transport back to the United States if abroad) that becomes necessary due to injury or illness.
    Accident/Illness
    Covers the cost of medical help or hospitalization (not covered by your health insurance) needed while traveling. This is especially important if you're traveling outside the US, since medical costs incurred abroad are often not covered by your health insurance, HMO plan, or government health insurance such as Medicare.
    Life and Accident Insurance
    This coverage pays a benefit in the event of the death or dismemberment of an insured while traveling or on vacation.
    Reparation of Remains
    Covers the cost of arranging for having an insured's remains returned home in the event of their death while traveling.
    Additional Services
    Some travel insurance "package" policies also offer you a number of services while traveling. These include:
    • Assistance arranging emergency cash transfers.
    • Assistance finding local medical or dental help, and/or contacting medical consultation (including your own physician) while traveling.
    • Assistance finding local legal representation while traveling.
    • Assistance replacing important documents, such as passports or tickets, that you lose while traveling.

    Checking the Fine Print

    A travel insurance policy is a contract, and as with all contracts, you should always "read the fine print."
    "Read the policy exclusions first. Check to see what's not covered, then check to see what is covered." says Warren Winnick, an insurance broker from Wellesley, MA.
    In particular, when reading the policy, check for the following:
    Know What Insurance You Already Have
    For example, your homeowner's insurance might cover your belongings while you're traveling, and you may already have adequate life insurance coverage. On the other hand, don't assume insurance that you have—most especially, your health insurance—will cover you for expenses incurred while traveling, especially (as noted above) if you'll be traveling abroad. (Note, however, that most policies specifically state that they don't pay for costs already paid by another policy you hold).
    Know Exactly What the Policy Covers
    If you've bought a family vacation package, then must each member of your family be specifically named in the travel insurance policy? Are you covered if you take a side trip during a vacation tour? These are some questions you should ask when assessing your policy. Moreover, if you're traveling abroad to an area or country undergoing unrest, see if the policy excludes hijacking or terrorism related injuries, or completely excludes all coverage when you're traveling in that specific area or country.
    Check Pre-existing Conditions
    See if your policy excludes payment (as many do) on claims for trip cancellation, trip interruption, or travel medical insurance, if your claim arises from a pre-existing medical condition. If it does, check to see if it offers (as many policies now do) the option of waiving this clause for a small additional premium.
    Check Your Health Insurance Coverage
    Again, as noted, most won't cover you while you're traveling abroad, but some will. However, virtually none cover medical evacuation costs when you're abroad. If you do buy this travel coverage, be certain it covers the cost of transporting you (or a family member traveling with you) home if medically necessary, not just the cost of transporting you to a local hospital or medical center.
    Be Sure Any Travel Insurance Coverage You Purchase Is Underwritten by an Insurance Company
    Trip cancellation/interruption coverage, for example, that is underwritten by the cruise line you're traveling on won't be much help if the cruise line itself goes bankrupt.
    If you have specific questions about the travel insurance you're considering purchasing, its best to call and direct these questions to the insurance company underwriting the policy (many have toll free numbers for this purpose).

    Purchasing Travel Insurance

    Okay, now that you know what travel insurance can include, the obvious question is, should you buy it? For most people, the answer is yes. As noted, many other insurance policies you currently have (such as homeowners' and health insurance) won't cover you when you're traveling, especially if you're traveling abroad. And, even if it does, in many cases the trip cancellation/interruption coverage itself is worth the cost of travel insurance. This is especially true given the fact that travel insurance has become, relatively speaking, very inexpensive.

    RESOURCES

    U.S. Travel Association http://www.ustravel.org/

    American Society of Travel Agents http://www.asta.org/

    CANADIAN RESOURCES

    Transport Canada http://www.tc.gc.ca/eng/menu.htm

    Association of Canadian Travel Agencies http://www.acta.ca/

    References

    FAQs. US Travel Insurance Association website. Available at: http://www.ustia.org/faqs/. Accessed November 17, 2011.

    Travel insurance. TravelASSIST Magazine. Available at: http://www.travelassist.com/mag/a64.html .

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