10 Common Travel Insurance Questions and Misconceptions Answered

Travel insurance is one of the most important things to buy for your trip — no matter how long you are going away for it is a must have.

As I was recently chastising a friend for never getting it, I realized as we talked he had a lot of misconceptions about what travel insurance really was. And, judging by the questions that make their way to my inbox each day, he’s not the only one.

I haven’t talked about travel insurance in a long time and want to address many of the concerns, questions, and misconceptions that have piled up over the years that, honestly, I should have written about ages ago (my bad!).

I always get travel insurance when I travel. For as little as $2.50 USD a day, it’s the most important thing you hope you’ll never need. After all, we get home insurance, life insurance, health insurance, and car insurance. Getting travel insurance is the same thing. You want to protect yourself against the unforeseen.

A friend recently got dengue fever and had to cancel a lot of her travel plans — but her travel insurance covered the hospital costs and reimbursed her expenses. Insurance was there when I popped an eardrum and lost luggage. It was there when another friend had to go home after her father died. It was there for these people too:

But not this person who decided not to get it:

Travel insurance is a must but since it is a confusing topic (try reading New York insurance law for fun. I did. Note: It’s not fun.) today I want to answer the common questions about travel insurance. These questions pop up in my inbox all the time and are the greatest points of confusion on the subject:

Note: There are few universal rules in travel insurance so be sure to read the fine print of your policy to find out the specifics of what is and isn’t covered. The below answers are no substitute for checking your actual policy! Policy wordings and conditions vary greatly from country to country, state to state, and company to company. So read them and be sure to go with the company that gives you what you need – there are many good insurance companies out there!

What the heck is travel insurance?
It’s emergency care when things unexpectedly go wrong. Depending on the policy you buy, it can be there for when your luggage is lost by the airline, when you fall hiking, pop an eardrum scuba diving, get a parasite overseas, or need to cancel or cut your trip short because your dad died. It’s designed to be there for accidents (both health and non-health related) and unexpected events you never thought could happen to you. It’s not a substitute for health insurance back home, an open checkbook to supplement your trip expenses, or a license to be foolish.

Is travel insurance just health insurance?
No, it’s so much more than that. While there is a medical component for sudden illnesses and accidental injuries, it can also cover you for trip cancellation, trip interruptions, loss or theft of your gear, and emergency transportation should you need to get to the nearest hospital fast.

Okay, but it’s like health insurance too, right? I can go see a doctor when I want?
Travel insurance is not a replacement for health insurance and should not be treated as such. It’s there for unexpected emergencies. Break a leg? Pop an eardrum? Get food poisoning or dengue? Travel insurance has you covered. Want to go see a doctor for a physical or get a new crown on your tooth? You’re on your own!

Can I get treated for an illness I already have?
Most travel insurance plans don’t cover pre-existing conditions. If you get sick on the road, yes, travel insurance is there for you. But if you need medication for an ongoing chronic disease or a medical condition you knew of before you bought the policy, you could be out of luck. Moreover, if you get sick under one policy and then you extend it or start a new policy, most insurers will consider your illness a pre-existing condition and won’t cover it under your new policy.

My credit card offers some protection. Isn’t that good enough?
Credit cards, even the best, offer very limited protection. Some offer coverage for lost or stolen items, medical expenses, and trip cancellation if you booked your trip with the card, but they may not cover you being airlifted home or anything else (always check. You may also not be covered unless you activate the policy before your trip.) And, if they do cover something, the coverage limit may be so low that you might be shocked when you have to pay the difference. Bottom line: don’t rely on credit card coverage for any more than lost or stolen items, and maybe not even that.

Unless you have an American Express Platinum… but not all of us roll that deep!

How does the insurance actually work? Do they mail me a card I can show the doctor?
If it’s a major medical emergency needing overnight hospitalization or emergency repatriation, then you (or someone else) would contact the emergency assistance team and they can help make arrangements and approve costs. For all other situations, including day admission to hospital, you need to claim reimbursement from your insurer. You pay out of pocket and then submit documentation to the insurance company after the fact (so no need for a card to show the doctor). Be sure to keep all documentation, file any necessary police reports, and save all receipts. Companies don’t reimburse you based on your word.

What about Obamacare? How does that affect everything?
For Americans, the ACA, or “Obamacare,” covers you only in the United States, and travel insurance is not a replacement for health insurance nor does it get you out of its requirements. But if you are away from the United States for 330 days or more, you don’t need to get US-based health insurance. You also get a three-month grace period each year before you get charged a penalty. Be sure to contact a tax accountant or the ACA hotline number for more information.

I read reviews online. All these companies suck. What’s up with that?
Most people don’t read the fine print of their policy. (Who has ever read their iTunes agreement? Exactly.)  People buy it, don’t read the exact wording, and make assumptions about coverage. So, when something goes wrong, they scream bloody murder when something isn’t covered or when lacking supporting documents to support their claim and write a nasty review online. (Most people don’t write good reviews when they are helped. On the Internet, we love to scream our displeasure but rarely our pleasure.)

Take online user reviews of insurance companies with a grain of salt. I’ve read them and most of the time, I think, “You didn’t read your policy!” I’m by no means an insurance company defender, but if you’re going in with no documentation, no proof you owned what you lost, or you want to make a claim for something that is specifically excluded on the policy, you should expect to get denied. Is the reimbursement process fun? No. It’s a lot of paperwork, but when you have all your ducks in a row, you get reimbursed. Reviews by users who didn’t read their policy doesn’t mean insurance is a bad idea. It just means people don’t follow instructions.

I got drunk and hurt myself. Will I be covered?
Possibly not. If you are doing something foolish (whether you’re drinking or not), insurance companies will want to know if putting yourself at unnecessary risk led to the injury. If, after investigating, they find you did, they can deny your claim. That’s not to say that they expect you to be sober your entire trip, but let’s just say you’re unlikely to get reimbursed if you’re tanked and decide that it would be a good idea to stand in the middle of the road and play chicken.

So don’t be foolish!

Does travel insurance cover me in my home country?
Some travel insurance can cover you at home. For example, World Nomads travel insurance covers you either 100 miles from your permanent address (for U.S. residents), outside your home province (if you’re Canadian), or outside your home country (for everyone else). It depends on your policy, and there are always conditions on when the coverage starts and ends and where you can travel to, so check this carefully first.

I’m a senior. What should I do?
Insurance companies don’t like covering seniors as they view them as high risk, thus it’s a lot harder for older travelers to find comprehensive coverage! For seniors, try the company Insure My Trip. They usually have a lot of good policies.

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I’ve used travel insurance since I started traveling, and it’s helped me, my friends, and readers of this website. I can’t stress its importance enough.

I hope you never have to use your plan but, if you need to, you’ll be happy you bought it. Don’t avoid it because you read a bad review or think you’ll be OK. Travel insurance is a safeguard against the unexpected. Nobody ever expects the Spanish Inquisition — and no expects to get hit by a drunk backpacker driving a scooter in Thailand!

Like a responsible adult, be prepared. It’s worth it.