How Travel Insurance Works

Travel Insurance Buying Tips

Your credit card may offer built-in or add-on travel insurance.
Your credit card may offer built-in or add-on travel insurance.
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The first thing to do when determining your insurance needs is to check all your current insurance policies and credit cards. Your health, life, auto and even homeowners insurance often cover a great deal of what you'd pay for with travel insurance. You should also check your existing policies closely if you're traveling abroad to ensure coverage in foreign countries. The best thing to do is to call your agent, tell him your plans and see what he recommends.

Your credit cards may also cover a portion of your vacation. Visa provides a good emergency assistance network at no additional charge, but you'll be responsible for any expenses. Mastercard's gold and platinum editions offer travel coverage for loss or damage of luggage, hotel burglary and roadside auto assistance. Their World Elite card provides the most comprehensive benefits, including trip cancellation, emergency accident and car rental coverage. It also offers a personal travel consultant, concierge service and airport lounge access, but you'll need a good credit rating and income to be eligible. American Express also provides comprehensive travel coverage. The company offers automatic car rental insurance with certain cards as well as accident coverage en route if the fare was purchased with the card. Their platinum card even covers medical evacuation. American Express also has stand-alone travel insurance that covers everything a standard insurer might offer.

Here are some more purchasing tips and things to look for:

  • Check to see if your expenses are covered up front, or if you pay and get reimbursed later.
  • Make sure you understand the deductible and any coverage limits.
  • If you're on medications, be sure your policy covers replacement costs.
  • Beware of policies bundled with your trip by your travel agent. They're often substantially more expensive.
  • As with any insurance, shop around. Check prices and compare coverage.
  • Check your destination's national medical plan. Some are less expensive than travel insurance and tourists can even be covered under the country's health care system.
  • Check with your insurance carrier about adding a rider to your existing policy to cover expensive items like laptops and jewelry.
  • Check to see if a cancellation due to terrorist acts is covered.
  • Ask if the coverage is primary or secondary. Secondary policies require that you go through your standard insurance first. Primary covers you outright.
  • Make sure there are no destination restrictions.
  • Find out what hazardous activities are covered and weigh that against your recreation plans.
  • Maximize your coverage by buying at least two weeks before your trip.

In the next section, we'll wrap up our travel insurance assessment with a look at some new options being offered by carriers.