When to Buy Travel Insurance: A Guide for Visitors in Canada

Posted on June 11, 2019

Planning a vacation is one of life's great pleasures. If you're lucky enough to travel internationally, you're choosing flights, picking your hotels, planning your activities, and figuring out your costs.

Amid the fun, it's hard to think about what would happen if you couldn't go. It's also challenging to think about what could go wrong while you are traveling.

The reality is that you have to think about what may happen if you cancel, get sick, run into bad weather, or cut your trip short.

While you hope that none of these things happen while you're on vacation, it's smart to anticipate the worst scenarios. This uncertainty is why travel insurance exists. The question is: when to buy travel insurance?

If you're unfamiliar with what travel insurance covers read on to find out. It's essential to know how are you are protected when you are out of the country or on vacation.

Trip Cancellation

Cancelled trips are the number one concern of people that are traveling. Once you have saved up for your vacation, you've now spent that money on plane tickets, activity fees, hotels, golf games, and other expenses that will make your vacation enjoyable.

Often these expenses are not refundable, so if you have to cancel your trip, you will lose money *and* your vacation.

Trip cancellation coverage will refund prepaid, and non-refundable expenses if you have to cancel before you leave.

Your travel insurance company has a list of reasons for trip cancellation under which you will be protected. They usually cover a cancelled trip because of sickness, injury, death, hurricane damage, work-related issues, terrorism at your destination, jury duty, and financial failure of your travel supplier. Death and illness of a family member are the most common reasons that people have to cancel their travel.

The above situations are also covered if you have to interrupt your trip. If you must return home, trip Interruption coverage will reimburse you for the Lost portion of your trip, and additional expenses to get you back.

Types of Additional Coverage

Some Travel Insurance companies require you to purchase your travel insurance as soon as you have made your initial trip deposit. Many companies allow you to add more coverage after you buy your initial insurance policy.

Here are some of the policies that you can purchase in addition to your initial trip cancellation:

Cancel for Any Reason Coverage

This policy is exactly what it says. It will reimburse you for the covered amount for non-refundable trip deposits, pre-paid trip deposits if you cancel your trip for any reasons beyond the standard cancellation stipulations.

This coverage will reimburse from 50-100 percent and can take care of partial cancellation penalties levied by a travel supplier. In simple terms, say your trip costs $100. You cancel, and your trip supplier charges you 50 percent. Your "cancel for any reason" coverage pays for 80 percent of the penalty, so your refund would be $50, plus 80 percent of $50 for a total of $90. You'd lose just $10 in this instance.

Some items to note about this full coverage:

• There are generally strict rules about when you can purchase it;

• There are also strict rules about how far in advance you can cancel your trip;

• All pre-paid arrangements that are subject to cancellation fees must be insured;

• Your insurance may have a maximum per-person benefit; and

• Refunds from travel suppliers are deducted from the insurance refunds.

Cancel for Work Reasons Coverage

This contingency is in addition to what you may have included in your original policy. This upgrade is not as extensive as the "any reason" extra coverage, but it does cover you if your work schedule changes, or if your work directly involves a merger, bankruptcy, acquisition, or product recall.

It also covers you if you need to work because a natural disaster, fire, flood, or burglary has rendered your place of business unusable. Speaking of work reasons, you may be able to add even more coverage in case of further conflicts.

Work Conflict Coverage

This coverage adds protection in case of employment transfer and involuntary termination of employment. If you are in the military, it covers emergency deployment, reassignment, and revoked leave.

This type of rider may need verification from your employer. The insurer may require specific lengths of employment and may require you to purchase the plan within a certain number of days after your trip deposit.

Pre-Existing Medical Coverage

Travel insurance excludes medical coverage for pre-existing conditions. You can buy a waiver to the exclusion as an add-on to your travel insurance policy.

If you do file a claim while traveling, the insurer will look back anywhere from two to six months to find out if you were "medically stable." If you were, then medical issues on your trip would not be considered pre-existing.

If you weren't medically stable, you might wish to opt for buying a waiver to be safe. This coverage also requires you to cover the full cost of your trip and to purchase the insurance within a specified time frame.

Financial Default Coverage

This coverage protects you against financial default on the part of your trip suppliers. For instance, if an airline stops functioning, or a yacht service stops running, your payment to them is protected under this add-on.

The requirements for this include insuring your complete trip for the full purchase amount, that the supplier is on the insurer's approved supplier list, you must purchase your protection within the specified time frame, and the supplier cannot have been in bankruptcy when you bought your insurance.

Hurricane Coverage

Lastly, you might be taking a trip to Florida or the Caribbean during hurricane season. If this is the case, it would be wise to consider purchasing a hurricane rider for your trip insurance.

Hurricanes can cause pre-departure cancellation, trip interruption, missed flights, travel delays, and non-medical evaluations. Some constraints for this insurance are:

• Insurance must have been purchased before the hurricane is named;

• You must have insured the length of the trip, and full cost; and

• "Natural disaster" or "hurricane" must be listed as the covered reason in the insurance policy.

Assessing Your Risk

Now that you know what's available to you to customize your coverage, it's important to accurately determine which add-ons you need to buy to secure your investment.

Make an honest appraisal of your health situation. Medical coverage can be costly out of pocket, so if extra insurance doesn't break the bank, it might be wise to have.

Research your trip providers, and see who is on your insurer's approved list. Do this comparison before booking your trip. Get familiar with cancellation policies for your hotels, car rentals, Air BnBs, and any other prepaid suppliers. Write them all down or make a spreadsheet to keep track. Their timing and policy requirements need to be compatible.

Check the weather and look into storms forming during hurricane season. They can travel quickly and really wreck your trip.

Be familiar with your work requirements and use good judgment to figure your work cancellation add-ons. If you're not sure about your company or your workload, choosing those riders protects your money.

Deciding When To Buy Travel Insurance

This is why we're here, right? When you're planning your trip and booking your airfare or lodging, you will put in a deposit to secure your place. The day that you make this payment is called the "initial trip deposit date."

If you purchase your travel insurance on this date, or within just a couple of days after, you are making sure that your coverage will be valid and in place by the time you depart. Much of the fine print on your insurance contracts involve purchase dates and eligibility dates.

Purchasing early allows you enough time to buy other riders and check your waivers if you need to. It also affords you the chance to add additional costs such as plane tickets and tours to your policy.

Be sure to estimate your total trip costs on the high side, so that if your costs go down, you may be entitled to a partial refund of your premium.

So, the answer to the question of when to buy travel insurance, the answer is as soon as possible after your initial trip deposit date. This action protects you the most, offers you the most flexibility, and gives you the most time to finalize your costs.

Read our information about how to make sure you are getting the coverage that's best for you. Read the fine print and compare quotes with care. You want the best protection for you and your money in case you must use this insurance.

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