Travel insurance is essential for those who plan to travel abroad or spend a sizable part of their budget on their trip. Travel insurance policies can protect against a number of misfortunes, such as medical treatment while in another country, loss or theft of luggage, and even trip cancellation fees.
But even if you think you’re properly protecting yourself while traveling by purchasing travel insurance, the devil is in the details. Always make sure you read the entire contract before signing it and more importantly, be honest when answering questions put to you by the agent, especially questions about your health.
Take the case of two separate Canadian travelers who visited the United States in 2011. Both had travel insurance policies with the same company, RBC Insurance, and both had heart problems that required hospitalization while in the U.S. However, one patient was reimbursed in full by RBC, and the other had his claim denied outright.
Tony Smith of Kitchener, Ontario purchased a $71 travel insurance policy and ended up having a heart attack while visiting Florida. The 76-year-old Smith needed to have two stents installed into blocked arteries, racking up nearly $100,000 in medical bills. RBC paid the bill in full.
Leon van Witsen of Toronto was not as lucky. The 89-year-old Witsen suffered from congestive heart failure while visiting Texas in June 2011. His medical bills ending up being nearly $65,000 and RBC denied the claim in full. The reason: Witsen had not been entirely honest when answering the medical questionnaire from the insurance company.
Van Witsen had answered “no” to two questions about high blood pressure medication when the answer should have been an unequivocal “yes.” If he had simply answered those questions honestly, his premium for the trip would have been $289 instead of $223 for two weeks of coverage, but the $65,000 in medical bills would have likely been covered in full.
Trip cancellation coverage is another perk of travel insurance – it pays for lost expenses when you need to cancel a trip for a variety of reasons, including illness, weather conditions, and airline travel expenses. But the protections vary greatly from policy to policy and it’s important to read the fine details, as one Huntsville, Alabama couple learned in November 2012.
Kristen Torbic and her newlywed husband were scheduled to travel from Nashville to Miami and then on to St. Lucia, where they had booked a week at the Sandals Resort there. However, the Nashville to Miami flight experienced mechanical problems before takeoff and had to return to the gate. The couple was told that the flight had been cancelled and the next flight would be 48 hours later.
They decided to cancel the trip and file a claim on the travel insurance policy they purchased. But it turned out that their flight actually left 10 hours later, and was never considered officially canceled by the airline. Their policy stated that a flight must be delayed for at least 12 hours before coverage kicked in.
This is a tricky situation considering the Torbics were given bad information from the airline before making their decision, but perhaps if they knew about the 12-hour clause, they would have stuck it out in the terminal and ended up being only a day late instead of losing out on the entire $3000 reservation.
Whether you’re only going on a short break or are looking for the best backpacker insurance for your gap year, make sure to always read the fine print!