Ah, vacation. Whether you’re planning to take a road trip, backpack in Europe or relax on a luxury cruise, there’s nothing quite like a hard-earned getaway.
Not to pop any vacation dream balloons here, but…as insurance folks, we’d be remiss not to bring up an often-overlooked possibility: what if something goes wrong? We’re experts at thinking about potential risks, so we’d feel a lot better (and excited) about the fun you’ll have if you’ve considered them, too. Here, we’ll cover all things vacation insurance, but don’t worry — keeping in the spirit of vacation vibes, we promise to keep it fun and helpful!
If you’re renting a car on vacation…
Imagine that you’ve completed your flight(s) to paradise, and now you’re at the car rental counter. You’re ready to get in the car drive off into the sunset when they ask the question that makes us all pause: “Do you want to purchase our car rental coverage?”
Ugh.
Here’s the deal: most insurance policies you currently have on your personal vehicles extend to rental cars, like collision and comprehensive coverage. If you only have a liability policy on your car, that is the only coverage you’ll have on the rental car (see below exception on possible credit card coverage).
At the same time, even if you do have collision and comprehensive coverage on at least one of your personal vehicles, there are still rental car risks to consider, namely diminished value and loss of use coverage.
Diminished Value: If you cause damage to a rental car, even if it’s repaired, it is likely not worth what it was prior to the damage. Some rental companies may charge you for this loss in value. Yuck.
Loss of Use: While the damaged car is in the shop getting fixed, the car rental company isn’t making money on it from rentals. You may be on the hook for covering that loss. Double yuck.
It’s important to know whether your personal auto policy would provide protection in these situations. Some insurance carriers partner with specific rental companies to bridge these gaps, so before you reserve a rental car, check with your insurance advisor about what vehicle coverage you currently have and what they’d recommend in order to lower your liability risks if something goes wrong.
What about car rental credit card coverage, you ask? Good (and common) question. Credit card companies may offer secondary rental car coverage, and in some cases, primary coverage. This can be valuable for covering physical damage and to protect you from premium increases caused by a rental car claim on your personal insurance.
Pro tip: read the fine print on your credit card benefits before your trip. Some card companies require you to decline the rental company’s insurance coverage to apply.
If you lose your luggage — and its contents — on vacation…
You’re waiting at the airport carousel and suitcase after duffel bag after backpack rolls by with no sign of yours insight. Cue the slow onset of panic.
The good news: airlines are responsible to a certain degree for lost, delayed or damaged luggage. According to the U.S. Department of Transportation (DOT), airlines must compensate travelers for “reasonable” expenses incurred from damaged, delayed or lost luggage. We’re really summing it up here, so be sure to read the details they provide. Keep in mind also that amounts vary by airline.
The bad news (depending): the DOT caps airline liability for luggage loss or damage on domestic flights at $4,700 per passenger. International flights are governed by the Montreal Convention, and liability is usually capped at $1,700. Airlines can pay out more, but they are not required to do so.
So, if those amounts don’t match your definition of “reasonable” for your packed vacation goods (and souvenir shop finds), your Homeowner’s or Renters’ insurance may become important. Personal Property policies may help with vacation losses, though they are also likely to be subject to deductibles and limits. If you have a replacement cost endorsement in your policy, you may be reimbursed for the new replacement value rather than the depreciated one. This is where we, again, encourage you to check in with your insurance agent to fully understand your coverage details.
Pro tip: Keep high-value items, important medications and travel documents in your carry-on bags, and then in your in-room safe if available, once you arrive at your destination.
If you must travel with expensive personal items…
Don’t want to part with your engagement ring while white-water rafting in Colorado? Bringing along your expensive watch for a formal vacation dinner? Have a high-end camera or amazing new drone you want to use for capturing the natural wonders of your vacation sites?
Consider scheduling them (aka specifically listing them on your insurance policy) for long-term protection of these high-value items. This not only protects them on an everyday basis while you’re living everyday life at home, it covers them when they accompany you on vacation. Scheduling items in your Homeowner’s or Rental policy typically removes deductibles and provides coverage no matter where you are at any given moment. If you want to take valuable items on your trip, discuss if and how they are covered on your policies beforehand. If they aren’t already scheduled, consider adding them permanently to offer you peace of mind at all times.
If your trip itself goes wrong…
From weather delays to medical emergencies, there’s potential for all kinds of “what-ifs” that could take place between the time you leave until your return. Trip insurance may save the day — and your money. Comprehensive travel insurance typically covers:
- Trip cancellations, delays or interruption (including sickness)
- Emergency medical expenses
- Evacuations
- Lost luggage
Is travel insurance worth it? Sometimes yes, sometimes no. Be sure to check the fine print, and consider how you would feel most comfortable traveling. Whether or not your insurance advisor sells travel insurance, they can help you compare what’s available with the policies you already have, what your credit cards may offer and other travel insurance options out there.
Some additional safe travel tips…
We hope if you’ve learned anything here, it’s the following:
- Call your insurance advisor. Ask what your current policies cover and whether they have advice for scheduling high-value items or looking into other available options.
- Check your credit card benefits (and discuss with your agent, if you’re unsure what it means).
- Use your hotel safe for high-value items and documents.
- Carry onto flights anything that would be devastating to lose if your luggage gets lost or stolen in transit.
- Get a trip insurance quote if your trip is extensive or complex.
Vacations are meant for creating fond memories. With a little prep — and the right insurance coverage — you can keep your focus on making those happen. Bon voyage!
