Why Is Travel Insurance So Expensive? Can I Cheat It Cheaper?
Why is travel insurance so expensive for some people and not for others? Why are some destinations more expensive than others when it comes to travel Insurance? How come people say it is more expensive to get travel insurance if you are traveling to Canada or the USA? Sadly, the travel insurance industry isn’t as easy or transparent as the car and home insurance industry, and this is due to there being an over-saturation of travel insurance companies in the global market, and because travel insurance has more factors involved in terms of risk.
Do Not Buy Trip Cancellation Or Trip Interruption For Elements Where You Are Eligible For Refunds
Let us say you have bought transport to London, you bought a few nights in a hotel, you bought public transport pass, and you have bought your trip home. Let us assume these facts:
Trip/transport to London – You buy a cheap non-refundable flight
Nights in a hotel – Has a very generous refund policy
Public transport pass – Is not refundable because you are past the refund deadline
Trip/transport home – You buy a flight that partially refunds people who cancel
You may buy a full policy for your trip that includes trip cancellation insurance and/or trip interruption insurance, or you could have insured the non refundable parts and saved a bit of money. You may buy medical coverage for the entirety of your trip, but do you really need to cover your stays in the hotel? Plus, your travel insurance will not pay you if your hotel refunds you because travel insurance only covers your losses, and you do not make any losses when you get a refund.
If your hotel gives you a refund, then you will not be able to claim on your travel insurance. If your hotel has a fantastic refund policy, then why pay travel insurance to cover your hotel?
Consider Using Your Credit Card Rather That Paying For Certain Types Of Travel Cover
Credit cards are big business, which is why they are wrapped and strapped with laws and rules that may help you as a consumer. For example, some forms of travel insurance will help you get your money back if your travel supplier/travel company goes bust before your vacation. And yet, there are many occasions where paying with a credit card gets you the same protection. You may be able to save money on travel insurance by simply paying with your credit card.
Another example is where your credit card offers deals that may save you from buying travel insurance add-ons. For example, credit cards have great fraud protection, so you may be better off paying with a credit card rather than buying fraud protection add-on. We have also reviewed many credit cards that offer free car insurance overseas if you are renting a car.
In summary, there are times when you may save money by paying with a credit card instead of covering yourself with your travel insurance. I am not saying that you can pay with a credit card and avoid travel insurance completely. I am simply saying that you may lower your travel insurance costs by exploiting the protection offered by credit card companies.
Keep It To Just Medical If You Wish
We at eCheck.org have often mentioned the benefits of Self Insuring, and there are plenty of times where self insuring saves you money on your travel insurance. Instead of buying full travel insurance, you should buy medical cover, and then self insure the rest of it. It may be a good idea to buy travel insurance that covers your medical expenses, but that covers nothing else. If anything else goes wrong, such as lost baggage, trip delay, etc., you may use your self-insured money to cover it.
Explaining Self Insuring
Self-insuring is a little like buying a lottery ticket, but keeping the $2 for yourself and not buying the ticket. After 10 years of lottery ticket buying, you have over $1000, where the only downside is that you lose out if your numbers actually came up in the draw.
For example, some people self insure their house contents. They go online and look for a home contents insurance quote. The quote they find is the amount they would pay if they took out travel insurance, but instead of taking it out, they pay into a separate savings account. Instead of paying the quoted amount to an insurer, you are paying that money into your own separate savings account. This is a savings account that you set up, and it is only ever used for self insuring your house contents, which means you do not dip into it for any other reason. Over the years, the money builds up, plus whatever interest it earns. If the self-insurer is lucky, he or she will never need to touch that money. If the self insurer suffers some bad luck, such as being robbed, then the self insurer empties the money in the dedicated savings account and repurchases what has been lost. On a similar note, while self insuring, if something small happens, such as a carpet is burned, then the saving account is dipped into to pay for a new carpet. Just like with the lottery example, the only time you lose is such as is if something big and bad happens before you have had chance to build up a tidy sum in your saving account.
Why “Only” Medical Insurance?
If you are going to self insure, then you should still buy travel insurance that covers your medical expenses. This is because medical costs have a habit of running into the thousands, and it is unlikely that you will save up enough to cover your medical costs.
For example, lets say you go to Britain three times per year for 2 weeks at a time. Each time you go, you pay $95 for travel insurance. Instead of buying travel insurance, you put the money into a savings account that you named/defined as your travel insurance savings account. Three times per year at $95 per time is $285. Over the course of 10 years, it comes to $2850. Yet, just one injury or illness may cost hundreds, and a stay in a UK hospital will easily cost more than $3000.
For example, instead of paying for full travel insurance at $95, the buyer could pay for only medical cover at $36 per trip, and put the remaining $59 into a savings account. Over the course of ten years, the buyer saves up a tidy sum in the savings account to cover things such as lost baggage, flight delays, etc.
Times When You Should Not Self-Insure Your Travel Insurance
In our opinions, there are two circumstances where you should not self insure. Let us assume that all self insuring people still take out travel insurance to cover their medical expenses. One circumstance where you should not self insure is if you are spending a small fortune on your trip and very little of it is refundable. In that case, if you are spending a lot of money, it may be worth paying a bit extra for full travel insurance.
The second circumstance where you should probably pay for full travel insurance without trying to self insure in any way is if you are taking an overly long trip and/or are taking a very risky trip. For example, going skiing without the appropriate travel insurance is silly because you are likely to hurt yourself. Not buying travel insurance if you are taking a six month vacation in another country is probably not a good idea either.
Maybe Leave Out Some Of The Smaller Expenses
This tip is based on my opinion only, rather than the research and testing that our echeck.org team did, but I think there are a bunch of small things that you shouldn’t pay for. I read this sort of advice all the time:
When getting a quote, enter all the trip costs, not just hotels and airfare. Enter costs such as theme park passes, excursions, tour costs, event tickets, bus tickets, etc.
There are two reasons why I disagree with this sort of advice, and they are “Who cares” and “Refunds.” Why should I pay dollars extra to cover the buss passes on the off-chance I may lose them? I would rather risk it and re-buy the bus passes rather than pay for extra insurance to cover them.
I have been to plenty of events and excursions overseas, and almost all of them have a refund policy. For example, if the event is rained out, or the star cancels, then they refund your money. Even if I did add the ticket costs to my travel insurance policy, the policy will not pay up unless I can prove I cannot get a refund. In other words, if the event tickets can be refunded, then covering them on my travel insurance is a waste of money because the travel insurance company will not pay up anyway.
Avoid This Crappy Advice About Cheaper Travel Insurance
I have read quite a few articles about how to lower the cost of travel insurance in case we missed something, and I saw a lot of crappy advice. Here is some of the crappiest advice that I present to you as a demonstration of the type of crap you need to avoid when you are looking for ways to lower your travel insurance costs.
Consider the likelihood that you will require medical treatment while on vacation
This advice is bull crap. You have no idea what injuries or illnesses you will get during your trip…that is why you buy travel insurance. People who have never been ill or injured in their lives may go overseas and be mauled by rabies-carrying bats.
Consider the potential cost of medical care in the country you are visiting
All overseas medical treatment is expensive. Even in Poland, Slovakia and Turkey where elective surgery is cheap, it still costs a bundle to have medical treatment and to stay in a hospital. Medical treatment is expensive, it is not like negotiating for the cost of cheaply made shirts. There is no country on the planet where medical care is so cheap that you shouldn’t get travel insurance. Either get travel insurance, or take the risk, but forget weighing up the cost potential cost of treatment because it is pointless.
The duration of your stay
Less time equals less money. This sort of thing grinds my gears. Who says, “Well, I wanted to go for 14 days, but I save $30 on my travel insurance if I go for 10 days instead.” If you are shortening the length of your vacation/trip to save a few bucks on travel insurance, then your priorities are askew.
Choose your destination wisely
Wait, What? What? What? I have read this piece of “Advice” on more than one online article. How is choosing your travel insurance going to affect your choice of destination? Are there people out there who say, “Well, I was going to visit the Maldives for a week, but travel insurance is cheaper if I go to a polluted Indonesian, so we are going there.”
I am not denying that your destination affects the cost of your travel insurance, but nobody is so nutty that they decide to take a trip one place, but then go another place because the travel insurance is cheaper.
Limit the amount of time you spend on your trip
I have read these snippet of golden advice is too many places. Who limits the time spent on their trip to save on insurance? Everybody knows that if they cannot afford longer, then they do not stay longer. People are not limiting the length of their trip to save money, they are already limited by their vacation/trip budget.
Here is a perfect example of what I mean when I say there is lots of dumb advice online:
“Don’t be surprised that travel insurance for a 2 week holiday is likely to cost double what it costs for a 1 week holiday.” Isn’t that the dumbest and most condescending thing you have read this week? When I buy two apples, it costs me twice as much as buying one apple. Yes, if you stay two weeks, your travel insurance will cost you twice as much as if you stay one week.
Don’t pay for cover that you don’t need
How is this advice? Who genuinely goes out to pay for cover they don’t need? If it happens, then it usually happens by accident. Nobody goes out to buy moldy bread, and nobody buys cover they don’t need on purpose. This is another perfect example of the type of thing you read on these types of articles that some people think passes as advice, when it isn’t even information.