How to purchase travel insurance

Travel insurance is no longer optional. After hundreds of thousands of travelers lost deposits, nonrefundable tickets and activities because of the recent outbreak, it’s more or less mandatory. But how do you buy travel insurance after this is over?

“There are various coverages that could be vital for travelers,” says Damian Tysdal, founder of Travel Insurance Review.

Almost half of Americans who canceled their travel plans after the pandemic lost money, according to a new survey by ValuePenguin. The main offenders? Airlines and hotels. The average loss: $854 per person.

So how do you buy travel insurance after the pandemic? Very carefully, say experts.

“When looking into purchasing an insurance plan, travelers should make sure they’re covered for situations like COVID-19,” says Jeremy Murchland, president of Seven Corners. “Travelers also need to keep in mind there are many other hazards involved with travel, especially international travel, including injuries and other types of illnesses outside of COVID-19.”

These are the two types of travel insurance you can buy after the pandemic

If you’re going to travel, it’s not a question of whether you need insurance, but what kind.

“Cancel for any reason” travel insurance. It costs between 10% and 12% of the price of your vacation, and it will refund part of your travel costs if you decide to cancel.

“Named perils” travel insurance. This is the more common kind of travel insurance. It’s less expensive (7% to 9% of your trip cost), but as the name implies, it only covers the perils named in the policy. And a pandemic is probably not included.

“Every traveler, especially when traveling outside of the U.S., should consider purchasing a comprehensive travel insurance policy to protect themselves and their trip investment from unforeseen emergencies,” says Terry Boynton, president of Yonder Travel Insurance.

But one size doesn’t fit all, say experts.

“Travelers may have different needs when it comes to travel insurance,” says Kasara Barto, a spokeswoman for Squaremouth.com, a travel insurance comparison site. For example, domestic travel will probably rebound first, which means customers will look for policies that include cancellation coverage and little to no medical coverage. The reason? “Health insurance typically covers travelers while in the U.S.,” she says.

How to buy “cancel for any reason” travel insurance

“Cancel for any reason” travel insurance is the breakout star of the coronavirus pandemic. Although it’s more expensive than standard “named perils” travel insurance, it is more flexible. Its main benefit is that if you change your mind about your trip, the policy guarantees a minimum of 75% of your money will be refunded.

“There are, of course, still 100% reimbursements for the normal miseries of the world” covered under travel insurance policies, such as disruptions or lost luggage, according to Jonathan Breeze, CEO of AardvarkCompare. “The 75% “cancel for any reason” benefit is simply an extra level of protection.”

AardvarkCompare has seen interest in “cancel for any reason” policies jump from just 5% to more than 50% since the beginning of the current crisis. In some countries, it already accounts for most travel insurance sales. For example, in Germany, Reiserücktrittsversicherung is the most popular kind of insurance, according to Lum Kamishi, the travel insurance editor for Visaguide.World.

Many travel insurance companies pulled their “cancel for any reason” policies from the market because of recent fears that tentatively planned trips for this summer would be canceled. But Dan Skilken, president of Tripinsurance.com, says they’re still available from some insurance companies. “And they should come back from other insurance companies after the travel market starts to calm down,” he adds.

What kind of changes have insurers recently made? Cheryl Golden, director of marketing at InsureMyTrip, says a few reduced reimbursement percentages. “But ‘cancel any reason’ remains widely available to those who meet the eligibility requirements, and we are not aware of any price increases,” she adds.

PK Rao, president of INF Visitor Care, agrees. “Travelers should be avoiding ‘cancel for any reason’ plans which have a history of withdrawing or limiting coverage during pandemics — or at least be aware of these sudden changes which are possible by taking a look at the exclusions or policy language.”

How to buy “named perils” travel insurance

To find the best “named peril” travel insurance policy after the current crisis has faded, look at the past, advises Sherry Sutton, vice president of marketing at Travel Insured International.

“Travelers should review their plans carefully, as always, but they should also take time to review how the insurer managed the current situation,” she says.” How did they communicate, what type of coverage changes did they make, were they flexible?”

Fact is, some travel insurance companies were better than others. The best insurers offered more coverage and went the extra mile to help customers. The worst — and you can find them on the complaints boards — responded to claims with arbitrary denials.

Yes, some of the better insurance policies cost more. But you get what you pay for.

“Historically, there has been a lot of focus on price when purchasing a travel insurance plan,” says Sutton. “While price should always be a consideration, I think COVID-19 will highlight the need to spend a little more to get the right coverage in the future.”

Stan Sandberg, co-founder of TravelInsurance.com, says after the outbreak, many travel suppliers offered either full refunds or vouchers for future travel for “named perils” policies. “In either case, a traveler holding a travel insurance policy has options,” he says.

Travel insurance after the pandemic focuses on health and money

So what should you look for in a post-pandemic travel insurance policy? Overall, there’s more of an emphasis on health — and money.

“Travelers should continue looking for policies that provide coverage from unexpected injuries, illness, or accidents,” explains Rachel Coen, a spokeswoman for G1G Travel Insurance. “Additionally, this current pandemic underscores the need to protect trip costs. Millions of trips were impacted by COVID-19 related global travel shutdowns, leaving travelers bearing the financial brunt of canceled flights, hotel reservations, and other nonrefundable trip costs.”

Pay attention to the refund terms. All travel insurance comes with a “free look” period of between 10 and 14 days after you buy the policy.

“If you’ve been forced to cancel your trip, and if you get a complete refund for your trip expenses, you should be able to cancel your policy and get a full refund of your premium,” says Erin Fish, co-founder of goWanderwell.com, a travel insurance site. “If your trip has been postponed to a later date — sometimes even up to over a year later — you should be able to request from your travel insurance company a policy postponement migration to reflect the new travel dates.”

At least one thing hasn’t changed about buying travel insurance.

“Always read the fine print,” says Pamella Seay, who teaches hospitality law at Florida Gulf Coast University in Fort Myers, Fla. “Examine the exclusions and determine what might not be covered.”

Pay close attention to how your insurance policy handles a “force majeure” or an Act of God. Would the policy cover such an event, or would it be up to you to pay for your expenses?

“Knowing the exact terms of your agreement is important,” she adds.

What to look for in travel insurance after the crisis ends

Medical issues. Chris Zimmel, a retired flight nurse, recommends studying the medical coverage provisions closely. “Will you be covered only if treated at the local hospital?” she says. “Will it cover transport to the nearest appropriate facility, as defined by the insurance company, to the closest hospital in the U.S., or all the way to your hometown? Don’t just assume you’ll be transported to your local hospital.” Also, consider air medical transport and travel security membership through a company like Medjet.

A future crisis. Generally, epidemics and pandemics aren’t covered. That’s what Bahar Schmidt, founder of the luxury travel site Eluxit, discovered when she tried to buy travel insurance in March. “I was buying flights during the early stages of the COVID-19 pandemic, and I was considering adding travel insurance,” she says. “However, when I read the fine print, I realized the policy offered through my airline explicitly did not cover pandemics.” Don’t bother trying; most major travel insurance companies don’t cover pandemics anymore. Try a “cancel for any reason” policy if you want coverage.

Quarantines. How does travel insurance deal with a future quarantine? Few policies address that, but Nate Hake, a former lawyer who travels frequently, expects insurance companies to address that question soon. “Imagine if six months from now a place like Thailand reopens for tourism but then gets an unexpected wave of infection and suddenly has to lock down on short notice,” he says. “The risk to insurers is pretty big in that situation, and it’s reasonably likely to happen somewhere, so it’s going to be interesting to see whether travel insurers can find a way to come up with quarantine insurance-type products that are affordable.”

What you should expect after you buy insurance

Going forward, travel insurance will offer some benefits that it didn’t before. For example, claim processing will take less time — even if there’s another pandemic. Companies have been deploying technology and systems that process and pay claims faster than ever.

At Allianz Travel, an initiative called SmartBenefits aims to pay customers in real-time for qualifying flight delays without the need to submit receipts.

“SmartBenefits allows us to actively monitor customers’ flights and when we detect a significant delay, automatically file a claim for that delay,” says Daniel Durazo, a spokesman for Allianz. “This innovation has really changed how travel insurance works, and along with a robust mobile app and round-the-clock assistance, will be what travelers are looking for from travel insurance, in addition to coverage for trip cancellations and interruptions, medical emergencies and baggage issues.”

Don’t make these mistakes when buying travel insurance

When it comes to buying travel insurance, there are important new rules after the pandemic — and troubling new ways to lose money. But they are expensive travel insurance errors that you can easily avoid.

“Several travel insurance companies have added exclusions for COVID-19,” says Dan Skilken, president of Tripinsurance.com. “There really is no good reason for them doing this. So I would make sure if you are buying a plan for a future trip without this exclusion. The plan should cover you if you get sick and cannot travel, or you get sick during your trip from COVID-19.”

What if you don’t follow the new rules? That could be an expensive travel insurance error. Since the early days of the first COVID-19 outbreak, travelers have flooded the helpline of my nonprofit consumer advocacy site with requests for refunds. Travel insurance — if they had it — didn’t always offer protection against pandemic-related travel losses.

After the outbreak began, only half of those who paid for a trip or event got a future credit, such as a voucher for a flight or hotel stay, according to a recent survey of consumers. An unfortunate 15% reported they did not receive a refund or credit for their travel loss. That includes some travelers who thought travel insurance covered them.

Travel insurance companies have begun warning prospective customers about the limitations of their coverage. For example, Allianz Travel Insurance now displays a large banner across its front page, noting: “Our travel protection plans generally do not cover losses related to COVID-19.” Generali Travel Insurance warns: “Our plans will not cover fear of travel.” And Arch RoamRight notes, “There are no benefits under the policy for shelter in place or stay at home orders issued as they are not considered quarantines as defined by the CDC or the Code of Federal Regulations.”

Expensive travel insurance error #1: Not getting enough coverage.

Travelers need to make sure that they are purchasing the right coverage for their circumstances, says Kasara Barto, a spokeswoman for the travel insurance site Squaremouth.com. “While many of the impacts of the outbreak were not covered by travel insurance, some policies are still offering cancellation and medical benefits for certain situations,” she says.

These policies, she notes, may offer coverage for some of travelers’ top coronavirus concerns. Among them: cancellation for medical, economic, and employment reasons.

Expensive travel insurance error #2: Getting the wrong kind of travel insurance.

Beware of trip “protection,” which isn’t insurance, according to Terry Boynton, co-founder and president of Yonder. “Travel insurance is an actual insurance product backed up by large underwriting companies and state regulation,” he says. “Trip protection isn’t as secure and might only reimburse you in the form of a future travel credit, not cash, if you had to cancel your trip.”

Also, keep in mind that most travel insurance policies will not cover cancellation because of government restrictions. And they won’t cover a cancellation because you’re afraid to travel. Laura Heidt, the client insurance desk manager at Brownell Travel, notes that the medical component will typically cover treatment at a nearby hospital if you get sick while traveling.

“While no coverage will transport you home while you’re infected with COVID-19,” she adds, “if you experience long term complications, or a different illness or accident lands you in the hospital, medical transport coverage like Medjet can make sure you are able to get to a hospital at home.”

Expensive travel insurance error #3: not asking questions.

Travel insurance is complicated — now more than ever. And it’s easy to make assumptions about what is — and is not — covered. Assume nothing, say the pros.

“Travelers tend to make the mistake of not reading the plan document ahead of time or taking the time to ask questions before buying to understand what is and is not covered,” says Jeremy Murchland, president of Seven Corners. “Even after this outbreak, people may be confused about the fact that fear of contracting an illness isn’t covered.”

Expensive travel insurance error #4: Ignoring the fine print.

Not all travel insurance is equal. Some cheaper policies have significant exclusions that may make them worthless in the future, says Erin Fish, co-founder of the site goWanderwell.com.

“Some examples of the limitations and exclusions often seen in these plans can be: low medical benefit maximums, medical benefits limited to emergencies only, no coverage for pre-existing conditions, no coverage for cancellation or interruption due to bankruptcy or default of your travel supplier,” says Fish.

Steve Dasseos, the head trip insurance guru for TripInsuranceStore.com, has another fine-print gotcha: “Don’t assume that all companies define the terms the same,” he says. For example, what date will count as your initial trip deposit date? It depends on the insurance company.

Expensive travel insurance error #5: Buying it from the wrong place.

Michael Bonebright, a consumer analyst with DealNews.com, warns against buying insurance policies sold by a third party in a post-pandemic travel world. “Most people get travel insurance as an add-on from a travel site like Expedia or Hotels.com,” he says. “However, if you need to make a claim, you have to contact the insurer itself — not the travel site.”

Going directly to a reputable travel insurance company is also a good option. But do your homework, advises Dan Durazo, a spokesman for Allianz Travel Insurance.

“It’s important to know if the company is offering its own products or just marketing products from other companies, whether they manage their own claims process, whether they have 24/7 customer service and whether they have an in house travel assistance team that is available 24/7 to help with travel emergencies big and small, including medical emergencies and evacuations,” he says.

Bonebright also recommends shopping for a policy directly through a site that specializes in travel insurance. Those include InsureMyTrip.com, Squaremouth.com, and TravelInsurance.com.

Expensive travel insurance error #6: Not buying “cancel for any reason” insurance.

Travelers tend to focus on the least expensive kind of insurance. But cheap may get you into trouble, experts warn.

“It’s important to note that fear of travel, travel advisories and destinations being inaccessible due to the coronavirus are not covered reasons for trip cancellation and interruption,” says Christine Buggy, vice president of marketing at Travelex Insurance Services. If you want the flexibility of being able to cancel for fear of an outbreak, consider a “cancel for any reason” policy.

“This upgrade allows a traveler to cancel a trip for any reason according to the terms of their plan,” she says.

In addition to refunding a percentage of your trip, “cancel for any reason” could also cover 100% of trip costs for issues like sickness, injury, or family tragedy, notes Jonathan Breeze, CEO of AardvarkCompare, a travel insurance comparison site. His company currently offers six “cancel for any reason” plans from four insurance companies.

Expensive travel insurance error #7: Ignoring the pandemic exclusion.

A lot of travel insurance policies have exclusions for epidemics and pandemics. That means if there’s a second COVID-19 outbreak, and you’re on a trip, your coverage may be limited — or nonexistent.

“Be sure to choose a plan without a pandemic exclusion,” says Lisa Cheng, a spokeswoman for World Nomads. Her company offers policies without a pandemic exclusion.

Expensive travel insurance error #8. Assuming you know everything about travel insurance.

“I think there are going to be many changes in travel insurance going forward,” says Robert Goldstein, a luxury travel advisor at Ovation Travel Group. “I’m sure the insurance companies are in the process of reevaluating the terms and conditions for travel insurance.”

In other words, by the time you read this, the rules might have changed again.

And remember, even the best travel insurance policies don’t cover everything. Take the legal aspect of traveling, for example. Legal prohibitions against traveling stranded hundreds of thousands of travelers after the COVID-19 outbreak.

“Traditionally, international insurance and assistance plans offer a light version of legal assistance — usually limited to transit related issues — but do not assist on urgent and unforeseen legal events, such as regulations in the COVID-19 era,” says Alex Thompson, CEO of Legaroo.com, a legal assistance provider.

Going forward, travelers should consider plans that include a local legal point of contact. That person would assist by avoiding language barriers and navigating the legal environment.

This is by no means an exhaustive list of errors you could make when buying travel insurance. But in a new world of travel, you have to protect your next trip against a possible pandemic. These strategies can help.

“You have to look at the big picture,” says Jeff Rose, a financial planner with Good Financial Cents. “Give some thought to the idea of travel insurance before you begin planning your trip.”

Seeing the big picture is more important than ever in a world where the next pandemic could shut down travel and take your next vacation or business trip with it.

Christopher Elliott’s latest book is “How To Be The World’s Smartest Traveler” (National Geographic). This column originally appeared in the Washington Post.