Travel Insurance 201: Don’t Get Duped


Answers to your burning questions so you can decide if you want travel insurance and can get the best for your situation if you do get it!  Consider reading Travel Insurance 101: Do You Need It? first.

Choose an FAQ or read them all.

ISN’T TRAVEL INSURANCE BASICALLY GAMBLING?

Yes!  You’re betting you will need it, and the insurance company is betting you won’t.  They usually win.  Which I why I’ve often taken the bet that I won’t need it.  But it’s an insanely risky bet.  If you do need it, the insurance company is out a percentage of their financial security.   If you don’t have it and there’s a catastrophe, you could be out your entire life savings.  Not to mention the financial risk you put your family in.

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WHAT DOES TRAVEL INSURANCE (SUPPOSEDLY) COVER?

Travel insurance can cover lots of things.  All the coverage options sound wonderful, but remember they are often laced with webs of technicalities.   It’s up to you to decide what kind of coverage is important to you and then read specific policies to be sure a loophole isn’t going to leave you high and dry.

→ Medical:

  • Emergency Medical/Dental: for sudden, unexpected illness or injury during your trip that’s either life threatening or could cause serious and irreparable harm if it isn’t treated. The treatment has to be medically necessary and be provided by a doctor, dentist, hospital or other licensed provider during your trip.   Limits on medical range from tens of thousands to hundreds of thousands, with higher premiums for more coverage.  Limits on dental are much lower.
  • Evacuation: must generally be arranged by your insurance company before it happens. In most cases they get to pick where to evacuate you to, and it’s often the nearest appropriate medical facility (i.e. not back home).
  • Accidental Death & Dismemberment: Heaven forbid you lose an arm or actually die on your trip and your family needs your body back.  Be sure to read the fine print here.  This provision can be null for several reasons, including participating in many adventure sports or getting stuck in a civil war.

→ Other Possible Trip Tragedies:

  • Trip Cancellation/Interruption – you fall ill on your trip, you fall ill before your trip, someone dies and your departure is delayed or you return home early, you get pregnant, you get stuck doing jury duty, your house catches on fire, you get laid off two months before your trip, etc.
  • Financial Default – your airline/cruise line/tour operator goes bankrupt
  • Terrorism in Itinerary City – sudden terrorism activity means you no longer want to go on your trip.
  • Baggage Loss – there is a limit, but they will reimburse you for loss if your situation meets all their criteria. Read the fine print!
  • Baggage Delay – again, if your situations meets all the criteria (e.g. more than 24 hours waiting on your bags), they will reimburse you for having to replace items like toothbrush, underwear, clothing, etc. during the delay.
  • Travel Delay – your airline goes on strike, you get quarantined, a typhoon delays flights or closes roads, your passport gets stolen, etc.
  • Collision/Damage Waiver – some policies will help out if you get in an accident in a rental car.

If you want to try and nickel and dime your way down to a cheaper policy, address the risks that worry you most.  As one LP forum contributor puts it “Cover for possessions is less important. You can save up for another ipad, legs are a bit more difficult.”  Just remember, to read the fine print – coverage criteria can be challenging to meet!

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WHAT ISN’T COVERED?

This part is sort of terrifying.  It’s in an insurance company’s financial interest to cover as little as possible.  So even if you get a killer, comprehensive policy, be prepared to battle if you have to make a claim.  If you haven’t read the fine print you’ll be surprised to learn they won’t cover:

  • Your stupidity – Got high and broke your leg? Not covered.  Got into a bar fight and earned some broken ribs?  Not covered?
  • Your carelessness – Forgot to lock the doors on your rental car and your backpack is gone? Too bad.  Someone snagged your wallet and Ray Bans off the beach while you were swimming?  Your fault.  Got up to pee at a coffee shop and some crazyface walked out with your laptop?  Your oopsie.   Bag stolen while you slept in a shared dorm without lockers? Unlucky!
  • You breaking the law – Technically illegal to rent and drive a motorbike in Asia, but everyone does anyway? And you did, too?  And you wrecked?  Ouch body, ouch wallet!
  • Your ignorance – Shocked to find your policy doesn’t cover snorkeling – basically swimming while wearing a mask – and you accidentally kicked a sea urchin? You’re on your own!  Didn’t know you’d have to prove you owned your $$laptop$$ after it was stolen?  Sad times, my friend.  There’s lots of sneaky fine print out there.
  • Your routine needs – Been gone for months and in need of a dental or annual exam? They’re not paying for that.  Even if you’re in a country where exams are really pricey.  Have diabetes or need other pre-existing condition medical supplies while on the road?  Reach into your own pockets!
  • Anything else they can get away with – the internet is full of cautionary tales of people thinking they were covered and then their insurance company finding a way to wiggle out of paying.
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WHAT A FREAKING SCAM!  WHY SHOULD I EVEN THINK ABOUT GETTING INSURANCE?!

You’re right.  Unless you know all the sneaky ways insurance companies try to get out of paying, you have a very good chance of not getting reimbursed unless your claim is for something catastrophic.  And even then, it’s not going to be easy.  But before you give insurance the finger, think about your mom.  Or your dad.  Or whoever your next of kin is.

When you don’t get travel insurance, you’re going all-in.  You’re betting you won’t fall through a bridge in Battambang, crush half the bones in your body, end up penniless, and drain your parents’ lifetime savings down to nothing.  Because guess who loves you too much not to step up to the plate once your bank account is empty?   Insurance gives you, and by extension your family, at least a chance of not going bankrupt.

Sometimes insurance does pay.  A company I selected via Insure My Trip’s travel insurance comparison website paid my $400 Cambodian hospital bill without batting an eye.  However, upon checking myself in I whipped out my policy and started reading the fine print.  Had the situation gone differently, there’s a lot the policy wouldn’t have covered.

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SO WHAT’S THE BEST TRAVEL INSURANCE FOR ME?

Only you know all the details and nuances of your trip, your bank account, your life circumstances, etc.  Read Travel Insurance 101 to get a basic orientation.  Buy whatever level of peace-of-mind you can afford.

If you’re going open-ended – the most rewarding way travel – World Nomads (and True Traveller if you’re a UK/EEA resident) will cover you in spite of you having already departed, not having a return date, and/or not having a fixed itinerary.

If you’re American, you don’t have to worry about “creditable coverage” anymore.  I mention this because you’ll see it talked about in outdated forum posts and insurance info pages.  The Affordable Care Act eliminated the “creditable coverage” loophole insurance companies were using.

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WHAT SNEAKY FINE-PRINT SHOULD I LOOK OUT FOR?

This list is by no means exhaustive.  Here are some ideas of technicalities to consider as you shop around:

  • Countries Covered? –check to make sure none of the countries on your itinerary are eliminated in the fine print. Or just call a representative for the policy you’re considering.
  • Elevation Covered? – Yup!  Surprise!  Some policies are void over a certain elevation.  If you’re going to mountainous areas, double check!
  • Being on Vacation Covered? – an LP forum contributor said it best: “I found certain cheap policies […] could almost define adventure sports as watching the grass grow on the hotel lawn!” Sometimes the fine print exempts almost every situation you’ll be in on your trip.
  • Valuables Covered? – Some people don’t really think about the $1,000 baggage loss limits until after their bag is gone.  With a $400 camera.  And a $100 rain jacket.  And their favorite $50 travel shoes.  And their $200 cash.  And their $800 laptop.  And their $100 Kindle.
  • Evacuation Decisions – as mentioned above, the insurance company – not the doctor, and not you – usually decides where you’ll go in an evacuation. If this matters to you, double check!
  • Theft Covered? – if you read very closely you’ll discover lots of scenarios that end in your stuff being gone and you not being reimbursed.  Hugely important is getting a police report, which can be a trying task in places with less western-style governments.  Many internet-sob-stories about these situations center around lack of “observation.”  E.g. putting your bag above your head on the bus and waking up from a nap to find it missing is an “unobserved” theft.  Many insurance companies won’t pay.
  • Cancellation/Interruption Covered? – again, maintain your sanity by remembering this benefit they boast about can actually be very difficult to collect.  If your sibling/BFF gets engaged and sets a wedding date that requires you changing your trip, good luck getting your insurance to protect you against the financial fallout.
  • Regular Ownership covered? – How often do you save the receipts for stuff you bought six months ago?  How often do you take pictures of every single item you possess?  Oh, you’re normal and so the answer is “never.”?   In that case, you’ll be sad to find that your policy may not cover your jacket that got stolen.  Document all your valuables before you leave: take photos of the stuff and receipts if you have them.  Photos of you and the item on the trip are even better. aIf you’re like me and lay all your stuff out to do a major repack every once in awhile, snap a photo each time.
  • Regular behavior in medical drama covered? Did you call your insurance company immediately?  Did you take a photo of your sliced open leg when it happened? bInstagram addicts are in luck on this one!  Did you protect your hospital paperwork like a second passport?  Did you file your claim as soon as you checked out of the hospital?  Did you keep old itineraries that prove your travel details?  Let’s hope so!
  • One-Way Travel Covered?  Some policies require you to have a return ticket for the policy to be valid.  Not World Nomads or True Traveller, but it’s something to look out for with other companies.
  • Long-Term Travel Covered?  Just finished your Working Holiday Visa in Australia and now you want to go travel in India?  Some policies won’t cover you if you have been in your home country for 6 months out of the past 12.  Again, World Nomads and True Traveller are the exception.

I liked a review site’s industry lingo explanations about what isn’t covered and the major loopholes.   Sorry about their annoying pop-up.

I’m slowly collecting cautionary tales as I come across them:

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WHAT HAPPENS IF I ACTUALLY HAVE A MEDICAL PROBLEM AND NEED TO USE IT?

.

First:

If you’re conscious, re-read your policy and call your insurance company immediately!  It’s a bit late in the game to be strategizing, but better than assuming the whole way through a medical ordeal that insurance will take care of everything.

For instance, after checking myself into a hospital in Siem Reap, I confirmed all the shenanigans so far (xrays, switching doctors, etc.) were covered.  However, the fine print on my policy said a flight to another hospital that could provide the care I needed would only be covered if the subsequent hospitalization lasted for more than seven days.  Since I would have been going for a procedure that would have me on my feet that same day, I risked putting off treatment for as long as possible – and lucked out when the situation resolved itself.

Second:

Document EVERYTHING.  Of course you’re supposed to call the insurance company right away to let them know what’s happening.  A good rep might even tip you off as far as how to handle things so they’ll get covered.  Get all the receipts and paper work you can.  Take photos.

Third:

Keep your hopes high and your expectations low.  Here’s why:

  • Unlike back home, where the doctor’s office sends the bill, you will probably need to pony up the cash for your treatment upon check out. Sometimes even upon check-in!
  • No insurance company has a bullet-proof reputation for quickly paying claims. Not only is it a real pain to fill out all the forms and submit the proper documentation, but getting the cash back in your pocket can take a long time.  Sometimes “proper documentation” is ludicrous.  One guy was shocked to find he would have to submit a notarized statement that he didn’t have any other forms of insurance before claiming on a hospital visit.  (Note: he complained and got it waived).
  • Remember that every policy has loopholes to help the company wiggle out of coverage. Don’t head out on your trip thinking, “I paid a gazillion dollars for insurance, so I’m covered no matter what happens!”  A more realistic perspective: “I’ve taken steps to protect my next-of-kin in case something horrible happens.  I may even get help paying for treatment if I’m in an accident.  Heck, if I’m really fortunate, I might get help paying for any unlucky things that happen to me on my trip!”

Fourth:

File your claim right away.  It can take forever to get your money back: set the ball in motion ASAP.  Further, it’s already an exhausting process.  Waiting three weeks until your trip is over or until you’re in a more convenient position to endure the frustrating hoop-jumping will just make things harder.  While everything is still fresh in your mind, set aside a day (yes, it may take you hours!) to hack through all the red tape.

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WHY IS IT SO *&$#@ING EXPENSIVE?!

Lots of reasons!

  • Because they can.
  • Because it’s a business: they know how much revenue they need to cover claims and still make a profit.
  • Because medical care is expensive. You may not know this if you are from a country where health care is considered a right (lucky you!).  If that’s the case, it’s even harder for you to stomach the crazy costs, hey?
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WHAT COULD POSSIBLY GO WRONG?

I’ve personally experienced, witnessed, or heard second hand about the following:

Health Challenges:

  • Blowing out an eardrum while SCUBA diving
  • Busting an ankle jumping down from a Jeepney ride
  • Getting a round fruit stuck in my esophagus.
  • Doing the responsible thing and getting my annual check ups while on the road.
  • Getting my formerly tweaked shoulder looked at by a doc when it continued to plague me on my trip.
  • Partner getting some weird foot fungus from a swamp tour in Brazil
  • Partner developing intestinal problems lasting months and requiring ongoing, and sometimes hilarious diagnosis.
  • A friend getting dengue fever while on a volunteer trip to Central America. (I’ve met several individuals who contracted this horrible mosquito virus on their trips.)
  • A woman I met falling through a Cambodian bridge as she biked across, crushing half the bones in her body and losing years of her life to recovery.
  • An internet story of a man going on a weekend trip to Brussels from London without travel insurance, having a stroke, and dying in the hospital after five days leaving a traumatized wife with no husband and huge bills.
  • An insurance employee told me about a guy who broke his neck in Africa and needed an air ambulance back home requiring First Class Seats – one for the insured and one for a Doctor. The medical costs in Africa were $21,700 USD and the repatriation (returning the guy home) was $30,300 USD.
  • Another insurance employee story about another African car crash. There were only four hours left on a woman’s policy when she broke her neck in a car crash, had 4 operations on her neck/spine, and spent 6 weeks in the hospital. Her mother was flown by the insurers to be with her as her condition was critical. She was then flown back home in an Air Ambulance with a medical crew and was transferred to a local hospital. The cost was more than $138,000 USD.

Wallet Challenges:

  • Getting my bag stolen when a distraction scam worked on my travel partner.
  • A typhoon delaying a friend’s domestic flight preceding his international flight. Had to buy new, last-minute flight from the Philippines to Europe.
  • A friend’s jacket disappearing while in the hands of TSA.
  • An internet story of a man dropping his camera into the ocean.
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HOW DO I GET MORE TRIP PLANNING ADVICE LIKE THIS?

I send out travel tips and life hacks to those who have front-row-seats to my permanent nomad life.  Get yours:



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I’M STILL SUPER STRESSED.  WHAT ELSE CAN I READ?

Jessica over at Life Remotely does a great job of helping you think about all the components of “travel insurance.”

References   [ + ]

a. If you’re like me and lay all your stuff out to do a major repack every once in awhile, snap a photo each time.
b. Instagram addicts are in luck on this one!