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Tips on Purchasing Travel Insurance

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There's certainly no end of potential problems that can befall a business traveler. From strikes to weather problems to mechanical issues, road warriors are more likely to encounter problems when traveling than vacationers are, simply because business travelers spend so much more time on the road.

That's where travel insurance comes in. Whether for business travelers or families on vacation, travel insurance can help provide recourse and compensation for unexpected events. (For more information on travel insurance, consult my travel insurance overview.)

A good example is the April 2010 eruption of a volcano in Iceland that caused a complete air shutdown and flight delays for days for business travelers across dozens of countries.

So, you might wonder, what happens if you have travel insurance and a natural disaster like a volcano causes significant travel disruption? Are you covered?

The short answer, is, "It depends…"

According to John W. Cook, president of QuoteWright.com, a travel insurance store, travel insurance policies typically contain four different coverage areas that might apply to a disaster like a volcanic eruption: trip cancellation, trip interruption, missed connection, and travel delay. These specific coverage areas are all "named perils" coverages, which means that you can only claim them if they’re caused by one of the specific covered events.

Named Perils Coverages

That's where it can get tricky. For example, is a volcanic ash cloud a "natural disaster" or is it an "adverse weather" event? The answer can have a big impact on the trip cancellation and trip interruption insurance coverage. If it's a natural disaster, your insurance company may limit coverage only to natural disasters that make your destination uninhabitable. However, if a volcanic ash cloud was considered an adverse weather effect, causing your airline to cease operation for 24 hours or more, you may have a better shot at compensation.

The other two categories, travel delay, and missed connections are more straightforward. These usually include "natural disaster" as a covered event, so you should be all set.

Medical Coverage

"I recommend that business travelers concentrate on the basic coverages rather than the trip cancellation or interruption coverages," says John W. Cook, president, QuoteWright.com. "The cost of the trip is usually a business expense that can be absorbed by the employer as a business expense without too much trouble however, the medical expense and evacuation coverage may be a concern because the business traveler might be out of network and not covered by their basic coverage."

However, if you become ill overseas it might help to reference these tips for what do you when you get sick while traveling.

Read the Fine Print

Check the fine print of any trip or travel insurance your purchasing, since different underwriters define terms differently and there are no standards when it comes to coverages. Cook suggests that one of the most important things to consider is pre-existing medical conditions, since they represent a large portion of travel insurance claims for trip cancellations or interruptions.

Like almost anything you purchase these days, it makes sense for business travelers to make sure they've read potential insurance policies carefully and evaluated their options and needs before plunking down cash for travel insurance.

"The bottom line is to read your plan carefully and don't assume that there will or will not be coverage," says John W. Cook, president, QuoteWright.com.

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