If you’re planning a trip over the holiday season, consider putting travel insurance in the mix.
As with any form of insurance, travel insurance basically shares monetary risk: Lots of travelers pay a little so that a few can recover major losses. Some travel risks can involve thousands of dollars, which is when travel insurance is a good idea. If you don’t, it isn’t.
Ask yourself the following: (1) Do you need travel insurance? and (2) Are those needs more pressing during the holidays than at other times?
I have consistently identified three travel risks that potentially involve big dollars. For the most part, you potentially face all three regardless of when you travel:
- Forfeiture of deposits, prepayments, or stiff cancellation penalties if you have to cancel a trip.
- Extra expenses for returning home if you have to curtail a trip and return unexpectedly.
- Medical expenses that aren’t included in your regular health insurance, including emergency transport home.
If you have a lot of money tied up in nonrefundable prepayments or stiff cancellation penalties, always consider trip-cancellation/-interruption insurance (TCI). That covers what you have to pay to cancel before you leave or return home early.
TCI is “named peril” insurance: It pays off only if whatever causes you to cancel or return early is specifically stated as a “covered reason” in the fine print. Almost all TCI policies cover you and your traveling companion in the event either of you suffers sickness or accident, along with a laundry list of other calamities, including being called to jury duty or having your house burn down or get flooded, or if your destination becomes uninhabitable. They also cover you if your destination suffers from an act of terrorism, but not if you just feel vaguely uneasy. Most TCI also applies if a close family member suffers a problem that requires you to cancel or return early.
The main gotchas are (1) most policies limit coverage to events that are unforeseen at the time you buy the insurance. Specifically, (2) they do not cover cancellations related to medical conditions that were pre-existing at the time you bought the policy. Many insurers, however, waive the pre-existing condition exclusion if you buy the insurance within a set time (usually less than two weeks) after you make your initial deposits and prepayments. This means many of you are probably too late to take advantage of the pre-existing conditions waiver if you purchased tickets long ago, although you might find an insurer with a less stringent limit.
Most policies do not cover work-related problems. You can, however, cover work-related problems if you buy an increasingly popular “cancel for any reason” option.
Are these risks greater during the holidays? Probably not: Your need for TCI depends on how much money you have at risk, not when you travel.
If you get sick or suffer an accident when you’re away from home, you may need immediate medical help and face some stiff bills, which travel-medical (MED) policies cover. The main risks occur when you’re outside the U.S. Your own medical plan may cover you anywhere in the world; but some don’t. Medicare doesn’t cover you outside the U.S., and Medicare supplements C or better provide only limited coverage.
Some developed countries provide “free” emergency health coverage for American visitors, but not for non-emergency doctor visits. In many cases, however, you have to shell out big payments on the spot and argue about reimbursement when you return home.
If you fall and break your tush in some remote area, or come down with an arcane malady that local doctors can’t handle, getting you to a hospital in a helicopter or back home on a private jet could cost a fortune. Medical evacuation (ME) insurance pays for those expenses; most regular health insurance and Medigap do not. Bundled travel-medical policies generally cover both MED and ME.
As with TCI, it’s hard to see why you are at any greater medical risk during the holidays than at any other time. You either need MED/ME or not, no matter when you travel.
The Small Stuff
Bundled travel insurance policies typically cover a bunch of smaller-dollar risks, including travel delay, missed connections, baggage loss, damage, and delay. Most also offer 24/7 assistance.
Various delay provisions help you pay for accommodations and essentials, generally up to $3,000 or so, in the event of bad weather and other unforeseen factors. Although airlines usually compensate you when a delay or cancellation is their fault, they do not cover you for any expenses caused by bad weather or other force majeure, and even when they do compensate you, it’s for a limited amount. Insurance covers such cases, as long as they’re specified in the fine print—and the fine print covers most situations you’re likely to encounter.
I normally don’t recommend buying this sort of policy for at least three reasons: (1) airlines usually cover their baggage problems, (2) the dollar risks are usually fairly small, and (3) your credit card may cover at least some of these contingencies as free card features.
Unlike the cases of TCI and MED/ME, however, your risks of delay, cancellation, baggage problems, and such probably are somewhat greater during the holidays than at other times of the year: Winter weather can be bad, and you might have to wait longer than usual to arrange alternate transportation in the event of cancellation or long delay. The irony is that these “small stuff” coverages are usually available only as package policies bundled with TCI and MED/ME.
More from SmarterTravel:
- Using Third-Party Rental Insurance? Read This First
- Is Travel Insurance a Waste of Money?
- Air-Passenger Rights: The on-the-Go Guide
Consumer advocate Ed Perkins has been writing about travel for more than three decades. The founding editor of the Consumer Reports Travel Letter, he continues to inform travelers and fight consumer abuses every day at SmarterTravel.