In the US travel insurance market, misconceptions are widespread, leading to confusion and hesitation among travellers to secure appropriate coverage. Compared with other, more mature global travel insurance markets, in the US there is often a lack of understanding

of how travel insurance works and what it covers, compounded by persistent myths that skew consumer perception of its value. As international travel becomes increasingly complex with multifaceted risks – from health emergencies to logistical disruptions – debunking these myths is crucial.

The importance of travel insurance extends beyond mere risk mitigation; it’s a fundamental aspect of travel planning that protects both financial and personal wellbeing. Misunderstandings about cost, coverage and claims processes discourage many US travellers from purchasing travel insurance, potentially leading to substantial financial losses and stress during what should be enjoyable travel experiences. With a variety of insurance products available and the tailored solutions they offer, staying informed is more important than ever.

In this article, we aim to dissect and refute some of the most common myths surrounding travel insurance in the US market. By clarifying these misconceptions, we hope to illuminate the true benefits of travel insurance, promoting a more knowledgeable and better prepared travel community.

Myth: “I don’t need travel insurance, it’s too expensive”

This common misconception overlooks the fundamental purpose of travel insurance: to protect people’s financial investment in their travels or unexpected costs from events that happen during their trip. For example, a medical evacuation, which involves a medically configured aircraft, trained crew and comprehensive ‘bed-to-bed’ care, can be staggeringly expensive. The cost of an air ambulance from Los Angeles to Las Vegas can reach US$20,000, and from Aspen, Colorado, to New York, the price could hit $39,000. If someone was travelling from Cabo, Mexico, to Las Vegas, the price could soar to $44,000. With adequate travel insurance, however, travellers wouldn’t owe a dime in such scenarios.

Just as someone wouldn’t drive uninsured, travelling without insurance exposes travellers to financial risks

Travel plans are inherently unpredictable. While no one embarks on a journey expecting to get sick or injured, unforeseen medical emergencies can and do occur. This is particularly problematic in foreign countries where US health insurance, like Medicare, might not provide coverage, potentially leaving US travellers with steep medical bills.

Travel insurance offers customisable options similar to car insurance. Just as someone wouldn’t drive uninsured, travelling without insurance exposes travellers to financial risks. While cancel for any reason (CFAR) policies are pricier, they do offer extensive coverage. Travellers can also choose medical-only insurance to keep costs down while still covering major risks that happen while on their trip. This flexibility allows US travellers to tailor their coverage to their specific needs, ensuring they are protected against significant financial burdens without overpaying for unneeded features.

Myth: “I am covered for everything, no matter what happens”

This pervasive myth stems from a misunderstanding of the scope and limitations of US travel insurance policies. Travel insurance does not universally cover all possible scenarios; rather, it is designed to cover specific risks under defined conditions which are clearly outlined in the policy documentation. It is crucial for US travellers to carefully review their policy to understand what is and isn’t covered. This attention to detail can prevent surprises in the event of a claim.

One significant area where misconceptions occur among US travellers involves incidents related to alcohol abuse and drug abuse. Many travel insurance policies explicitly exclude coverage for accidents and health issues that arise while the insured is engaged in alcohol or drug abuse. This means if an insured event occurs during or after such activities, the insurance provider may rightfully deny the claim.

Additionally, the legality of certain behaviours varies by country. Substances like cannabis might be legal in some parts of the US but are illegal and carry severe penalties in many other countries. US travellers assuming that their insurance will cover legal repercussions or medical treatments related to illegal activities abroad often find themselves unsupported by their policies.

Just as someone wouldn’t assume all aspects of their health are covered by a standard health insurance policy, it’s important for US travellers not to make broad assumptions about travel insurance

Understanding these nuances is essential. Just as someone wouldn’t assume all aspects of their health are covered by a standard health insurance policy, it’s important for US travellers not to make broad assumptions about travel insurance. Knowing precisely what their policy covers helps align their expectations and provides a clearer picture of the protection they actually have while travelling.

Myth: “I can cancel my trip because I am afraid of travelling”

Contrary to popular belief, standard travel insurance policies do not allow for trip cancellations due to fear or apprehension about potential risks like Covid-19 outbreaks or geopolitical instability. Insurance typically covers unforeseeable events directly affecting the traveller, such as illness, injury or natural disasters at the destination, not subjective concerns or fear-driven decisions.

For US travellers seeking greater flexibility, CFAR insurance may be a suitable option. This coverage permits cancellations for any reason, including fear of travel, provided it is enacted within a set period before departure. While CFAR policies are more costly, they offer partial reimbursement and cater to travellers desiring broader protection against uncertainty. It’s essential for US travellers to understand their policy’s specific terms and opt for CFAR if they anticipate needing this level of flexibility.

Myth: “I don’t buy it because travel insurance companies find ways to not pay claims”

Insurance companies are required to adhere to strict auditing standards and must provide clear justifications for both approving and denying claims

This common myth suggests that travel insurance companies are often looking for reasons not to pay out claims. In reality, denial rates for travel insurance claims are far lower than people expect. The vast majority of claims submitted are indeed payable and are honoured by insurance providers.

The process of handling claims is regulated and transparent. Insurance companies are required to adhere to strict auditing standards and must provide clear justifications for both approving and denying claims. This regulatory oversight ensures that claims are processed fairly and according to the terms set out in the policy. US travellers should feel reassured that their valid claims will be paid, dispelling the myth that companies predominantly look for reasons to deny them.

Myth: “I don’t need travel insurance because my credit card has a policy for me”

Many US travellers mistakenly believe that the travel insurance offered through their credit card is sufficient for all their travel needs. While it’s true that some credit cards provide travel insurance benefits, the coverage is often limited and comes with significant restrictions. For instance, such policies typically cover only basic issues like lost luggage or flight delays and may not include comprehensive medical coverage, emergency evacuations or services like translation assistance and hospital referrals.

To qualify for credit card insurance benefits, travellers generally need to have booked their entire trip using that specific card

To qualify for credit card insurance benefits, travellers generally need to have booked their entire trip using that specific card. Even then, the coverage is usually secondary, kicking in only after other insurance policies are exhausted, and may not cover important aspects of travel-related incidents, such as medical expenses in foreign hospitals, which might not accept third-party payments. These limitations underscore why US travellers need to review their credit card’s insurance terms carefully and consider a standalone travel insurance policy to ensure they are fully protected against a wider range of potential issues while travelling.

As we conclude this discussion on US travel insurance myths, it’s crucial for industry professionals to understand and address these misconceptions. By effectively debunking myths, we empower US consumers with accurate information, which is essential for fostering trust and confidence in travel insurance products. This is particularly important as the travel landscape continues to evolve, presenting new challenges and complexities.

For those in the travel insurance industry, staying informed and providing clear, transparent information are key strategies for enhancing customer relations and business operations. We encourage professionals to continue educating themselves and their clients about the benefits and limitations of travel insurance.

For more industry insights and resources, visit ustia.org.