Financial protection for every travel mishap

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Financial protection for every travel mishap

People may want the best experience when they go on vacation, but they also want the best value.

A survey from AARP showed that both Gen Xers and Millennials are price-sensitive when it comes to travel. Just under 60% of Gen Xers and just over 60% of Millennials have had to change their plans because of higher-than-expected airfare. Why the change? Because nearly two-thirds of both groups budget when they plan their travel.

They also want good deals: Around three-fourths of both groups use travel booking sites, allowing them to compare costs of flights and hotels, and over half of Millennials use sites like Groupon or LivingSocial to find deals on experiences (compared to 44% of Gen Xers).

The last thing anyone wants, no matter what generation they’re in, is for a financial disaster to derail their vacation. Here are three mishaps that can make your travel go off the rails – and how you can financially protect yourself against them.

Flight gets cancelled or delayed

It feels inevitable: You’re in the middle of your vacation and your flight gets delayed. You’ve spent hundreds of dollars on a ticket that you can’t use, or the delay is going to make you miss your connecting flight. What do you do? Just eat the cost?

Sure. Or you could buy travel insurance before your trip.

Travel insurance will cover nonrefundable trip deposits, the cost of meals or lodging if you have to stick around because of a delayed flight, or even the cost of a missed connection. Depending on the policy you buy, you can cover your costs of your flight even if it’s your fault. Travel insurance policies include a list of acceptable reasons for missing a flight, such as getting sick; as long as you meet one of those, you’ll be able to recoup your costs. Plus, travel insurance also often covers a variety of other things, like medical costs abroad and lost baggage.

Travel insurance usually costs around four to eight percent of your travel costs, depending on the cost of your vacation and the coverage you opt for, and many insurance and financial institutions, from AAA to USAA, sell it. If you want peace of mind, it may be worth incorporating a travel insurance policy into your vacation budget.

Or you can opt for a more low-key option to protect you against flight delays. For between $19-$34, Freebird will rebook your flight to make sure you get to where you need to be, whether your flight was delayed or cancelled. It may not offer the same wide-ranging coverage that travel insurance does, but its focused benefit means that it’s a much more affordable option if flight delays are your only concern.

Rental car breaks down

Renting a car when you travel opens up a whole new world of freedom. You aren’t limited by where you can walk to or relying on busses full of tour groups. You’re on your own schedule, and you aren’t tied down.

But that also means you’re responsible for your rental car.

There’s always the moment when you’re renting your car and the person behind the desk asks you if you want insurance. If you’re like most people, you think "Of course not, that’s a racket!" Then you get nervous – what happens if you get into an accident? You’re in unfamiliar surroundings, maybe even in another country, and you don’t want to deal with this on your vacation, and it’s really not that expensive...okay, fine just buy it.

And that’s a perfectly valid thing to do! But you might also be paying for it unnecessarily.

Many personal car insurance policies also cover rental cars. If you have comprehensive and collision coverage in addition to liability coverage, your rental will likely be covered, too. Non-owner car insurance typically includes liability on rental cars as well.

There may be some stipulations, like if you’re traveling outside the country, but you should check with your existing insurance before you buy more coverage. The credit card you use may also provide some level of coverage.

You can also choose to buy separate car rental insurance. Sites like InsureMyRentalCar.com offer discounts of up to 70% less than what you’ll pay from the rental company. Rental car insurance can usually be bought on a daily or annual basis, so you can choose what’s right for you depending on how often you rent. It also typically provides primary coverage, so you don’t have to go through your personal policy first and can avoid raising your premiums.

Get sick abroad

If you get sick but you have health insurance, you might assume you’re covered. And in most cases, you are. Sick at home? Covered. Injured in another state? You’re probably still covered.

But what about when you’re in a different country?

Some carriers and specific policies may have limitations on the medical coverage you get if you’re sick or injured while abroad. You should definitely check with your insurer before you travel; if their coverage seems limited, you might want to supplement it with another policy.

As mentioned, your travel insurance policy may cover you. Many travel insurance plans also provide coverage for medical evacuation, so you can be transported to somewhere that can give you the treatment you need.

You can also look for travel health insurance. AIG’s Travel Guard travel insurance has a medical travel expense plan that only uses the medical portions of a travel insurance policy. That means trip cancellation won’t be covered, but medical and evacuation expenses are. Stripping out those additional services reduces the cost substantially; medical coverage for a hypothetical trip to Spain costs only $24. GeoBlue, from Blue Cross Blue Shield, provides a similar service.

When you buy a medical travel plan, always look closely at what conditions and ailments are covered, along with the coverage limits. These plans may cover most of the costs of medical treatment, but you may still be on the hook for some of it.

The point of a vacation is to relax, have fun, and experience new things. You’re there to make memories, and you don’t want one of those memories to be you stressed out because you’re stuck at the airport or on the side of the road somewhere. Getting the proper insurance to cover all of your automobile, flight, and medical needs provides peace of mind so you can actually enjoy your vacation instead of worrying about it.

Travel data from AARP.