How Does Travel Insurance Work? Secrets You Will Never Know About

There may be situations wherein you are having concerns on your upcoming flight. How Does Travel Insurance Work?

You may be longing for it to happen and have invested in its preparation. You worry that as you’ve already spent a certain amount, something beyond your control will mess up your plans.

As a traveler, such situations can possibly happen. Therefore, in order to get yourself covered during such situations, investing in travel insurance is recommended.

What is Travel Insurance?

Travel insurance is a product intended for covering unexpected losses that can be incurred while traveling, either domestically or internationally. The indicated losses range from minor cases such as delayed luggage to major cases like a medical emergency.

Travel insurance is always purchased before the scheduled travel. It is a separate transaction which can be purchased through outlets available on travel ports and online website. Depending on the policy, the money invested can be refunded for a designated period only.

Coverage of Travel Insurance

Travel insurance covers the following aspects:

Travel delay and missed connection

The coverage includes refunds for the meals and accommodations purchased during the delayed period. It also covers any additional costs when you miss the connecting flight because of the delay of the prior trip.

Lost or delayed luggage

Items that are delayed can be refunded only to the limit of clothes and essentials purchased within a maximum of 24 hours.

If the luggage is considered permanently lost or even damaged, reimbursements for replacing the items are covered up to a specific amount only.

Trip Cancellation       

This guarantees a full return of your travel expenses upon cancellation due to reasons like:

  1. Terrorist attack at the intended destination
  2. Severe weather in between the intended destination
  3. Injury, sickness or death of you, a family member, or a traveling companion

Medical emergency

The coverage is for any medical situation that happens during the trip upon leaving until landing on the destination.

It covers reimbursements for the expenses sustained for all the medical treatments performed during the trip and an additional option for transportation arrangements to the nearest hospital and your home after hospital discharge.

Here are some of the statistics for travel insurance coverage for UK travellers published by this 2020:

Coverage Minimum mount Covered Maximum Amount Covered
Trip cancellation £750 £10,000
Medical £0 £20,000,000
Baggage £750 £3,500
Personal liability £1,000,000 £2,500,000

How Does It Work?

Now that you understand its definition and coverage, let’s start discussing how does travel insurance works. Travel insurance typically reimburses your expense or grants you the money that is subjected to the insurance policy.

To be able to receive the payment, there is what we call “claims” for proving that the situation you experienced is covered by the policy.

In a real-time application, that may not be the case always. Time is always of the essence in presenting claims and their validity period. Travel insurance works typically similar to any common type of insurance in the following procedures:

  • Travel insurance is to be purchased before an unlikely event occurs. If an unfortunate event occurs while traveling, you can’t purchase the insurance applicable to that situation and are, therefore, not entitled to any of the payment it covers.

For example, two days before your travel, you fell ill. The doctor diagnosed that you have a serious illness and advised you to cancel your trip. When you notify either the airline or the cruise line, it can be too late to request a refund if you have not purchased a travel insurance policy.

  • Upon your purchase, it is already assumed that you have read and understood the details of the policy including the fine prints. For example, there can be reasons why you canceled your flight. Even if you avail of the travel insurance, the insurance company, on the topic of trip cancellation, does not consider a reason like “having stuck in rush hour traffic” valid.

For other reasons like a diagnosed sickness two days prior, it can be considered as a valid reason as long as the documentation proves it.

  • If the unlikely event occurred, you are expected to provide necessary documentation when you file for a claim. The documentation can be in the form of receipts for the expenses incurred and the statements from the airline or cruise line.

For example, if you purchased travel insurance before you cancel your trip when you are diagnosed with a serious illness, you are entitled to receive the amount indicated when the claims are approved. Since the reason for such cancellation is the illness, the documents to be submitted must be related to proving such an event occurred.

You can choose to have your reimbursement handed to you through a check, direct deposit, or debit card.

  • Possibly, the insurance recommends you cover the costs like the medical bills and other necessities then reimburse you upon approval of the claims filed. This might take a while to process.

For example, travel insurance may require you to pay upfront while the transfer funds are still being processed. Another example is that if there are premium plans, you may receive a certain fixed payment per day for the period of delay either of flight schedule or reclaiming of baggage. Since the payment is fixed in this example, receipts for your expenses incurred during the delay are not necessary.

How the Premiums are Determined

The following risk factors will determine the travel insurance premiums:

  • The traveler’s age
  • The traveler’s expenses
  • The intended destination of the traveler

The greater the risks are, the higher the premium will be. This means that an elderly have a higher premium compared to a young university student. A traveler that has invested on a long-awaited vacation trip on a tropical island also has a higher premium compared to a traveler who flies to a nearby country for a casual visit.

How to Choose a Plan

When choosing a plan, the first thing you want to do is to have your upcoming trip quoted. Personal details may be required such as your age, the costs of the trip, and the trip’s schedule. You can then do a comparison of the costs possible and the benefits you can get.

If you’re a budget-conscious traveler, a basic trip cancellation protection may be enough. It covers trip cancellation, trip delay, and trip interruption benefits.

For those who want to travel overseas with a medical issue but are still fit to travel, they can consider comprehensive travel insurance. It covers the trip cancellation benefits and also the medical emergency benefits. There is also an insurance plan that focuses only on the medical emergency benefits with a reduced cost compared to the comprehensive travel insurance.

There is also a “one-time” plan that can cover kids aged 17 and below as travel companions. It can provide a substantial amount of benefits.

For a traveler who plans to do multiple trips within the next twelve months, the annual travel insurance plan is recommended. It covers almost, if not, all the benefits for travel insurance for a period of one year.

According to the information presented in, this 2020, travel insurance companies paid out over £399 million for UK travelers last 2018. On average, a British traveler pays £9.40 for the “one-time” plan and £21 for the annual plan.

How to Take Advantage of the Insurance

If you decided to purchase travel insurance, don’t wait for too long. If you are planning to get travel insurance, make sure you do it as quickly as you finished arranging your travel. The earlier you get it, the better selection can be made. There are other plans that offer benefits wherein you have to pay the initial deposit within a set number of days.

Also, before the trip occurs, read the content of the documents. If you find something bothering or are not satisfied with the plan, you usually have 10 days or so to request a refund before the trip occurs or a claim is initiated. During the trip, the payments made for travel insurance are non-refundable.

Frequently Asked Questions

When does travel insurance seem necessary?

It actually depends on the situation. Ideally, you want to get it when you’re planning to go on international trips or want to get to other countries for medical reasons. On the other hand, it’s not necessary if you’re traveling only within your country of origin.


In general, travel insurance has a similar procedure to that of a common type of insurance. It involves purchase prior to a risky event, plenty of plans to choose from, and the filing of claims. To avoid any misconceptions, wrong assumptions, and even legal battles, it is highly advised to absorb the information of a certain insurance policy before you avail of it.

Now that you understand how does travel insurance works, it is important to determine if such a thing is necessary for you or not. Just remember that any uncontrollable event might happen, and it may be a bigger deal than the preparations you have made. If you want assurance for your trip, investing in travel insurance is ideal.

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