Thanks to extreme weather events, staff shortages and a seemingly endless slew of industry strikes, flight cancellations and travel disruptions are an unfortunate and ever-present reality of travel right now.
Given the doom-and-gloom-laden headlines of late, it’s understandable that travelers might be concerned about the financial risks of spending money on travel.
What happens if you miss the departure date of your $20,000 Antarctica cruise because your airline rescheduled your flight at the last minute? If your baggage gets lost, who will pay to replace the essentials you need? Or, as seen with the wildfires in Greece, what happens if your vacation is cut short due to a natural disaster?
Given how much can go wrong, ensuring you have a good travel insurance policy is essential — but to what extent do these policies deliver on their promises? Do they cover the cost of flights, tours, car rentals and more when you face unexpected cancellations or disruptions? If so, how do you decide which travel insurance policy is right for you?
If you’re traveling this summer, here are six things to look out for when taking out travel insurance that might save you a lot of money and headaches in the long run.
Do your homework before picking a plan
Travel insurance policies and coverage areas can vary considerably. TPG’s comprehensive travel insurance guide is a good page to visit as you research different options.
Some policies focus specifically on trip cancellation, while others have coverage designed to address potential challenges like COVID-19. Some include trip disruptions and cancellations, while others are customized for particular trips, such as cruises and domestic road trips. Then there are incredibly flexible (albeit pricey) “cancel for any reason” policies, which cover almost every reason you’d need to cancel as long as you abide by your chosen plan’s purchase and cancel stipulations.
Choosing the right travel insurance plan is dependent on several factors, including your budget, your trip type and your risk profile. For example, World Nomads designs policies specifically for those interested in adventure travel. The insurance company’s Explorer package covers injuries sustained during activities like bull riding, cliff diving and flying a stunt airplane. For those concerned about getting injured while playing croquet or salsa dancing while traveling, the Standard product should suffice.
Rental car coverage is one of the more complicated areas of travel insurance, as many overlapping options are available. You can choose a plan that bundles rental car coverage into a policy for homes and personal vehicles, opt for a plan provided by the rental car company, go with coverage that comes with a credit card or pick a travel insurance plan that includes coverage for rental cars.
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Out of the many credit card-based rental car insurance options available, American Express’ Premium Car Rental Protection program receives high praise from TPG readers. This Amex-specific insurance program covers damage to and theft of your rental car (with no deductible) for $12 to $25, depending on coverage and state. Upon enrolling in the program, you’ll automatically be billed once for the full rental period — not per day, like most car rental companies charge for supplemental coverage — every time you reserve a car with your Amex card.
TPG reader Matthew Vincent is particularly fond of this Amex policy. After his recent rental car fender bender, Vincent shared that Amex directly reimbursed the rental car company more than $1,100 for repairs (including a $100 rental company “administrative fee”). That cost would have otherwise been his responsibility if he didn’t have his card’s supplemental insurance.
Related: 6 truths and myths about ‘cancel for any reason’ travel insurance
Book your travel insurance when you book your trip
Just because it’s called travel insurance doesn’t mean that you only need it when you travel. Many travel insurance claims take place before the trip has even happened. From sickness and injury to your planned hotel closing down, there are many reasons to make such claims before traveling.
If you’re taking out travel insurance, it’s wise to ensure that you do it when you book your travel and that it also covers the duration of your vacation until the date of return. That way, you can ensure you’re covered for all eventualities between booking and return.
“To be eligible for coverage, a traveler must purchase a policy before something becomes a known event,” says Christina Tunnah, general manager of marketing and brands for World Nomads. “For example, before a hurricane is named or a strike is announced, and before a traveler gets sick or injured at the last minute.
“The sooner a traveler buys their insurance policy, the sooner they benefit from predeparture coverage such as trip cancellation for a covered reason.”
Yes, it’s additional paperwork to fill out straight after going through the arduous flight and accommodation booking process, but if you get it out of the way early, you’ll have peace of mind.
Consider ongoing travel issues in your policy decision
Ongoing staffing shortages, as well as airport and airline strikes, have increasingly caused lost baggage issues and itinerary changes in recent years. As a result, travelers should do all they can to safeguard their travel purchases. That’s where travel insurance has proven incredibly helpful.
“Our customers tell us that they’re eager to travel this summer and explore the destinations that they’ve waited so long to visit,” Daniel Durazo, director of external communications at insurance provider Allianz Partners, told TPG. “But they’re also taking precautions to protect their travel investment against unforeseen covered circumstances that may derail their trip … travel insurance can provide coverage for medical emergencies … as well as other unexpected covered cancellations, trip interruptions, travel delays and baggage issues.”
Related: 7 steps to take when an airline loses your luggage
Many TPG readers have found travel insurance policies worth the added expense when faced with traveling challenges. For example, when TPG reader Julie Batholomew’s luggage was delayed for more than a day during her honeymoon, she was able to buy items for herself and her husband (totaling $600) to replace necessities in the missing suitcase; this was thanks to her Allianz travel insurance policy she purchased through AAA. While she says the reimbursement process has been slow, she’s been happy with how the company has handled everything.
Aside from weather and logistical problems, another concern is the potential for airlines, cruise lines and other travel companies to go bankrupt.
If a travel company ceases operations for financial or legal reasons, customers could be stranded or lose thousands of dollars of booked travel — not to mention have to find new flights and hotels at the last minute.
When Crystal Cruises abruptly suspended all cruises in January 2022, customer Maria Russoniello found herself out $4,000 in deposits for her upcoming trip. In such cases, individual passengers are often far down the list of creditors when a cruise company develops a court-ordered repayment plan. Fortunately, Russoniello was able to be reimbursed through her credit card.
“It only took one call to Chase” to get the amount refunded on her credit card statement, she said.
However, Chase and many other credit card companies have changed the language in their trip cancellation and interruption coverage to exclude operator insolvency as a covered item, as TPG reported in 2020. With this in mind, it’s worth paying careful attention to the fine print in your credit card coverage in case you need to purchase additional insurance to cover any gaps.
Consider how your insurance could help during an extreme weather event
As we’ve seen recently with the wildfires on the Greek islands of Rhodes and Corfu, extreme weather events can quickly derail a vacation. Climate change is increasingly affecting global weather patterns, whether in the form of extreme heat, above-average rainfalls or unpredictable storm patterns. Such scenarios can be hard to plan for, but there are certain things to look for in your travel insurance policy that could help should the situation arise.
“Extreme temperatures are not likely to be a covered reason for trip cancellation, but a flight delay due to extreme weather may be,” says Tunnah.
Related: TPG’s best tips for traveling during a heat wave
According to Tunnah, when reviewing their travel insurance, travelers should consider key areas such as emergency medical coverage, the amount of emergency evacuation coverage and which scenarios are covered for trip cancellations. You could draw upon all these areas of your insurance plan during an extreme weather event.
“It might also be worth looking at the definition of natural disaster and what sort of coverage applies,” says Tunnah. “For example, a policy may not cover fear of travel, but it may cover cancellation in case a natural disaster makes one’s home or destination accommodation uninhabitable.”
In short, while you may not find a specific clause that relates directly to an extreme weather event, there may be unrelated clauses that help deal with the aftereffects of such an event. Don’t be afraid to ask your policy provider about how your policy could help in such a scenario.
Make sure the full cost of your vacation is covered
Underinsuring can be a costly mistake and often one you won’t realize you’ve made until it’s too late.
When you’re taking out a travel insurance policy, pay close attention to the cancellation section and how it weighs up against the actual cost of your holiday. You might think you’ve found the perfect policy, but if the costs covered for cancellation don’t match up with what you’ve actually spent, you could lose out.
For example, a policy could offer coverage up to $4,000 if your trip is canceled, but if you’ve spent closer to $6,000 on your vacation, you’ll end up considerably out of pocket if you need to make a claim.
“Insurers process claims based on the terms and conditions of the policy, and travelers will need to provide documentation to support their claims,” explains Tunnah. “Travelers could be reimbursed up to the policy limits but not above and beyond them.”
Related: Are you covered for strikes this summer? Check your travel insurance policy now
In the best-case scenario, you might only lose a few thousand dollars in this example, and you’d at least get the full amount written in your policy. In the worst case, your insurer could claim that you’d underinsured your vacation and pay you less than the full amount of your policy. This is due to what’s known as the “average” clause, which allows an insurer to pay out a proportion of a claim based on the percentage of the required coverage the customer has.
In the above example, the $4,000 coverage would mean the holiday is 33% underinsured. If an insurer applied the average clause here, the company might only need to pay the difference — 67% of the amount the client had purchased for themselves. In this instance, that would be $2,680 — less than half the total cost of the holiday.
This is because your insurer was, in effect, only receiving a fraction of the premiums they should receive from you to leave you fully covered; consequently, in some scenarios, this could be reflected in your claim.
But it’s not just the obvious costs you need to cater for; you should also consider variables that may not have yet occurred, such as medical treatments. For example, your policy may offer $50,000 in emergency medical coverage for a trip in the U.S., but if you found yourself seriously injured or ill, your medical expenses could greatly exceed this amount.
According to Tunnah, it’s wise to look to cover all bases, from your possessions to unforeseen circumstances that could happen. “When considering how much coverage to purchase, look at possible costs of emergency medical, evacuation and repatriation; total prepaid, nonrefundable trip costs; and the value of your belongings.”
In short, always read the fine print. If it doesn’t match your needs, chat with your insurance provider to see if they can make you a better offer that leaves you fully covered.
Overprepare in case you need to file a claim
While insurance companies want to maintain good brand and customer service reputations, it’s important to remember that these for-profit enterprises can maximize their profits by minimizing their payouts. This means getting reimbursed is not always as easy as you’d think.
You can improve your chance for reimbursement from even the most stubborn of companies by being organized and on top of everything you could later need to claim for. Document everything, read the fine print and don’t be afraid to be persistent.
If you’re traveling with valuables, we strongly recommend taking photos of each item before you travel. When possible, you should also photograph any product receipts so you have proof of purchase. These small steps can sometimes be invaluable in successfully claiming for a damaged or lost item. With the right documentation, processing a claim can go relatively smoothly.
But what about documenting things that aren’t your specific personal items? After contracting malaria in 2021 during a trip to Africa, TPG writer Ryan Smith was forced to spend days in a hospital, leaving him no choice but to reschedule flights. His biggest challenge — beyond dealing with the illness itself — was trying to convince the adjuster for his Allianz AllTrips Premier Plan that his flights did not originate from or go to the U.S.
Smith’s request for reimbursement was rejected twice due to the lack of documentation … for a nonexistent flight.
“The adjuster simply couldn’t get past it, even when I emailed him a document of our full itinerary,” Ryan said. “It took about two months to get them to understand our trip and process the claim. They were also difficult to contact since you can’t directly contact the adjuster when there are issues.”
Keep your paperwork in order to avoid delays or rejections when you file a claim. The better you document your situation, the better your odds of getting covered should any potential mishaps arise.
Related: 4 times your credit card’s travel insurance can help with summer travel woes, and 7 times it won’t
Bottom line
Travel insurance is an essential travel resource. With continuing airport and airline struggles, increasing chances of extreme weather events and the current cost of living, having travel insurance can keep you from unnecessarily losing thousands of dollars. Additionally, purchasing the right travel insurance policy can help minimize stress as you travel this summer.
However, plans vary, so you need to carefully read the fine print before selecting any policy to ensure it matches with everything you may need in the event of a claim. If an incident occurs where you’ll need to invoke the policy’s benefits, diligently document every aspect of your trip’s costs and the impact of the event — if needed. Make sure you are persistent when pursuing reimbursement, too, as some insurance companies require a bit more convincing to dole out reimbursements.
Additional reporting by Bill Fink.
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