Does travel insurance pay off in a COVID-19 era? Here are things to consider

Many people could be a tad more willing now to book a flight or trip, given the ongoing good news about progress toward COVID-19 vaccines.

Lingering uncertainties and spiking coronavirus cases in some areas, though, might drive you to think twice and hedge your bets by spending extra cash on travel insurance. But is it worth the money?

It might be — but it might not.

To be sure, the Centers for Disease Control and Prevention urged travelers to stay home for the holidays. The reason: Coronavirus cases, hospitalizations and deaths are increasing.

Millions, of course, traveled by plane for Thanksgiving in spite of a similar warning.

Dig deep into the details

“No one should assume that COVID is part of a travel insurance policy,” warns Carmen Balber, an insurance expert and executive director for Consumer Watchdog, a nonprofit group based in Los Angeles.

“The No. 1 warning for any travel insurance purchase is read the fine print. It’s so crucial in travel insurance because there is no standard policy.”

Typically, travelers early in 2020 weren’t covered if a trip was canceled due to COVID-19. But much of that has changed since the pandemic began in the United States and now many travel insurance plans will include some coverage related to coronavirus.

Not all policies, though, will treat all the risks associated by the virus the same way. And it’s up to the consumer to make certain that any travel insurance policy that is purchased specifically mentions COVID-19.

“The big catch is: ‘What emergency is covered?'” Balber said.

Most policies are going to cover a death in the family. Many times, policies will cover serious illness of you or a spouse, and sometimes a job layoff or issue.

Many policies might treat COVID now the same way the policy would treat another illness but it’s best to check.

So if a parent dies two days before a big trip to Florida or France, you might be able to get your money back.

Many times, travel insurance will have a medical benefit, which can range from $25,000-$100,000. And the plan can include emergency evacuation coverage and may cover certain medical costs. But the policy might not cover the costs of transporting you home.

Again, you need to carefully read that policy. Look closely at exactly what’s excluded from coverage and when. An event that is not listed on, or not described in, the policy is not likley to be covered.

“People are surprised when a family emergency doesn’t qualify,” Balber said.

Even so, she said, the concerns about the virus could give people more reason to consider buying travel insurance, depending on how much money they might lose if the trip had to be canceled.

Some countries, such as Costa Rica, are requiring that travelers have health insurance to cover any COVID-19 related medical treatment or quarantine lodging while in Costa Rica, according to the U.S. Embassy in Cost Rica.

Not every dime you spend will be covered

Remember, though: Trip insurance only covers the money that you cannot recover elsewhere. If you cancel a hotel but they refund 90% of your cost, you typically can recover the other 10% from the insurance. No double dipping.

And even more important: Buying just a basic plan isn’t going to help you recover costs if you’re just skittish and want to stay home if the area where you’re traveling has seen a spike in COVID-19 cases.

Know what your airline, others offer

Take time to first read the rules set out by an airline.

Delta Air Lines, for example, notes that if you purchase a ticket now through Dec. 31, 2020, the airline has waived change fees for all domestic and international travel, even if you’re scheduled to travel next year.

Tickets purchased between March 1 and Dec. 31, 2020, can be changed without a change fee or Award redeposit fees for a year from the date you purchased it.

If you wait and buy an airline ticket on Delta in January 2021 for U.S. domestic travel, you could rebook your flight without a change fee for most U.S. domestic travel and U.S. domestic award travel, but that waiver excludes Basic Economy fares.

SkyMiles members might change or cancel Award Tickets before departure. No longer will changes and cancellations made within 72 hours of departure result in the loss of miles, with the exception of Basic Economy fares.

If you cancel your Delta ticket, you’ll receive the value in the form of an eCredit, which can be used for one year from the original ticket issue date without a change fee, according to Delta spokesman Drake Castañeda.

In addition, you might want to look at what could be covered by your credit card. Some credit cards offer good travel insurance benefits; others offer nothing. You need to review the exact rules there, too.

Take time to compare travel insurance

Overall, it’s wise to compare what’s being offered through specific policies. Websites, such as TravelInsurance.com and SquareMouth.com, can help you study various policies and rates for trip insurance.

In general, rates reflect the cost of the trip and the ages of those who are traveling.

“In most cases, an older person is going to pay more than a younger person,” said Stan Sandberg, co-founder of TravelInsurance.com.

Sandberg said some travelers might want to buy insurance even if their only cost of the trip is the flight — say they’re staying with relatives — because of some extra coverage relating to lost baggage, medical care or trip delays that require staying longer in a location. It is possible to buy a medical trip policy only.

The typical trip cancellation plan runs somewhere from 4% to up to 10% of the travel costs being insured.

On a $1,000 trip, for example, the cost could range from $40 to $100.

What if you want to back out for any reason?

Some travelers might want to add what’s called a “cancel for any reason” optional upgrade. But it’s a pricey add-on.

“Cancel-for-any-reason” policies typically allow cancellations up until two days before departure and offer up to 75% reimbursement of the cost. Some less expensive options only offer 50% reimbursement.

“It creates a bit of an option or hedge if you will for those who are really skittish about traveling during COVID,” Sandberg said.

“Cancel-for-any-reason” coverage might add another $35 to $50 on top of the insurance cost for a $1,000 trip.

Sandberg said an enormous level of cancellations took place in the summer, as might be expected. He’s noticed an uptick in interest in travel insurance but admits that overall interest in travel remains down, compared with a year ago.

Some people may be more willing to book a trip for 2021 or 2022 as they feel more confident that the virus is getting under control, particularly if the vaccine starts being offered, he said.

Yet Sandberg stresses that it’s important to buy travel insurance when you book that trip.

You don’t want to play a wait-and-see game and then try to buy travel insurance when you see cases spiking in the area where you plan to travel. It’s too often too late to buy insurance once it’s known that a disaster, such as a hurricane, is on the way to an area.

And you want to avoid getting tripped up by the chance that an illness could be pegged as a pre-existing condition and then you’d be denied coverage.

“You can’t buy car insurance after you’ve had the accident,” Sandberg said.

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