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Travel Hacking Part Two:  Travel Insurance

8/21/2023

 
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​​Our previous article on travel hacking struck a chord.  Americans love to travel and after experiencing the sanctions of the Covid-19 pandemic, we are making up for lost time.  According to US Travel Association, total travel spending increased by 0.9% from June 2022 levels and was up 4.7% year-to-date through June 2023.  Heading into the busy summer travel season, air travel demand increased 12% in June compared to June of 2022.
Along with this increased demand travel has become more expensive. Take flying for example; how much have flight prices increased?
​
Data released by the U.S. Bureau of Labor Statistics Consumer Price Index shows a 17.7%% increase in airfare from March 2022 versus March 2023. That means right now, on average, Americans are paying almost 20% more for flights than they did a year ago. That year-over-year number has been even higher in prior months.

Hotels and other travel vendors also seem to be looking for ways to make up for lost revenue.  Travel insurance is a way to offset some of the financial risk and protect your wallet if you experience delays (Flight Aware Data cites 7,000-9,000 delays per day in the US), cancellation, lost baggage or medical emergencies.

 What types of travel insurance are available?
 
Travel insurance is available on a per trip basis.  If you are a frequent traveler, annual insurance plans are available for frequent travelers, but be aware that the benefits may be different. You will also see airlines, hotels, cruise lines, etc. offer insurance for their portion of a trip.  Some credit card companies also provide insurance when you use their credit card to book a trip with a specific vendor.  The key with credit card insurance is that you must use that particular credit card to pay for travel if you want their insurance protection.

Does travel insurance cover Airbnb or VRBO bookings?

The answer to this question is determined by the coverage provided within the travel insurance and/or vacation rental policy.  Our personal experience included the need to cancel an Airbnb stay due to illness.  Some of the Airbnb fees were refunded but the daily rental fee was not. We did not have travel insurance; either separately or through Airbnb. The experience was a good lesson to pay close attention to cancellation policies, credit card protections and travel insurance coverage.

How much does travel insurance cost?

Just like other types of insurance, there are maximum reimbursements allowed for each category of travel disruption, depending on the insurance provider.  Typically, a travel insurance policy is more comprehensive than credit card insurance and costs between 4-12% of the cost of the trip.  Factors including benefit coverage, age of travelers, destination, and cost of the trip determine how much you will pay for the travel insurance.

When is the best time to purchase travel insurance?

The best time to purchase travel insurance is when you book a trip.  Some sources say it is best to purchase insurance within two weeks of making a payment or deposit.  It doesn’t mean you can’t purchase insurance later, but the same coverage may not be available.

When should I use my credit card insurance vs purchasing trip insurance?

It depends.  As a general rule the protections offered by credit cards tend to be more limited.  This article by The Points Guy does a great job outlining types of coverage as well as the insurance protections offered by several of the more popular credit cards.  One of our friends had to cancel their 12-week trip to Australia due to a medical emergency.  They had great trip insurance and were able to recoup 95% of their costs and reschedule for a later date.

What is the best trip/travel insurance resource?
​
Squaremouth.com is a travel insurance portal.  It can provide quotes from different insurance companies for all types of travel and coverage requirements.  It is also a good resource for additional travel insurance information.

As with any contract, insurance or otherwise, the devil is in the details!  Read the fine print to understand the scope of coverage.

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