Travel Insurance

How Does Travel Insurance Work?


Travel insurance is intended to cover medical expenses, lost luggage, trip cancellation, flight accident and other losses incurred while travelling, either internationally or domestically. There are plans that also offer optional or additional coverage, such as a waiver of pre-existing medical conditions, accidental death and, most importantly, cancellation of the trip for any reason.

With people travelling more frequently than ever before, the sales of travel insurance will only rise in the coming years. This is quite evident in a report published by Allied Market Research titled, Travel Insurance Market by Insurance Cover, Distribution Channel, Users, Geography – Global Opportunity Analysis and Industry Forecast, 2014 – 2022, which stated that the global travel insurance market is expected to grow at a CAGR of 8.5% during 2016-2022, generating $28,264 million by 2022. The rise will also be driven by the fact that there are several countries, such as the US, France, Belgium, Luxembourg, Norway, Finland, and Poland, where travel insurance is mandatory for obtaining a visa.

How does Travel Insurance Work?

Travel insurance is a safety net that works quite similarly to other insurance policies. The aim of such policies is to keep your travel investment protected from unexpected events that can negatively impact your travel plans.

Travel insurance works through a reimbursement structure. If there is a mishap, the traveller needs to most likely pay for the expenses up-front. The traveller then files for a claim for such expenses. Once the travel insurance company approves the claim, the traveller gets reimbursed by the insurer for the expenses covered by the purchased plan.

When filing a claim, the applicant needs to provide documentation of the issue for which they desire reimbursement. Anything from a medical bill to the flight schedule or statement from the airline would work, depending on the situation.

It is always advisable to buy travel insurance before your set off on a trip, minimizing the risk of damage or loss due to any disrupting event, such as an illness, severe weather or act of terrorism. When you buy a travel plan, make sure you read the policy document and the terms and conditions carefully to fully understand what the insurance company will and will not cover.

Tips for Travel Insurance Reimbursement

  • Read the Terms and Conditions Carefully Before Buying:
    Many travel plans come with a 14-day window. If you are not convinced by the terms and conditions of the plan, but do not get the policy cancelled within 14 days, you are believed to have agreed to the terms and conditions.
  • Never Throw Away Receipts:
    As mentioned earlier, travel insurance works in a reimbursement structure. This structure completely relies on paperwork, such as receipts and credit card statements, which become proof of your expenses.
  • Never Delay the Filing of a Claim:
    The way you shouldn’t be late in buying a plan, the same way, you shouldn’t be late in filing a claim. Notify the insurance provider as soon as possible.
  • Know the Accurate Trip Cost:
    This is an important factor in receiving the accurate amount of reimbursement. Knowing the exact trip cost will prevent you from under-insuring yourself. If you are  under-insured, the reimbursement amount available will be lower than the costs your incur for travel disruption.

Be a smart traveller and take these precautions to stay prepared for even the worst scenario.


Having lived in 3+ countries, worked for companies small and big in USA, Middle East & India, I have a lot of stories to share about international travel, immigration and living as an NRI in the US. Add me on WhatsApp if you have any queries (+001-408-489-4785)

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