Travel insurance can’t prevent travel trouble, but it can address the financial impacts of many common problems. Policies are sold for single trips or defined time-frames, typically one year, with the option to renew indefinitely.
Like other forms of insurance, travel policies cover specific events up to predetermined coverage limits. Coverage limits determine policy premiums, which are paid upfront when the policy is purchased or on long-term policies’ renewal dates. Covered risks and exclusions vary significantly by policy type, insurer prerogatives, and travel preferences, but typically include:
- Trip interruptions due to non-excluded events
- Cancellations (entire trip or components thereof)
- Lost or delayed baggage
- Carrier or service provider failures
- Emergency evacuations (due to physical perils and medical emergencies)
- Medical treatment
- Accidental death (including transportation of remains)
- Accidental dismemberment (compensation for dismemberment caused by non-excluded incidents)
Some of these events are more common than others. We’ll explain more about each covered event and type of coverage below.
The Most Common Type of Travel Insurance
Trip insurance is the most comprehensive form of travel insurance. Unsurprisingly, it’s also the most expensive.
Single vs. Annual Trip Insurance Policies
Single Trip Insurance Policies
Single trip insurance policies cover discrete trips or portions of trips. It’s possible to cover the entire duration of a single vacation or business trip, from the moment you leave your house to the moment you return.
Annual Trip Insurance Policies
Annual trip insurance policies are appropriate for frequent travelers. They’re usually good for one year with the option to renew indefinitely. Premiums vary less than single trip plans, though demographic factors still play a role. Most insurers offer annual plans for single travelers and couples, with minor-age children included at no additional charge.
Annual trip insurance pricing is usually flat – you pay the same premium regardless of how much you travel. However, some insurers impose travel day minimums, effectively excluding infrequent travelers.
Difference Between Single and Annual Trip Insurance Policies
Aside from obvious time-frame differences, single trip and annual trip policies usually differ in one key respect: Single trip policies have generous coverage for trip interruption and cancellation, while annual policies have limited or nonexistent trip interruption and cancellation coverage.
This is important because trip interruption and cancellation are among the most commonly invoked and financially beneficial covered events. Many insurers do offer supplemental trip interruption and cancellation policies for annual policyholders for an additional annual or per-trip fee.
Others add these covered events to high-end (and potentially costly) annual policies. Before you choose an annual policy, determine whether it’s possible to add trip interruption and cancellation coverage, and if so, how much it’ll cost.
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