By Brendan Wycks, Co-Executive Director, CAFII.
COVID-19 significantly raised awareness of the need for travel insurance among Canadians travelling within and outside our country. And with good reason.
At the beginning of the pandemic, the media was filled with reports about the seriousness of the virus, the length of time some people with COVID were spending in hospital, and, in countries such as the U.S., the exorbitant cost of medical care, most of which is not covered by provincial health plans. There were also reports of many people cancelling trips and not being able to recover some or all of the money they had invested in their vacation.
While COVID infection rates are now lower in most industrialized countries and travel to some places is now relatively safe again for fully vaccinated people, travellers still need to consider a number of important issues before leaving home, including whether they need to purchase one or more type of travel insurance.
Travel Insurance is designed to protect people from a variety of unexpected expenses related to travel outside of their home province. It is available in three broad categories: Travel Medical Insurance, Trip Cancellation Insurance, and Trip Interruption Insurance. These three types of travel insurance can be purchased separately and sometimes as a bundle.
Travel Medical Insurance covers emergency medical care expenses while you are outside of your home province. For example, costs covered typically include treatment by a physician, hospital stays, diagnostic tests and, in some cases, prescription drugs. It can also cover emergency medical evacuation back to Canada or your home province from the location you are visiting. This type of policy usually has a limit on the total dollar amount of benefits it will pay – typically several million dollars per person. Provincial health plans cover only a fraction of any health care expenses you incur when outside of Canada and they also have limits on coverage when you travel to another province.
Before purchasing Travel Medical Insurance, check to see what, if anything, may be covered by your employee benefits plan or by a credit card you hold. In some cases, they may provide you with coverage for a limited period of time — usually the first 30 days of a trip. This amount can be topped up by purchasing additional travel medical insurance for a longer period, although the top-up insurance will not carry forward coverage for illness or injuries sustained in the prior period from another policy. It’s also advisable to check the Government of Canada website to see if there is a travel advisory in place which discourages travel to a country you intend to visit, as government travel advisories can result in your Travel Medical Insurer limiting or excluding coverage when you’re in the country in question.
Trip Cancellation Insurance will reimburse you for all or most of the amount of pre-paid, non-refundable travel expenses (e.g. airline, cruise, train, hotel, etc.) that you have insured, should you cancel your trip before departure for an unforeseen covered reason. Covered cancellation reasons usually include serious illness, jury duty, death in the immediate family, natural disasters, etc., but do not include a change of mind which makes you disinclined to travel. It’s a good idea to check the range of covered cancellation reasons in a policy before buying it. Policies that allow cancellation for any reason are significantly more expensive than those that do not, but they can be worth the extra cost in uncertain times.
Trip Interruption Insurance is similar to cancellation coverage, but its insurance covers you while you are actually away on your trip, for a list of covered reasons. In case you are required to return home early due to a covered reason, Trip Interruption Insurance will reimburse you for the lost portion of your trip, as well as for any additional expenses for a last-minute flight home.
The three types of travel insurance are all optional, and it’s entirely up to you to determine whether, which type, and how much coverage you need. With respect to Travel Medical Insurance, the factors you may wish to consider include the destination to which you are travelling, your age, your health, and whether you can afford to pay thousands of dollars or more for medical care should you experience an emergency medical situation while you are travelling.
With respect to Trip Cancellation Insurance and Trip Interruption Insurance, factors for consideration include:
- the cost of the trip that and how much of that money is at risk of not being eligible for a refund, should you have to cancel your trip before you depart;
- if you must interrupt your trip and return home prematurely, the costs that could be involved;
- your age, your health, and the same factors associated with any family members who’ll be travelling with you; and,
- whether you have sufficient coverage through another source such as an employee benefits plan or a credit card.
Generally speaking, the more money you have at risk related to your travel plans, the more you should consider purchasing Trip Cancellation and Interruption Insurance, which are often sold together as a dual coverage bundle.
With fall on the horizon, many Canadians will soon be looking at where they want to spend their next winter vacation. Part of that decision should involve looking at travel insurance, and deciding what might best fit your travel plans.