Reading the Fine Print of Travel Insurance

What do the recent events in Middle East and the major winter storms here in the U.S. have in common? Travel insurance can save day for travelers in both situations--if they've made smart purchasing decisions.

There are two kinds of insurance:

Trip cancellation/interruption: The most common type of insurance, it covers your out-of-pocket expenses should something go wrong before or during your trip. A weather delay at the airport? An overnight stay in a hotel and the purchase of some basic necessities would be covered up to a certain limit by your travel insurance company. If an unforseen event, such as illness, forces you to cancel your trip, travel insurance can help cover non-refundable expenses like plane tickets and hotel cancellation fees. Some companies now offer a type of insurance that allows you to cancel any time for any reason, but that can cost as much as 40 percent of your trip.

Emergency evacuation: This insurance provides you with 24-hour assistance and emergency evacuation. During the uprising in Egypt, companies like Access America and Travel Guard scrambled to assist customers with emergency travel arrangements, embassy or consulate referrals, and emergency translations.

But policies vary and there are often big, hidden exceptions. Recently, I had a conversation with Joe Sharkey, the New York Times business travel columnist, about reading the fine print of insurance.

Sharkey: If you're stuck in a situation, let's say in Tahrir Square in Egypt, and you need to get out, who are you going to call? Companies like Medjet Assist and International SOS are in the business to fix your problem when you have a major problem. So I've gotten to the point where I'm a believer now in travel insurance.

Greenberg: But you have to read the policies carefully. MedJet practices something called medical evacuation and repatriation insurance, so that if you're sick or injured overseas they will immediately get you stabilized and then send a medically equipped jet to rescue you.

But here is the key, to fly you back to the doctor and medical facility of your choice. There are a lot of other medical evacuation policies out there, some offered by credit cards others, or by independent organizations, that will fly you back to the medical facility and doctor of their choice, and the next thing you know, you're in a bad HMO in Rwanda.

Sharkey: Travel insurance serves sort of like AAA. You know, 25 out of 26 times everything goes smoothly, but every once in a while you run out of gas, or have a flat tire, or get lost, or you get stuck in snow.

Greenberg: And the most the airlines can offer is to make a "special exception" for canceled flights, by not charging you to change your ticket.

Sharkey: They're not going to charge you the $150 change fee. Well, big deal. That's where travel insurance works for you. I'm not dumping on airline clerks, but they no longer have the authority to fix problems. So, I've learned that's the point of travel insurance: that you've got somebody to call...Stuff happens, and you and I have traveled enough to know that it is always a surprise when it happens.

Tips on choosing travel insurance:

• Never purchase insurance from your travel provider, such as a tour company or cruise line. If they go belly-up, there goes your policy.
• Don't forget about car rental and medical coverage. Contact your credit-card company to confirm what may already be covered. But remember, your personal medical insurance isn't valid overseas.
• In many policies, civil unrest is an exclusion which means you won't be covered. Other common exclusions include acts of terrorism, or cancelling a trip because you're afraid to travel (unless you've purchased the very pricey, "cancel anytime" policy).
• Emergency assistance and covered benefits are two different things. Make sure that your travel insurance provider has 24-hour access so that you have someone to contact should things go wrong.
• Comparison shop. You can compare different policies and providers through resources like insuremytrip.com or squaremouth.com.

Related:

• Civil Unrest in Egypt: How to Protect Yourself in Emergencies
• Should Unrest in the Middle East Disrupt Your Travels?
• Did the Blizzard Ruin Your Trip? Next Time, Be Prepared