How To Read The Fine Print Of Your Travel Insurance Policy

Begin by learning the basics about the typical types of travel insurance that provide valuable benefits in a solid travel insurance policy.

Trip cancellation: Trip cancellation insurance reimburses your non-refundable, pre-paid deposits if you need to cancel your trip for a reason that’s covered by the policy, such as death, illness or injury, a job lay-off, military deployment, family emergencies or severe weather.

Trip delay: Covers the extra expenses you have to pay if there’s a delay caused by a reason covered by the policy, such as an airline weather delay. Travel delay insurance can also provide reimbursement for hotel stays and meals and non-refundable deposits you lose due to the delay.

Trip interruption: Reimburses the non-refundable deposits for bookings and activities you miss out on if you have to cut your trip short. For example, if you’re injured and have to return home, trip interruption insurance could reimburse you for the hotel deposit you lose for the unused nights. This benefit will also cover the costs associated with returning home, such as a plane ticket.

Emergency medical: If you’re sick or injured while traveling, travel medical insurance can pay for doctor visits, X-rays, prescription medication and more. If you need medical evacuation, medical travel insurance pays to transport you to the nearest adequate medical facility.

Baggage loss and delay: Baggage insurance reimburses you the depreciated value for lost, damaged or stolen luggage and personal belongings covered by your policy while you are travelling. Baggage delay insurance compensates you for personal necessities you buy if your luggage arrives after a specified time listed in your policy.

You may think you can cancel your trip for any reason, but this is not the case with a standard travel insurance plan. Your travel insurance policy defines specific reasons that are accepted for trip cancellation claims. This is why you want to read the fine print of your policy.

The ‘covered reasons’ most frequently experienced by travellers include injury or illness of the insured traveller, travelling companion or family member. Other covered reasons may include a traffic accident, loss of accommodations, missing documentation like a visa or passport, natural disasters or obligations, such as military service or being called for jury duty.

While the lists of acceptable reasons to cancel have similarities among travel insurers, they also have differences. For instance, the definition of “family member” varies by insurance company and should not be considered universal. Some travel insurance plans consider family to be close familiar connections, such as your spouse or grandparent while others are more inclusive.

All travel insurance policies will contain lists of exclusions. In fact, policies often contain more than one list of exclusions. For example, a policy might have separate exclusion lists for trip cancellation, baggage delay, medical claims and rental car damage.

Medical claims exclusions often include things like:

• Routine physicals and routine dental exams.
• Mental health care.
• Elective procedures, such as cosmetic surgery.
• Participation in adventure or extreme activities.

Travel medical insurance can include certain restrictions for pre-existing medical conditions. Depending on your age, your policy will have a set period of time before purchase, known as the stability period, that determines if your condition is considered pre-existing or not.

For example, a World Nomads travel policy has the following stability periods:

Ages 0 to 49: 90 days
Ages 50 to 59: 180 days
Ages 60 to 65: 270 days

Typically, if you had any changes in your medical status during this period, such as a new diagnosis or a new prescription for medicine, the condition would be considered “pre-existing.”

If you do have a pre-existing medical condition, there are options. For example, you can look for a plan that offers a pre-existing medical condition exclusion waiver, such as Blue Cross or CAA Travel Insurance, that shortens the stability period to seven days.

You’ll pay extra for upgrades to a standard travel insurance policy that provide the freedom to cancel or cut a trip short no matter what, so it’s important to understand what you’re getting for your money.

“Cancel For Any Reason” Travel Insurance

“Cancel for any reason” travel insurance (CFAR) provides partial reimbursement for cancelling a trip, regardless of the reason. Be sure you understand the terms of CFAR. These rules usually apply:

• You need to cancel your trip no less than 48 hours before departure.
• You typically recover 75% of your trip’s cost, not 100%.
• You must add the upgrade within a certain time period after your first trip deposit, such as 14 days.

“Interruption For Any Reason” Travel Insurance

“Interruption for any reason” travel insurance (IFAR) provides partial reimbursement if you return home early from a trip. It also helps pay for a flight back home. The following conditions usually apply to IFAR:

• Coverage typically doesn’t start until at least 48 hours or 72 hours into your trip.
• IFAR reimburses 50% or 75% of the insured trip costs.
• You must typically purchase IFAR within 14 to 21 days of your first trip payment or deposit.

You may know you have baggage delay coverage, but how much? Travel insurance policies can vary widely in terms of coverage caps and required time delays.

For example, CAA Travel Insurance offers up to $500 in reimbursements after a 10-hour baggage delay, while World Nomads offers up to $100 after a 12-hour delay.

Of course, superior benefits are often also reflected in pricing.

To see what your limits are for each coverage area, look at your policy’s schedule of benefits, which is included in your policy document and policy confirmation letter. When looking over your policy, you may decide you need more—or less—coverage.

It’s also important to know how you are reimbursed if you file a claim. This is especially true for baggage and personal effects coverage. If you file a baggage insurance claim, you may not get an amount that equals the cost of replacing the items with brand new ones. Compensation could be the cost for repair or replacement of the item, taking into account its age and wear and tear.

Think of it like your car insurance: If you get into an accident and your car is totalled, you’re usually reimbursed for the current (or depreciated) value of the car, not its current value.

Two of the biggest reasons claims are delayed or denied are because:

1. The customer tried to file a claim for a reason not covered under the plan.
2. The customer did not provide the necessary documentation (such as receipts).

Your policy will list the covered reasons to file a claim and the documentation needed. For example, if you cancel for a medical reason, you will likely need to provide validation of the illness or injury from a physician.

You should take the time to read all of the details to understand the specific benefits a travel insurance policy offers before purchasing. But if you don’t do your homework before pulling the trigger, most policies come with a ‘free look’ period, which is typically 10 days.

During this window, you can call if you have any questions and cancel the policy for a full refund if you feel it doesn’t meet your needs.