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Better safe than sorry – travel insurance for dummies

by Flitter Fever
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Apparently, there are still people who question the value of a travel insurance. Is it really necessary? Is it worth the money? The simple answer is: yes, it is. Don’t be stupid. God forbid but in case something would happen to you during your trip, you and your family will be grateful you did. This will be a long yet hopefully helpful post.

This topic is close to my heart, having personally witnessed several situations where travel insurance became essential. No fun topic and let’s hope you will be spared of such unfortunate event, but for some maybe a much needed reality check – better safe than sorry!

Health insurance vs. travel insurance

I am sure you have a health insurance and you may think it is enough for traveling too, but it is not. Your health insurance usually reimburses medically necessary costs abroad (in your continent), but it is limited and covers only a certain amount, usually the rate that is customary in your country for medical costs. Travel insurance covers the medical costs above the rate in your country.

So let’s say you are Dutch and you go to the US, you break your leg and the American private hospital you coincidently went to, charges twice as much as the hospital in your hometown would. In that case, the travel insurance will pay half of the bill, the part that the health insurance will not reimburse. Health insurance does not cover the early termination of a trip due to an accident or illness, this falls under travel insurance.

Costs & benefits

Yep, travel insurance costs money. In my case EUR 6.67 each month to be exact. Nevertheless, it is worth it, the benefits and risks are bigger. If you are struggling with the idea that you cannot afford a travel insurance for your backpack trip to Australia, ask for example your parents for support. Otherwise, sorry to say but you may question whether you should take the trip at all if you are not at least can afford a proper insurance.

You are taking a serious risk by not having a travel insurance; burden yourself, your partner and/or your bereaved with sky-high costs in case something happens to you during your travels. On top of the stress such situation would cause already. Is that worth it? You may think nothing will happen to you, and let’s hope not, but reality shows it happens on a daily basis. In the unfortunate situation it may happen to you, you’d better be safe than sorry and not have the additional costs on top of the possibly physical and/or mental damage you have already.

Be smart and compare

Obviously, you do not need to throw money down the drain either. It is always good to compare insurances as you can save money there. However, stay critical on the details. One insurance may be cheaper but have a much more limited coverage than another insurance that is slightly more expensive. Evaluate what is included and what do you think is realistically necessary for your situation?

For my Dutch readers I would advise Unigarant (ANWB) as I have several positive experiences with them and they ask a fair price in exchange of a good coverage. When my dad ended up in the hospital in Spain, they were so helpful! Contrary, when my younger sister was in the hospital in Malaysia after a serious accident, SOS International (emergency center of Europeesche Insurances) did not provide the support needed and it was such a debate with them to get things done, very frustrating.

Coverage

As mentioned before, check what your travel insurance covers and what not, to be able to make the best decision for your situation. It is always smart to ask a travel agent or insurance agency for advice since insurances are not easy topics and expertise can be of great value.

With a travel insurance, material damage such as your luggage and personal damage such as illness and/or accident (personal injury) that you may incur during your holiday or trip are covered. The damage that the travel insurer reimburses is quickly many times higher than the premium for your travel insurance. The travel insurer offers assistance in the country where you are on holiday, and ensures that you will be returned to the Netherlands if necessary (sick, injured, death, etc.). Travel insurance and cancellation insurance are often combined and may result in a discount.

However, you should also understand that the amounts covered have limitations too, which can be harsh. Let’s say you get into an accident abroad, requiring surgery and causing lifelong physical and/or mental problems, making you or your travel mate unable or less able to work for the rest of your life. Your travel insurance may only pay off EUR20K; either for max legal costs to file prosecution and make an attempt to recover damage on the prep (which is often very challenging, both legally and emotionally plus time consuming), or to pay you off, that’s it. Your legal and/or accident insurance may or may not provide an additional coverage. Risks are a part of life, but this is reality.

Worst-case scenario

Most people think about luggage or health care costs when considering or evaluating a travel insurance. However, the most important reason for getting a travel insurance is the basic coverage, consisting of:

  • emergency aid (emergency center)
  • repatriation (can easily add up to EUR20K)
  • costs if you die abroad: funeral or cremation costs on the spot or transport of the mortal remains back home (think in the range of EUR10K, depending on destination)

Moreover also because of:

  • extra costs for acute problems (for example longer hotel stay due to calamities);
  • extra travel and accommodation costs when the partner ends up in a hospital abroad;
  • special transport on medical grounds (ambulance-plane, winter sports plaster flights, etc.);
  • a search or rescue operation (for example the usage of a helicopter and/or search dogs);

In addition, all the paperwork and arrangements that come along with those kind of circumstances. Something you do not want your beloved ones to be concerned with (and believe me, it is a lot of hassle). The emergency center of a travel insurance can take care of that, they have the right expertise and local contacts.

A Dutch friend of mine passed away during her honeymoon in South Africa. My younger sister got into a serious car accident in Malaysia, hospitalizing her for about six weeks in Kuala Lumpur. A relative of a former colleague of mine was accidently murdered in Brazil. He forgot to arrange a travel insurance for this trip. Since his family could not afford transportation of his corpse back to The Netherlands, the situation forced them to have him buried all alone in Brazil. A few examples why having a travel insurance is important.

Baggage

Of course, luggage is important too. It is very unfortunate if your luggage is lost, damaged or stolen. However, stuff is replaceable. Just realize that airport luggage handlers have their own policies, which may cover only a fraction of your actual damage. You can do the math of the approximate value of the content of your luggage. Do you usually carry a lot of new or relatively old stuff? If you do not want or cannot afford yourself to cover the replacement of your stuff in case of damage or loss, make sure to pick that luggage box in case of closing a travel insurance contract. Also check the limited amount covered, own risk, conditions to reimburse, etc.

A former colleague of mine moved out of his parents’ house by going to Australia. A few days before his departure, the family house burned down including all of his stuff except for the clothes he was wearing, his wallet and passport. I still remember how relaxed he responded to all of this; it actually made is travel a bit easier, he would just but new stuff in Australia, paid by his insurance. Well that is one way to deal with that kinda shit!

Your luggage may contain valuable stuff (photo credits Anete Lusina)
Your luggage may contain valuable stuff (photo credits Anete Lusina)

Continuous vs. short-term travel insurance

Default rule is: if you are going on holidays approximately three weeks a year, a continuous travel insurance is beneficial. This does not need to be one holiday, it can be a sum of all holidays throughout the year, for example summer vacation to Spain, a city trip to London, a week of skiing in the Alps, etc. There are several online tools available to calculate whether a continuous or short-term travel insurance will be beneficial for you. The downside of a short-term travel insurance is that you have to think about it every time you book a trip.

Make sure your insurance covers the full period of your trip. Are you going abroad for two months or longer, backpacking in Asia or Australia for example? Check if your insurance covers this, usually they do not (standard). Most insurances limit the travel period covered to 4 or 6 weeks in one trip, some up to three months. If you are going away for a longer period, you need a special travel insurance.

Dutch insurance companies

For my Dutch readers: Allianz is an interesting insurance company to look into, for both short and long term travels (>2 months). Allianz has for example a special backpackers insurance. For shorter trips (max 2 months), I can highly recommend Unigarant (ANWB), who is awarded Tested Best in December 2018 by the Consumers Association (Consumentenbond). Within their extended package, Unigarant does have the option to cover trips up to 2-6 months as well.

As mentioned earlier, I am not enthusiastic about Europeesche Insurances, in practice mainly their emergency center SOS International. We feel they did a lousy job around my sister’s accident in Malaysia. Please understand I am not a licensed insurance advisor, the above are recommendations based on personal consumer experiences; contact your travel/insurance agency for advice.

Business travel

Are you going on a business trip? Please check the coverage of your personal travel insurance and check whether your employer has a proper travel insurance covering employees’ business trips. Often personal travel insurances do not cover business trips. In case you discover that your employer does not have a proper travel insurance, or excludes certain risks that you would like to get covered (such as stolen laptop), you can always ask your insurance agency for a travel insurance for individuals that also covers business trips because they do exist. It is just that not many people realize this.

Tip: make sure you have the details of the company’s travel insurance such as name, emergency telephone number and policy number in your phone, agenda and share it with your partner, relative or friend.

Once on a business trip to Prague I got seriously ill with high fever, requiring a doctor to see me. The GP decided that it was necessary to break off the business trip and go back home as soon as possible to recover. The doctor wanted cash payment for the medicine but gave a receipt I could submit. Luckily, my employer had a travel insurance that covered the full costs of changing the flights and medical costs involved. Initially I had to reimburse the medical expenses of the GP and medicine to my own health insurance, costing me my annual mandatory own risk (a few hundred euro), but afterwards I got this money back from my employer’s insurance.

Also, if you are going to do an internship or work abroad (including volunteer work) for a while, different rules may apply from travel insurance perspective. Check with your travel agency or insurance agency for further advice.

Specific job

Earlier mentioned Allianz has some very specific, work related travel insurances covering for example:

  • KLM steward(ess) insurance: covering private extensions of business trips;
  • Navy insurance: covering change and cancellations of private trips due to navy obligations or route changes;
  • Au pair insurance;
  • etc.

Cancellation insurance

A cancellation insurance is something else than a travel insurance. A cancellation insurance reimburses the costs of cancellation of a trip due to an unforeseen exceptional circumstance during the insurance period. In that case there must be an event that falls under the coverage of the insurance, for example death of a first line family member (father, mother, spouse, brother, child, etc.). For a travel insurance you pay a fixed amount, with a cancelation insurance you pay a percentage over the travel sum (short term) or fixed amount annually (continuous, based on max limit travel sum).

If you are already traveling and you have a valid reason to cancel your holiday unexpectedly (for example due to hospitalization), a cancellation insurance reimburses the unused travel days. Usually you can only close an insurance contract for cancellation within 7 days after the booking of your trip. Personally, I have an all-in-one package that includes a continuous travel insurance and cancellation insurance for the whole year.

Situations

Each cancellation insurance has different conditions, so make sure to have a good understanding of what is included and what is not for your particular insurance or the insurance you consider. At least in Europe the following situations are usually at least covered under cancellation insurances:

  • death or serious illness of yourself, travel partner or a close family member;
  • medically necessary surgery that must be undergone by you, your partner or your child;
  • unexpectedly obtaining a rental property;
  • serious damage to your home or business;
  • involuntary unemployment after a permanent contract;
  • entering into a new employment contract after unemployment;

Moreover, in several cases also:

  • duty of care for a relative in 1st degree
  • pregnancy or complications during pregnancy;
  • serious illness of a business partner;
  • divorce;
  • loss or theft of insured person’s travel documents required for the journey;
  • theft or cancellation of the vehicle where you would travel with;
  • illness or accident of your pet.

Limitations

So also important to realize is that a cancellation insurance does not cover all situations, should you no longer be in the mood for the trip booked. For example, you book a trip to Nepal with your boyfriend or girlfriend but before departure, you break up. In most cases (especially unmarried), this situation is not covered under the cancellation insurance. A former colleague of mine had this and he decided to go anyway; she did as well, with her new boyfriend, and they say together in the plane, neither of them wanting to give up their trip to the Himalaya LOL

Also, often pandemics and natural disasters are excluded. Whereas there are also travel insurances that cover any cancellation reason. So good to check the details. A broader coverage often comes with a higher price. So it’s a risk-chance evaluation.

Important to check the amount covered under your cancellation insurance per trip. For example, the total sum covered under your cancelation policy is EUR 3000 per person. If you are going for 3-4 weeks with a bit of luxury and/or activities, this amount can be easily exceeded. In that case, you should take an additional insurance over the amount that is above the limit in your cancelation policy.  

Examples

Many years ago, I booked a trip with my former boyfriend to Portugal together with another couple, his best friend and girlfriend. Weeks before we were schedule to fly to Faro, they broke up, shit! Fortunately for her, coincidentally, she was assigned a rental property in the same weeks, enabling her to reimburse her travel sum and more or less forcing us to go on holidays with the three of us. I can tell you: this was no fun trip. Possibly slightly better though than if she would have gone along anyway while they were already broken up or break up during the holiday LOL

It is always relatively cheaper to have a continuous cancellation insurance instead of short-term for every single trip. Personally I think it’s better to be insured double than insufficient. When I went to study abroad in the United States, I had three insurances:

  • the mandatory insurance of the exchange program
  • my own personal travel insurance (covering five months)
  • my mandatory health insurance

Please check the conditions of your cancellation insurance or ask your travel agent or insurance agency for further advice.

Negative travel advice

Something else to realize is that the following situations are usually excluded from reimbursement (or at least limited):

  • Natural disasters such as hurricane, tsunami, flooding, earthquake, erupting volcano, etc.
  • If you decide to travel to a country while a negative travel advice is applicable according to your national government (for example it is too dangerous and you ignore that advice).

Did a disaster happen in a country that you booked a trip to? For example a tsunami and you are supposed to fly there coming Saturday… Oh no! Check with your travel agency, the website of your country’s Ministry of Foreign Affairs and airline for further advice.

As long as there is no negative travel advice, most travel insurances and companies do not reimburse should you want to cancel your trip. Should they do advise negative, in that case it can be beneficial if you booked your holiday as a package deal with a travel agency, since then all can be changed at once by the agency.

Some popular holiday destinations also have a partly negative travel advice, for example Egypt, Philipines, Japan, Mexico, Thailand and Turkey. So always check this in advance and take it into account when planning a trip. To learn more about negative travel advice and insurances with disasters and pandemics in my article To travel or not to travel? Corona and other disasters lead to travel dilemma.

Extras

Most travel insurances offer a basic or extended package. Which one is suitable for you? Think about extra modules and coverage of business travel, money, travel assistance legal and/or traffic, replacement vehicle and accommodation, etc.

Hobby and sports stuff like cameras are usually only insured for a limited amount, unless you take an extra module or extended package to cover that. Do you have for example an expensive camera that you take on your trips? Or other hobby and/or sports gear like snowboard or surfboard? Consider an extra module for that within your travel insurance, or switch to another package or travel insurance that does cover the full amount that replacement of your precious stuff would cost, should you want that risk covered.

If you have booked an adventurous holiday and are going to do dangerous sports such as mountain climbing, abseiling, skydiving, paragliding, parachute jumping, winter sports such as skiing and snowboarding, diving, etc. then you must take out a separate travel insurance module to cover those risks. Maybe you are only going backpacking, however your new friends made you decide to go bungee jumping. The activity company often requires you to sign a liability statement. Better make sure your insurance covers should the jump go wrong.

Where you could save money

As mentioned earlier in this blog, a travel insurance is worth money, however you do not need to throw money down the drain either. So where could you potentially save? A summary of where you should be critical:

  • Compare coverage packages of multiple insurance packages and companies: which provides the best value for money and includes what you want to get covered?
  • Geographical coverage: will your own continent be sufficient (for example Europe) or do you need worldwide coverage (for this trip or year)?
  • Basic or extended coverage: do you need extra modules, if so, which? Baggage, camera, dangerous sports, legal costs, etc. Are there risks you do not feel important or valuable enough to cover by travel insurance?      
  • Estimate how much you will go on holidays this year to determine whether short-term or continuous travel insurance would be the smartest choice for you this year?
  • Do you still live with your parents? Check their travel insurance package and policy, it may cover you as well, possibly requiring only an extension to cover your next trip.
  • Often insurance companies and banks give discounts if you take multiple insurances in one contract, for example insurances for your house, liability and travel. Worth checking.

Travel agents may not be delighted me mentioning this, but ways to save on cancellation insurance fees are:

  • Book hotels or B&Bs that can be cancelled up to a few days or even hours before arrival, it’s an easy search option on booking.com;
  • Take car rental flex service, making it easy to cancel or change your rental last minute, optional with Sunny Cars for EUR 1 per day (min EUR 7, max EUR 21).
  • Book activities as short in advance as possible, once you know for sure you can do it (if booked as part of a package deal, in short-term travel and cancellation insurance you pay a fee over these activities too)

Obligations

Taking out travel insurance does not only mean rights, it also comes with certain obligations such as:

  • Pay your insurance premium in time
  • Prevent and limit damage (be careful with your stuff)
  • Report travel insurance damage in time (to the insurance or agency, possibly also local police)
  • Inform the travel insurance company about changes in your personal situation in time (for example divorce, relocation, etc.)

If you do not meet these obligations, the travel insurance company may refuse reimbursement of any claims you may want to file.

If you do not meet these obligations, the travel insurance company may refuse reimbursement of any claims you may want to file.

Precautions

  • Let others such as family and/or friends back home but also your travel buddy know your (rough) schedule and name/policy#/phone# of your travel insurance and health insurance. If something happens, they know how to contact your travel insurance.
  • Make sure you have the name/policy#/phone# of your travel insurance with you, on several places, possibly also online, not only your smartphone, should it get broken due to an accident or stolen for example. The phone number of your travel or insurance agency may also be handy, although not all of them may have a 24/7 emergency phone number.
  • If you have a serious medical condition (for example you are a heart patient) reconsider travelling to countries that lack proper hospitals that meet western standards to a certain level (e.g. many African countries), or too remote locations (for example jungle). Take enough medicine with you, covering longer than your scheduled stay.
  • Don’t do stupid things with regards to safety. Soon I will write another blog about travel safety.
  • Make sure you do not travel before you got all vaccinations advised for your designated country or countries. Dutch travelers: seek advice from your health insurance or GGD.

If something happens

  • Contact the insurance company directly or your travel agency for advice or help. If you need to go to a hospital or doctor, if possible, seek advice from your insurance’s emergency contact center first. They can recommend the best places (if possible with more or less western standards) instead of having to search yourself.
  • The travel insurance can contact your health insurance to see what can be reimbursed from them, and what should be additionally covered by your travel insurance company.
  • In case of a natural disaster such as hurricane or flooding, you may also contact your travel or insurance agency. Often these situations are excluded from coverage, however, the insurance’s emergency department should be able to help out with things that need to be arranged in such unfortunate situation. 

In a future blog post, I will write more about travel safety tips.

The above is solely my personal opinion, experience and knowledge on travel insurance. I did obtain a formal diploma on travel insurance (SEPR) in the past, however I am not AFM registered. No rights can be obtained from this article. Please ask your travel agent or insurance company for customized advice.

This blog contains affiliate links to support this website. For more information click here.

Last Updated on 08/26/2020 by Flitter Fever

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