Avoid these common travel insurance mistakes on your next trip

When I think of travel insurance mistakes, I’m reminded of Carol Buckley’s case. She recently contacted me about her daughter, who had booked two airline tickets from Boston to London, purchasing the airline-recommended insurance.

“Unexpectedly, she became pregnant with her due date very near to the travel dates, that by their own airline rules, she would not have been allowed to travel,” she says.

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Fortunately, her daughter had insurance. Unfortunately, the insurance didn’t cover her.

“Norwegian said the insurance did not cover normal pregnancy,” she says. The airline refunded her $361 in taxes, but kept her ticket, checked bag fees and insurance premium.

Buckley’s daughter should have said “no” to the limited airline insurance policy and consulted with a travel agent or shopped for more comprehensive coverage online. A “cancel-for-any-reason” policy would have protected her, paying a percentage of her forfeited tickets.

But her case raises an issue that worries many infrequent travelers: What if my travel insurance doesn’t cover me?

Turns out there are quite a few mistakes travelers — even frequent travelers — make with travel insurance. The more I looked into this issue, the more I realized that I needed to write two stories reviewing all of them. Today, let’s talk about common pre-purchase errors.

Policy not needed
“I feel like the biggest mistake I see people making is that they do not read their credit card policies,” says Hali Panella, a travel agent. That’s especially true with customers who assume their credit card won’t cover them — but don’t know for sure — and decide to buy an external travel insurance policy. “Before doing that, read the fine print for your card because you might be wasting money on protection when you’re already covered,” she adds.

Trip not completely covered
“Make sure to adjust insurance or increase coverage as you finalize your plans,” advises Elizabeth Lebrun, a travel expert with the website Simple Thrifty Living. If you don’t include all of your costs, then you won’t have your entire trip covered. Worse, if you have to make a claim, it could be denied because of the incomplete math. (I’ve seen it happen.)

Peril not sufficiently covered
Read the amounts on your policy extra carefully, advises Alan Rosen, who owns a travel agency in Boynton Beach, Fla. He recalls a customer who had to be evacuated from a transatlantic cruise several years ago. The cost: $80,000 — only $25,000 of which was covered by his insurance. “When I talk to clients about insurance, I ask them if they would buy the cheapest medical policy available without seeing what is covered? Most say they would not,” he says. “Then my response is, ‘Well if you wouldn’t blindly buy the cheapest medical policy for when you are at home, why would you do that for when you will be in a foreign country thousands of miles away?'” Indeed, when an emergency happens and you are far from home, you want to the best coverage — not the cheapest.

Activity not covered
“You have to read the fine print,” says Russell Hannon, a travel specialist. If you’re planning high risk activities like skiing, bungee jumping, white water rafting, some policies won’t cover you. “While you’re at it, check that your policy includes trip evacuation and medical evacuation insurance, which can be astronomically expensive,” he adds.

Country not covered
“New travelers often make the mistake of purchasing an insurance policy that does not cover the country they will be traveling to,” says Chantae Reden, a frequent traveler and blogger. For example, East Timor is not covered by many insurance companies. Countries that border two continents like Turkey, Egypt and Georgia have similar issues.

No more time
“People think there’s always time to get travel insurance,” says Beth Godlin, president of Aon Affinity Travel Practice. That’s not necessarily true. Many policies need to be purchased shortly after a trip is booked. And there’s also the fact that your circumstances can change between the time you buy a trip and you take it. Cruises, for example, are sometimes booked a year in advance. “A lot can happen,” she says. “The cost for travel insurance might outweigh the potential penalties for having to cancel down the line.”

And that’s just a short list. There are other mistakes — many others — made almost every day by travelers. I list them all on my consumer advocacy site. The workaround? Use a qualified travel agent, who knows the pitfalls of buying travel insurance, or do your homework by reading our FAQ section on travel insurance.

With careful planning, you can avoid the most common travel insurance mistakes. And if you can’t — well, I’m always here to help.

5 thoughts on “Avoid these common travel insurance mistakes on your next trip

  1. Personally, I think that the worst travel insurance mistake that a traveler can make when purchasing ‘travel insurance’ is to purchase it from the travel provider (i.e. airline, cruise line, tour operator, etc.). I am sure that there are some ‘good’ travel protection plans and travel insurance policies from travel providers out there but I haven’t saw one yet.

    Some people will argue that 1) insurance plans from travel providers are not age rated (in other words, the premiums are higher for everyone and/or the younger travelers are subsidizing the older travelers) because travel insurance for a traveler that is in hisher 70s or 80s can be high especially when taking a very expensive trip and 2) the refund for CFAR is 100% (but it is usually company credit, scrip, etc.) versus 75% ‘CASH’ for third party policies (policies that are sold at Squaremouth, InsureMyTrip, etc).

    Insurance is risk management…why do young people (i.e. 16 to 20 YOs) pay more for car insurance because they have more accidents…why are life insurance rates for older individuals (i.e. 60s and higher) are high because the probability of dying is higher than someone who is 30.

    When you take the risk out of the equation…the benefits are reduced and/or the premiums are raised for everyone. My wife and I took a tour of Europe where we received a ‘free’ travel protection plan from the tour operator since we purchased the tour through AAA…the regular price was $ 78…when I read the plan…it was worthless. We ended up buying a policy from InsureMyTrip.

    About five years ago, I read an article about a man in his late 70s that purchased ‘travel insurance’ from the tour operator. The man purchased the ‘Cancel for Any Reason’ benefit. The man became ill and his new health condition prevented him from traveling again. The tour cost him something like $ 8,600. He received a credit of $ 8,600 for future travel. Since he couldn’t travel anymore as well as the credit wasn’t transferable, he was out of his $ 8,600. $ 6,450 of cash from a third-party policy (75% of the 8,600) is much better than $ 8,600 of company scrip that he couldn’t spend or transfer.

  2. One reason to purchase travel insurance for individuals with Medicare that is traveling outside of the US is that Medicare and Medicare supp policies only cover you in the United States.

  3. When traveling overseas, it’s very important to read the fine print when it comes to medical evacuation. As a former flight nurse, I have seen the level of medical care available in third world countries, and in a lot of cases, it’s just appalling. Make sure the policy doesn’t pay for transport to the “nearest appropriate level of care”. That may not be in a country which we, as Americans, might consider appropriate. I have picked up patients all over the world whose families paid out of pocket to bring them home from some very questionable health care facilities.

    1. I know. I am a retired nurse and I have taken care of patients who had been injured and received care in Mexico. One man had a terrible infection from a broken leg that had been treated in a Mexican hospital.

  4. The average cost of a medical evacuation is $72,000. As Mr. Rosen pointed out – cheap policies have limited evacuation coverage. You need to look at the entire policy – some policies have only $5,000 in medical coverage. Is that enough if you are hospitalized while traveling? Don’t look at the cheapest policy – look at the one that has the best coverage that you might need.

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