Travel insurance policies cover some or all of the following (“comprehensive” policies cover most or all of these situations):
- Trip cancellation or interruption
- Medical expenses, and sometimes evacuation (transportation to an appropriate medical facility)
- Expenses related to a trip delay and lost, stolen, damaged, or delayed baggage
- A lump-sum payment if you’re injured or killed while traveling
- Emergency assistance
- Financial default of the travel supplier
A policy kicks in only if your situation fits within its specific conditions (those are the pages of fine print at the back of every policy). You can’t, for instance, get your money back if you decide to cancel because your cousin dies; that’s because most policies cover cancellation due to the death of only certain family members (excluding cousins). Another example: You can’t get your medical bills paid if an ongoing heart issue requires attention while you’re traveling—unless you’ve bought a policy that covers pre-existing medical conditions.
Here are three examples of how travel insurance can help. These are scenarios that a traveler might run into—and ways in which the right travel insurance policy could protect the traveler in each scenario. Remember that every policy’s benefits are different:
Beth is headed to the Caribbean during hurricane season, since she knows that prices are lower at that time of year and that the chance of a storm hitting any particular island is low. But a week before she leaves, Hurricane Peter wreaks havoc at her beachfront resort.
Since she purchased an insurance policy with trip-cancellation coverage before the storm was named and her hotel is now uninhabitable, she can cancel the trip and get all of her money back.
Halfway through a hiking trip in the Alps, Joe slips and falls, breaking his ankle.
His travel insurance policy has a medical expense limit of $10,000, so it covers some but not all of his medical bills. Because he can’t continue with his trip, his trip-interruption benefit reimburses him for the unused portion of his prepaid expenses.
While Amy is walking from the train station to her hotel, a thief steals her luggage.
Her insurance covers the value of the items in her luggage, up to her benefit limit of $750. Too bad she didn’t leave that diamond necklace at home, though; her policy will only reimburse up to $500 total for jewelry and electronics.