The eruption of the Eyjafjallajokull volcano in Iceland this past March cancelled hundreds of flights and stranded thousands of travelers across Europe in mid-April, and inadvertently served as a prime example of why travel insurance is often a wise investment.
“It promotes protection from the unknown,” says Suzanne Munson, spokesperson for Seven Corners, a travel agency based outside of Indianapolis. “For those individuals who had trip cancellation insurance during the situation with the volcano [in Iceland] this year, they received reimbursement for additional out of pocket expenses incurred for accommodations, travel expenses, etcetera due to travel delays or flight cancellations.”
In general, there are two types of travel insurance available for consumers to purchase coming into or out of the country: travel medical insurance and trip cancellation.
Travel medical insurance provides health care coverage if you get sick or injured while traveling internationally. Premiums for travel medical plans are based on your age, the length of your trip, and the medical maximum desired.
According to Munson, most people believe their health insurance plans covers them during travel abroad. That is inaccurate in the majority of cases, however. Even plans that do work internationally are for emergencies only, and Munson hasn’t seen any that cover emergency medical evacuations (average cost is $40,000-50,000). “Most people don’t have that kind of disposable income,” Munson says. “For as little as $50, you can buy an insurance policy for your entire family for a whole week.”
A trip cancellation insurance policy, on the other hand, is monetary protection for the non-refundable portions of your trip in case something unforeseen forces you to cancel your trip. There are 12-13 legitimate reasons to cancel a trip, but the most common cancellations, according to Munson, are weather-related, or involve illness or death, bankruptcy or default.
“In reality, the majority of situations are covered when traveling,” says Sheri Machat, Senior VP of Kansas City-based MH Ross Travel insurance Services. “People [often] think they can get paid more than the actual claim gets. They’ll only get paid back [the amount] they actually spent, not what the limit of the policy is.”
It also insures you if you are stranded somewhere unexpectedly due to a mechanical or weather delays, or worker strikes. These insurance premiums are directly proportional, and are based on your age and the cost of your travel arrangements.
Munson admits that while Europeans are knowledge about travel insurance, American awareness of its nuances is generally limited. While many trips can occur without a hitch, it just takes one mishap to put you in a logistical and financial bind.
Travel insurance is advisable for anyone who is planning an expensive trip, especially those with children or very elderly family members.
“If people today are buying a trip and spending their hard-earned money and there are non-refundable penalties that will be assessed if they can’t travel, they should consider travel insurance, regardless of age,” says Machat.
To learn more, see these statistics for the U.S. Travel Insurance Association.
