(NerdWallet) – Particularly since the COVID-19 pandemic, travel insurance has become a must-have travel item. And while it certainly could be useful coverage for many types of trips, there are many things about travel insurance that are misunderstood.
In most cases, travel insurance does not equate to automatic reimbursement. There is often a ton of paperwork to file to prove your case, along with strict deadlines to meet. And common bumps in the road of a trip (like a flight delay), not to mention full-blown bumps like a flare-up of an illness you’ve already been diagnosed with, aren’t usually covered.
Here are six common myths about travel insurance that come up frequently and the truths behind them.
Myth 1: Travel insurance is just health insurance
far from there Most forms of trip cancellation or interruption insurance only cover medical emergencies. This is useful if you break your leg during a ski trip in the Alps, but will not cover routine medical coverage.
Maybe you have a catheter that needs to be replaced by a doctor every two weeks, but you’re on a two-month trip. Many health insurance policies, including Medicare and Medicaid, do not explicitly cover most medical costs abroad. And most travel health insurance only reimburses for emergency medical expenses.
If you want to secure coverage for non-emergency medical expenses while abroad, you have two options:
- Boost your existing health insurance with additional coverage for international travel. The extra cost may be worth it if you travel frequently and/or anticipate seeking international medical treatment (even for a mundane teeth cleaning).
- Take out international health insurance. Many of the major insurance companies offer health insurance that can cover treatment both in your home country and around the world, both for emergencies and for more predictable treatments such as maternity, dental and wellness checkups. Whether you’ve decided to work remotely abroad or frequently travel abroad, it can make sense to make sure you can see a doctor anywhere.
Myth 2: Travel insurance is most useful for trips that involve extreme sports
In fact, it’s the opposite. Many forms of travel insurance will explicitly not cover certain high-risk activities like skydiving, scuba diving, or bungee jumping. If your trip involves adventure sports, you may need to purchase a separate policy that specifically covers your activity.
Look for aerial activities coverage, which typically covers activities from ziplining and hot air balloon rides to more exciting activities like skydiving, hang gliding, and bungee jumping. A specific water sports policy will generally cover boating, diving and deep sea fishing. And snow sports coverage can insure activities like snowboarding, skiing, heli-skiing, and ice windsurfing.
Squaremouth, which is a travel insurance comparison tool, recommends at least $50,000 in emergency medical coverage and $100,000 in medical evacuation coverage when purchasing these policies.
Myth 3: ‘Cancel for any reason’ can get all your money back
Travel insurance can sometimes be limited in terms of the scenarios that actually enable it. While it will generally cover events like accidental injuries or severe weather, it likely won’t cover many other reasons, like the risks of COVID-19 or suddenly skipping your trip because your work or personal life got packed.
For those scenarios, you might consider “Cancel for Any Reason” coverage, which can get your money back no matter why you need to cancel. But you won’t get all your money back. The exact amounts vary by policy, but policyholders can expect to be reimbursed between 50% and 75% of their initial payments, according to the National Association of Insurance Commissioners.
And still, there are limitations. For example, most CFAR policies require you to cancel your trip more than 48 hours before your scheduled departure.
Myth 4: Full-time travelers can best maximize travel insurance
While frequent travelers will undoubtedly get more value from an annual travel insurance policy or credit card travel insurance benefit than someone who only travels a few times a year, someone who travels full time, such as a expat or a digital nomad, you might be out of luck.
Check with your own insurance provider, but most travel insurance companies do not cover trips longer than 60 days. If your employer allows you to work remotely and you’ve chosen to become a full-time traveler, don’t count on your travel insurance policy to help you.
For trips longer than 60 days, you may want a travel insurance option designed specifically for digital nomads.
Myth 5: Travel insurance is best for people with medical problems
If you have a pre-existing condition, do not have travel insurance if that condition interferes with your trip. Most policies do not explicitly cover pre-existing conditions or travel that is taken against a doctor’s advice.
Please understand that the definition of a pre-existing condition can be quite broad. For example, if he had a mild heart attack while walking up the steps of the Eiffel Tower but was diagnosed with high blood pressure, his claim could be denied.
To ensure coverage, consider a more comprehensive policy that includes a pre-existing condition waiver.
Myth 6: You can wait until you get home to file a claim
Depending on the length of your trip, don’t wait to contact your insurance provider. If you cancel your trip before departure, some policies require you to notify your travel insurance company within 48 hours of your doctor advising you not to travel.
Most policies require that you file a written claim within 20 days of the occurrence. From there, supporting documentation (such as medical records, a death certificate, or jury duty notice) generally must be submitted within 90 days.
The bottom line
Travel insurance can be of great help in many scenarios. It can reimburse you for the purchase of new toiletries and clothing if your luggage is lost. May cover an additional one night hotel stay or meals for eligible flight delays. And you can refund non-refundable reservations in case you need to cancel or cut a trip short due to most medical emergencies or bad weather.
But there are many circumstances that are not covered, or may only be covered by certain policies and with proper documentation. Understand what your policy really covers before counting on travel insurance to bail you out.
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