4 Things Trip Insurance Does (and Doesn't) Cover

Are you planning a trip and wondering whether or not buying additional travel insurance is a good idea? While having a travel insurance policy can potentially save you from a trip-related financial disaster, many travelers are confused about what a travel policy will and, more importantly, will not cover. Before handing over your money, learn a little more about the benefits and gaps in these types of policies.

Four Things Trip Insurance Will Typically Pay For

All travel insurance coverage is not the same, so it is crucial for you to take the time to read thoroughly any policy you are considering purchasing and not just assume it will cover a particular problem. The vast majority of plans will offer financial reimbursement and assistance for the following four situations:

1. Trip Cancellation

Transportation, hotels, and tour packages are not cheap. When you need to cancel your plans due to an emergency, you can be out thousands of dollars if you do not have a travel insurance policy. Of course, an insurance company won't reimburse you for prepaid, nonrefundable expenses for any reason. Make sure you know which circumstances apply before changing your plans.

2. Medical Emergencies Abroad

Even the best health insurance in the U.S. may not pay for your medical costs when you are traveling overseas. Travel insurance can help pay hospital and doctor bills while you are traveling. Some travel insurance policies will also pay the high price of a medical evacuation if your condition demands it.

3. Lost Luggage

Luggage gets lost more often than you think, and the airlines are seldom willing to pay more than a few hundred dollars if your bags go missing. Arriving at your destination without your bags and needing to replace your items is costly. Your travel insurance can help to defray some of this expense. Not everything is covered, so be sure to keep your most valuable possessions with you at all times.

4. A Travel Hotline

When you travel, things don't always go as planned. Whether you lose your tickets, miss a connecting flight, or just need emergency telephone translation to sort out a misunderstanding, situations come up in which you may need some help. Some travel insurance policies offer a travel assistance hotline to give you help when you need it fast.

Four Things Travel Insurance Will Not Typically Pay For

1. Unspecified Medical Care

While most policies have an extensive list of covered medical procedures, they will not pay for any non-listed item or occurrence. These uncovered expenses include preexisting conditions, mental health, emergency care for injuries that occur during risky activities, accidents resulting from ignoring local regulations, and costs associated with pregnancy or childbirth. Some policies may offer optional coverage for certain situations.

2. Canceled Tours or Bookings

While most travel insurance policies will cover your costs if you cancel your trip, the majority will not pay out in the event the provider of the services doesn't live up to their end of the agreement. Just because the travel guide you booked online doesn't show up doesn't mean you can make a claim. Getting a refund from the service provider will fall directly on your shoulders.

3. War or Civil Unrest

Canceling a trip or cutting your visit short because of violence at your destination is not typically covered by travel insurance policies. Make sure to review the U.S. State Department’s travel advisories before booking your trip to any potentially dangerous areas of the world. Most travel insurance won't cover injuries occurring during civil unrest.¹

4. Bad Weather or Medical Outbreak

If you decide to cancel your trip because there are reports of potential severe weather or a medical outbreak where you are planning to visit, it is unlikely you will be getting a refund.

There are many great reasons to protect yourself with travel insurance, but know the limits of your policy to avoid a nasty surprise.

1. Travel.State.Gov, 2022

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.