Insurance & International Travel

A recent incident and a conversation with a travel friend highlighted the importance of international travel insurance.

Please note that this is written for American travelers but we are also aware of similar plans offered in Canada and other countries, but you will need to explore options based on your home country.

There are a number of different categories and types of travel insurance that apply to a number of specific travel plans that complicate the insurance decision. Generally, insurance is available to cover problems in five specific areas:

• Trip Cancellation and Interruption
• Theft of Property Losses
• Health and Accident coverage
• Medical Repatriation
• Life insurance

In truth, most travelers we talk to are too casual in selecting travel insurance. This articles concerns are focused in three main areas. First is a concern about having to cancel an expensive trip at the last minute and losing deposits and prepaid money. The second is travel interruption caused by missing difficult air connections or a cruise sailing. Lastly are medical cost concerns while being out of the country.

Another area that requires paying attention to is exactly what are the conditions where the coverage takes affect. Insurance policies are very specific legal documents and all too often coverage we thought we had doesn’t apply in some circumstances. Just recently a number of travelers were faced with giving up their travel costs or putting their health in jeopardy.

As the Corona virus started spreading around the world and countries started closing their ports, cruise ships and their passengers were placed in an interesting position. Initially cruise ships started adjusting their itineraries instead of canceling cruises. Passengers that were worried about their health wanted to cancel their cruise soon discovered that insurance companies concluded that those concerns were not covered by the cruise cancellation insurance with no refund.

The cost of insurance is not insignificant and everyone needs to evaluate the potential financial risk against the actual cost of the insurance policy. With a long cruise the cost could be very high and while the insurance could be costly the loss could be significant as well in the event you have to cancel or unavoidably miss a sailing.

One area where many people leave themselves seriously in jeopardy involves international medical emergency insurance. Too many people think that their health insurance will cover them out of the country and the truth is that is rarely the case. Unless your health insurance specifically indicates this is a covered item you are risking much too much. In one example we know about a retired couple was traveling in Europe believing that Medicare and their supplement covered them. They learned the terrible truth after a serious stroke left them with a quarter of a million dollars of medical bills.

Because many cruises involve international destinations most cruise policies provide medical cost reimbursement (up to specific amounts) and property theft and loss protection. Some also, but not all, cover the cost of medical repatriation.

Specific air travel insurance mainly is focused on the life insurance component and not on medical costs and trip interruption, which, in many cases is the airlines responsibility.

Because we frequently travel internationally our health insurance does have an international travel component that pays up to $50,000 for each of us with a lifetime cap of $50,000.

We also carry a medical evacuation and repatriation policy that over the past number of years has seemed reasonable to us. The cost for the two of us has been less than $200 for the annual plan.

Situational Considerations

Cruise only – Let’s say you are taking a Mediterranean cruise with flights into and out of the sailing port, a cruise insurance policy usually provides the appropriate amount of coverage in most areas. You can at times be charged for medical services while onboard and will have to submit documents to get reimbursed under these policies. Most cruise policies also cover medical expenses if you need care in a local clinic or hospital while on the cruise as well as medical evacuation and repatriation. The same policy usually extends coverage while on booked cruise/land packages.

Cruise with an extended land itinerary – If you are taking that Mediterranean cruise but then plan to go off on your own for a couple of weeks in Europe, chances are that cruise policy will terminate on disembarking the ship. For that reason you need to understand that you will not be covered for medical emergencies above the limits of your American health insurance.

Frequent international travel – If you are a frequent international traveler it is most important to analyze your risk concerns and how much you are comfortable paying. You have options of buying a complete medical plan (Geoblue) , a medical evacuation plan (EA+) or a complete annual insurance policy (Allianz, Amex) that offer some coverage in virtually all areas. One caution is that most annual policies only provide coverage while on trips of less than 60 days each.

In our case we take a number of cruises and international trips a year and our biggest concerns are medical emergencies and evacuation so we keep an annual MedEvac plan in place. We believe our Medicare supplement offers adequate (we hope) medical coverage for now and will buy cruise policies on individual trips as mentioned above.

There are also complete annual travel policies, which should be considered if you travel internationally often. Generally they have lower limits on coverage, especially in areas like trip cancellation and property loss. For example most annual policies limit cancellation protection to $2,000 per year. To the right is an example from a recent annual generic quote provided by Alianz for a typical retired couple.

Note: 26 European countries require health insurance to visit.

In early 1995 twenty-six European countries signed an agreement that abolished enforcing their borders between member states. As a result the area mostly functions as a single country for international travel purposes, with a common visa policy. Anyone from a country that requires them to apply for the Schengen visa to enter Europe must provide proof of international health insurance.

The 26 countries in the zone are Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, and Switzerland.

A letter from your insurance company is required, and this needs to mention that you will be covered in Europe for any medical, evacuation and repatriation expenses during your whole stay. The medical expenses have to be covered for at least 30,000 euros.

Americans and Canadians along with a number of other nationals do not need this visa to visit. Because of the immigration and pandemic crisis of the past years there have been a number of Schengen countries that are again enforcing their borders on an emergency basis.

This post was prompted by a travel friend contacting me wanting to know what travel insurances we use. We compared notes and kicked around some scenarios and decided it was a good subject to to explore in depth.

Also thanks to a  visitor from Reviews.com  we were directed to their extensive article on buying travel insurance and if you have questions about specific recommendations I would highly recommend reading this article from Reviews.com HERE.

INSURANCE AND LESSONS FROM COVID-19

A Number Of New Articles About Travel And Insurance Are Now Recommending “Cancel for Any Reason” Insurance

The fact is most travel insurance policies only reimburse you for canceling your cruise under specifically identified conditions. Most of those involve medical issues with you or immediate family. Some policies also provide for work related emergencies. Based on our experience with COVID-19 we now see a number of issues we hadn’t considered with most travel insurance.

Our Recent Experience Involving COVID

We were recently booked on a pair of cruises that went from Singapore to Rome with 14 ports of call and had paid in full (inside 90 days). As coronavirus issues began to appear our cruising companions cancelled early on and got full credit towards a future cruise. As things began to get worse we contacted the cruise line and they were no longer agreeing to issuing credits. 48 hours later they cancelled the cruise, gave refunds along with future cruise credits. After that we contacted our insurance carrier and were informed that they weren’t accepting claims involving coronavirus but might consider our air portion because our cruise was cancelled. After that we just contacted the airlines and got future credits to use within 12 months.

Insurance And Travel Advisories

It seems that under standard cancellation coverage, you cannot cancel due to travel advisories from the CDC, State Department or other government agencies. You can’t cancel because the cruise line changed the itinerary, or for fear of terrorism, or concerns about epidemics or natural disasters.

CFAR Insurance

Because of these issues there have been a number of articles suggesting that CFAR (cancel for any reason) policies are the answer. If you want the freedom to cancel your trip for any reason at all — and still get reimbursed for travel costs there are CFAR policies available.

We have another 30 day cruise scheduled in the fall across the Pacific and around Japan so we decided to investigate CFAR policy costs for that itinerary. Our current standard policy covering that cruise cost us about $350. We received a CFAR quote from the same carrier that would reimburse our “deposits” only should we cancel for any reason for a premium of $1,500 and seemed to not offer reimbursement two weeks before the trip. That exceeds our currently paid deposits by almost $800 with questions about the actual costs, in full, being covered making this a bad deal.

If anyone finds CFAR insurance that makes more sense we’d love to hear about it.

Insurance Is Still Important

We still believe travel insurance should be an important part of your travel plan. Its benefits usually include trip interruption, emergency medical and emergency transportation, travel delay, lost luggage and more but we need to understand there are major exclusions like pandemics, natural disasters, insurrections and government actions.

The burden is on all of us travelers to educate ourselves on things like terrorism, tropical storms and disease outbreaks affecting our vacation destination. Also if you choose to buy standard coverage after an event becomes “known” even if you didn’t know about the situation your, benefits would be severely limited, making that travel insurance policy almost useless.