The whole area of travel insurance is extremely confusing so hopefully this will help make your decision a little less so, next time you head overseas.
There are three main categories: trip investment (which covers trip cancellation or interruption), personal health (which fills in gaps in your normal health insurance), and personal belongings (which covers baggage loss and car rental damage). You should always have at least the first two. And make sure the personal health coverage includes both “medical evacuation,” which is the cost of getting you to an appropriate local hospital or clinic, and “repatriation,” which covers the cost of getting back home.
Top Tip – most people fail to recognise that most credit cards and health insurance packages already have some form of travel insurance coverage so you don’t need to buy more.
Credit card travel insurance usually covers everything, and of course platinum and higher level cards provide the best coverage. BUT most of the time you’ll only be covered if you paid for some, or all, of the international air tickets on the credit card, which is considered a trigger for the “activation” of the travel insurance. This means credit card travel insurance policies are useless for business trips (usually paid for by your company). So hopefully your company has something that covers you for work trips – it’s worthwhile asking as I have been caught out several times.
Luggage and personal items are covered well on credit cards, sometimes up to $15,000 per person, with a total of $30,000 for all family members. Standalone travel insurance policies quite often have limits as low as $2,000 for your baggage, so don’t assume you need an additional policy to cover this.
Of course, all the usual conditions apply – you may only get reimbursed for lost or stolen items if you have filed police reports within 24 hours, and only if you can provide original purchase receipts to prove ownership.
If you purchase the ticket for plane, train, bus or ferry on your credit card you will generally be insured against death or debilitating injury for a very high amount, such as $1,000,000 for the death of a cardholder. Regular travel insurance generally only pays out normal accidental death benefits of around $25,000 – $50,000.
And if you are lucky enough to have time off and are going on a long trip, choose your card carefully. Credit card insurance is often only valid for three to six months maximum, and unlike stand-alone travel insurance policies, can’t be extended.