My F&M

Travel Insurance: What Do You Need?

Share This Article

As the weather turns from winter to spring many of us are thinking ahead to our vacations for the year. Travel insurance is regularly offered as an option before you book your trip, but do you need it? Business travelers may also wonder if they are protected or need insurance. Who actually needs travel insurance? It depends. Travel insurance offers financial protection from potentially expensive situations arising while traveling. Popular policy types offer coverage for a medical emergency or protect your investment in a trip.

If you are traveling out of the country, consider buying medical and evacuation protection, especially if you are going to a destination that lacks a well-developed hospital system.

  • Health Insurance - It may surprise you to learn that many health insurance policies don’t cover medical expenses incurred outside the U.S. If you end up needing treatment, you may have to pay out of pocket. Medicare, for instance, generally does not cover such costs.  
  • Evacuation Insurance - If you have to be airlifted quickly from a remote location and transported to the U.S., the associated costs can be astronomical. Consider purchasing a policy that includes evacuation coverage if you plan on traveling to a country where you wouldn’t feel comfortable receiving emergency treatment.  

Another form of travel insurance protects your investment in the trip if you need to cancel. Many times these policies make sense to buy when you are paying a large sum of money upfront. There are three main types:

  • Trip Cancelation - These policies offer reimbursement of travel expenses if something happens and you cannot go.  Some policies are very flexible and allow you to cancel your trip for any reason, including extending coverage to problems encountered by your spouse or traveling companion. Others are more restrictive and only permit cancelation for specific situations.
  • Trip Interruption - These policies offer reimbursement if something unexpected happens during a trip forcing you to leave early.  For example, if you break your leg during a European tour and need to come home, you would be reimbursed for the part of the trip you missed.  
  • Trip Delay - These policies offer reimbursement for two types of events: delay in the start of your trip or a delay during your trip.  For example, if you miss your flight and need to reschedule, the policy will cover the rescheduling costs.  If you or a member of your party is delayed due to illness or injury, the policy may also cover rescheduling fees during the trip.

Trip coverage is included as part of a comprehensive plan. Many comprehensive travel insurance policies also cover the loss of baggage, theft, and damage to a rental car. Stand-alone medical and evacuation policies are available if you do not want to pay for a comprehensive plan but do want health coverage.

The timing of your purchase of travel insurance can affect the coverage of the policy. Some pre-existing conditions may be covered by trip, evacuation, and health insurance if they are not an active problem at the time you book. If you need to receive treatment for a condition between when you book the trip and when you buy the policy, some companies will no longer cover the condition. Trip cancelation due to weather or bankruptcy by hotels, airlines, cruise lines, or hotels may be excluded if the policy is bought after the fact. For weather cancelations, if the storm is far enough along to have been named before you buy insurance it is not covered as a reason to cancel. For bankruptcy cancelations, the policy must be purchased before the public is notified that the company is a default risk.

Make sure you have a good understanding of your current insurance policies to reduce overlapping coverage. Some homeowners, auto, health, Medigap, and life insurance policies cover travel items, and some credit cards offer trip cancelation coverage. Travel insurance can be purchased annually or per trip. For people who travel often, annual coverage may be more attractive, but generally is limited to medical and evacuation policies. If you actively work with an insurance agent, they may be able to help you reduce overlap with your current policies.

Be sure to shop around as prices and coverage can vary greatly. The insurance offered by a travel agent or tour company may not be the best for you. Comparison sites like and allow you to enter your trip details and compare different travel policies. These sites also have explanations of travel insurance and coverage details as well as travel tips. If you are a Rick Steves fan, he also covers the topic on his website in his travel tips section.

As with any financial decision, some research is needed.  Please feel free to contact your Foster & Motley advisor if you have any questions.