What is Travel Insurance?

It is a kind of insurance that provides coverage for consequences associated with journey. It is typically purchased when a person is going for booking of a trip. It usually provides coverage for the duration of a trip. But you can also purchase extensive or continuous policy from travel insurance companies, agents, or directly from operators. One drawback to buy policy from operators is that it does not provide good coverage as compared to policies offered by insurance companies.

Major Coverage Provided

Major coverage provided by any policy includes Trip Cancellation, Trip Interruption, Lost Luggage, Default protection.

Trip Cancellation

Traveler may need to cancel the trip due to unexpected conditions and illness.

Trip Interruption

Trip may be suddenly terminated due to illness or unavailability of hotel.

Lost Luggage

Traveler may lose his luggage and he has to face extra expenses.

Default Protection

Trip cancellation due to sudden stop of services of tour operator.

Who can get the policy?

It provides coverage for different kinds of travelers.

Traveling groups that can get coverage by travel insurance policies are as follows:

Student, Business, Leisure, Adventure, Cruise and International travel.

Risks Covered by Good Policy

A good policy must cover the following risks.

  • Medical expenses
  • Emergency evacuation/repatriation
  • Overseas funeral expenses
  • Accidental death, injury or disablement benefit
  • Cancellation
  • Curtailment
  • Delayed departure
  • Loss, theft or damage to personal possessions and money (include legal documents such as passport, tickets etc.)
  • Delayed baggage (and emergency replacement of essential items) -Legal assistance
  • Personal liability and rental car damage excess

Additional Coverage that can be purchased from Travel Insurance Company

Additional cost coverage is also provided by some policies. But this depends on the policy provider. Separate policy can be purchased for certain risks that are not covered in common policies. These risks include:

  • Pre-existing medical conditions( e.g. Asthma, diabetes)
  • High risk Sports (e.g. Skiing, scuba-diving)
  • Journey to high risk countries ( e.g. war, natural disasters or terrorism)
  • Common Risks that are not considered by Travel Insurance Policies
  • Pre-existing medical conditions are normally not covered
  • Pregnancy related expenses are also not considered
  • Accidents or illness due to use of alcohol or drugs is left uncovered in most policies.
  • War or terrorism is also not covered in policy but some plans also cover this risk.

Travel insurance companies offer their services 24 hours a day, 7 days a week. These services include full staff support and emergency tour assistance. It comprises 5-7% of the total cost

One Response to “What is Travel Insurance?”

  1. Prudential launches US$21bil cash call

    Move to woo shareholders’ backing for its AIA acquisition

    LONDON: British insurer Prudential launched its long-awaited US$21bil cash call and a delayed offensive to woo wary shareholders to back its takeover of rival AIG’s Asian unit.

    Britain’s Financial Services Authority forced the country’s largest insurer to revise its US$35.5bil offer in an embarrassing and unprecedented last-minute delay nearly two weeks ago, telling it to boost capital.

    Yesterday’s pricing of the deeply discounted rights issue and details of the agreement with the British watchdog have put the deal – a key part of plans to help AIG repay the US government – back on track, and chief executive Tidjane Thiam said he was confident shareholders would back the takeover.

    “We were a little bit like a fighter fighting with one arm behind his back.

    “We were handicapped, we weren’t able to answer a lot of questions,” Thiam said of conversations with shareholders in recent weeks, adding investors had given Prudential “the benefit of the doubt.”

    “Overall we feel confident they will support this. We always knew this would be a long, complex and challenging process – what we are attempting has never been attempted before.”

    Prudential would benefit from money already set aside when AIG was considering an IPO of its Asian unit American International Assurance (AIA), Thiam said.

    Prudential will sell new shares at 104 pence, a 39% discount to the theoretical exrights price – in line with rights issues in the financial sector through the financial crisis – and an almost 81% discount to Friday’s close.

    But shareholders indicated that modest improvements to synergies and hints at Asian disposals might not be enough to win over the 75% support needed to secure the deal and salvage the tarnished credibility of its top management.

    ”I don’t think it’s going to be easy for them to get the backing of enough shareholders.

    “They will struggle to get the vote through,” said one top-20 investor, asking not to be named.

    Paul Mumford, of Cavendish Asset Management which has a £2.5mil holding in Prudential, said he was still concerned over the size of the cash call, one of the largest ever.

    “Personally, I’m feeling a bit dubious as to whether it is the best thing for shareholders. They have got some punchy targets looking forward in terms of profitability of the group, but it does rely on the Far Eastern markets – they have got more eggs in one basket than before the issue,” he said.

    Prudential and its banks will offer fund managers a fat sub-underwriting fee of 2%, sources familiar with the situation told Reuters. They normally get 1.5% to 1.75% out of a total 3.5%.