Travel Insurance: What You Need to Know and How to Choose a Policy

Insurance is the antithesis of travel. In a paradigm of adventure and wonder there shouldn’t be a place for insurance salesmen and suits.

Unfortunately, you probably need it. Even more unfortunately, there’s a smorgasbord of confusing choice and indecipherable language out there. As with all insurance there’s an up-sell, centered around the gambling rhetoric of “what if?” They want higher premiums. You just want a vacation. And surely the dollars spent on travel insurance would be better spent on a cocktail with a funny umbrella in it?

Here’s an easy and impartial guide containing everything what you need to know about travel insurance.

What is Travel Insurance?

Can you get covered for such madness as swimming with sharks?

Can you get covered for such madness as swimming with sharks?

Essentially, travel insurance should cover you for everything that happens while you’re away from home. Medical bills in foreign countries can be obscene, as can helicopter rescue from the side of a mountain, and the costs of replacing everything in a stolen motorbike. Unfortunately, insurance companies make their margins with all the stuff you’re not covered for; traveling to a risky destination, any adventurous activity, no compensation if a company goes bankrupt. So when considering which policy, always remember the core mindset; all insurance companies are scumbags and are only interested in your dollars. Got that? Good. Here’s what to look for:

Two Types of Cover

Medical Cover

Most importantly, the need for medical cover will depend on your health insurance at home. Some (usually the more expensive) health insurance policies will provide medical cover regardless of where you are in the world. Others won’t. Check your policy and if you’re already covered then skip forward to personal cover.

In case of emergency, medical bills could make you bankrupt. Which isn’t even the worse case scenario. Without insurance or stacks of ready cash, you could be dead. In many developing countries, hospitals and doctors won’t do anything until they’ve got proof you can pay. That’s easily done with an insurance certificate and a quick phone call. It’s much harder when you’ve got to find someone to front you $10,000.

Personal Cover

The second part of travel insurance cover is about misfortune, not emergency. Delayed flights, stolen passport, missed connections, lost camera, curtailed trip; you can get covered for all the scenarios that probably won’t happen, but will be a nightmare if they do. The more you’re covered for, the higher the premiums.

Note that much of this cover is not necessarily essential. Airlines have some statutory requirements should they mess up your flight. Travel agents should be registered with ASTA (American Society of Travel Agents), ABTA (the British equivalent), or a similar local organization. So they must provide compensation that negates the need for a very costly travel insurance policy.

It’s worth considering the importance of insurance against personal belongings. Even expensive policies rarely provide more than $1000 in cover, which is barely enough for a SLR camera, especially with a $200 excess.

travel insurance facts

Choosing a Travel Insurance Policy

Please note that this article retains the mindset that insurance companies are the antithesis of travel. If it was up to us, then we’d wipe the very concept off the planet. Regrettably, when you travel to exotic destinations it’s something that has to be thought about. This article isn’t trying to sell anything. Different travel insurance policies are best suited to different people.

Look at Customer Service not Numbers

The difference between $5million and $10million cover is unlikely to be tested. However, make any claim and you’ll want easy and immediate access to the insurance company. And you don’t want them delaying a claim when your friend lies on a hospital bed. Reading reviews and finding a company with good customer service is more important than scrutinizing all the numbers.

Remember that Destinations and Activities Attract Differing Premiums

Ostrich riding is rarely covered.

Ostrich riding is rarely covered.

Sometimes you just have to grin and take it. Your choice of destination can make the same policy more or less expensive. In general, travel to the USA and Japan is in the highest price bracket. Ever since a cruise ship sunk off the coast of Italy, going on a cruise also means almost double the insurance premiums. If you’re planning to do any “adventurous” activity then the price goes up. In general, the insurance company definition of “adventurous” is everything other than lying on a beach and going on a stupid open top bus sightseeing tour.

The Three Most Popular Scenarios

The right travel insurance policy is dependent on the type of vacation you’re planning to take. Here are the three most popular scenarios.

1) Travel Insurance for a Two Week Vacation

Vacations are about relieving tension. Thankfully, most standard travel insurance packages are remarkably similar, so there’s no need to stress about them. You get cover for medical emergencies and expatriation, plus some compensation for delayed flights, missed connections, cancelled trips, and lost or stolen belongings. Most travel insurance policies are only valid for trips of less than a month (see below if you’re going away for longer).

If you are medically covered through your medical insurance then you may choose to forget about travel insurance, especially if there’s little of value going in the suitcase.

When comparing policies on sites like squaremouth.com and insuremytrip.com, don’t get too hung-up on the numbers. Having $2million or $5million medical cover isn’t that much different. Instead, check the excess fees and the level of compensation. $200 excess is ridiculous when you’re only covered for $300 of stolen personal belongings. That hardly makes it worth spending half a day in a random police station reporting the crime.

If appropriate, also check that they cover relevant pre-existing medical conditions. Many policies don’t. You’ll only be covered for in-patient medical care and emergencies, which makes curtailment an essential part of your package. Returning home for out-patient care isn’t as bad if you’re compensated for it.

2) Escaping for Over a Month and Backpacker Travel

Long term backpacker travel requires a different travel insurance.

Long term backpacker travel requires a different travel insurance.

Many travel insurance policies only cover “single trip,” meaning you must return home within a defined time period, often one month or six weeks. Certainly anyone planning to leave for over two months will be out of the standard insurance parameters. Annual travel insurance sounds like the solution but it’s not, as it only covers multiple single trips over 12 months. There are two alternative options.

Companies like World Nomads specialize in long term travel insurance. Essentially it’s for backpackers on long journeys away from home. They offer a standard package for an extended period of time. Extensive coverage for baggage and personal belongings really bumps up the premium and can make the insurance unaffordable. If you’re traveling for six months, your battered personal belongings probably aren’t worth an extra $50 a month in insurance. For dirt cheap cover of only the essentials, try a company like etravelinsure.

If you’re serious about staying away from home then consider travel health insurance from a company like HTH instead. This includes out-patient healthcare, and helps ensure that the dream job or trip isn’t abruptly ended. While it won’t cover personal belongings, it ensures you don’t get a huge bill when contracting malaria or falling off a motorbike.

3) Adventure Travel with Adrenalin Activities and Visiting Dangerous Countries

Most policies won't cover skydiving.

Most policies won’t cover skydiving.

Travel insurance companies know what they’re doing and anything that’s remotely risky invalidates the policy. Check the small print. Travel to anywhere that the US State Department recommends against visiting, and the insurance becomes invalid. Most adventurous activities aren’t included. Even innocuous activities like renting a jet ski or going canoeing are usually excluded. Some backpacker travel insurance companies specialize in risky destinations and activities but it’s expensive.

The cheapest option is to take a standard policy as per options one and two above, and then bolt on some additional cover for the few days spent in a particular country. So just take the basic policy and then upgrade before you embark on a two week Amazon kayaking trip or high altitude mountain climb. Then downgrade to keep the premiums down.

Trekking in the Democratic Republic of Congo is going to require some additional cover.

Trekking in the Democratic Republic of Congo is going to require some additional cover.