I’m Taking a Vacation. Why Would I Need Insurance?
A good question. Let’s see if we can give you some answers that will protect you and point out coverages you already have that cover you while on vacation.
There are three insurance issues to consider when you take vacation away from home.
· Rental car insurance and damage waivers
· Homeowner’s insurance works even during vacation
· Does your health insurance cover you when you’re traveling?
Rental Car Insurance and Damage Waivers
When you step up to the rental car counter the service person will ask if you want to take the “collision damage waiver”, or CDW. (Some rental companies refer to this as a “loss damage waiver” – LDW). Perhaps you’ve always thought of it as insurance. In fact, the rental agency is simply agreeing not to charge you for collisions that might occur while you’re driving. Unlike insurance, there is no claim to file. The rental company simply waives the right to charge you for damage.
Does It Make Sense to Take the Waiver?
Absolutely. For several reasons.
· If you cause damage to a car you’ve rented you’re not likely to have the “luxury” of waiting for the rental company to file an insurance claim, then to wait for the adjuster to assess the damage and, finally, bill you for that damage weeks later. It’s more common for the rental company to simply charge your credit card, which in today’s car repair market, can easily exceed the credit limit on your card. Totaling a rented car would certainly max out most peoples’ card.
· You may believe your own auto insurance would cover damages, theft of the rental car and other losses. However, the limits on your own policy apply to the rental as well. If the loss is greater than the coverage you carry, you’ll have to pay out-of-pocket for the difference.
Further, your personal auto coverage has a deductible amount you’ll have to pay even if your overall coverage is enough to repair the rental car. If you buy the waiver you won’t pay any deductible. Be aware that when your personal auto policy pays for damages, your carrier may increase your rates; you also have a chance of losing your “good driver discount.”
Your comprehensive coverage could also be insufficient if, for instance, you hit a deer or other large animal and destroyed the front end of the vehicle. Once again, you’d have to pay the deductible amount and could face premium increases. Likewise, the liability portion of your auto policy, which pays for bodily injury to others and for damage to their property, would cover such events, but with the potential loss of discounts and premium increases.
· You may also believe your credit card provides coverage for rental car damage. However, in many cases the coverage is secondary – meaning the credit card company (VISA, Mastercard, Discover and American Express) only pay the remaining balance after all other insurances and waivers have paid. Further, each company excludes a variety of situations from coverage. Our friends at Wikipedia [1] have compiled an article that lists many of these exclusions.
TIP: Every rental company waiver has restrictions and exclusions. Take a few minutes to read the description of the waiver, usually printed on the paper jacket or envelope that holds your rental contract. A few of these include:
· Only the driver authorized on the contract may drive the car. Losses with an unauthorized driver behind the wheel would not be waived.
· Some company’s waivers don’t permit driving on unimproved roads.
· If you drive while intoxicated, waivers won’t pay for losses.
The bottom line: If you rent a car during your vacation, take the inexpensive coverage the rental company offers. It’s a small price to pay for the knowledge that an accident won’t cause your vacation to cost you more than you budgeted.
Homeowner’s Insurance Protects You Even During Vacation
Of course your homeowner’s or renter’s policy covers your residence while you’re away, even on an international trip. But it does more than that. And the coverage it gives you won’t cost a penny.
One section of your homeowner’s (or renter’s) insurance gives you liability coverage. Normally it pays for bodily injuries, loss of wages and related costs when someone is injured while on your property. It also covers you when you’re on vacation in the event you cause injury to another person – for example, accidentally causing someone to trip, fall and break a bone.
In addition, a portion of your policy covers your personal possessions against loss, damage and theft. This coverage continues while you’re on vacation. Note though, if you plan to be away more than 45 days, talk with your insurance professional before you leave. Some policies need to be adjusted when your principal residence will sit vacant for an extended period.
Does Your Health Insurance Cover You When You’re Traveling?
If you are insured under the Affordable Care Act (“Obamacare”) and need medical care while on vacation out of your home state, you may find it difficult to find in-network medical providers. If you get care from an out-of-network caregiver or facility you will probably have to pay for that care yourself. For example, if you live in Florida and travel to New York, the health care network in Florida you signed up for at Healthcare.gov may not be available in New York. [2]
Likewise, if you are a Medicaid or Medicare subscriber, these in-network versus out-of-network restrictions also apply.
However, if you need emergency medical care while out of your home network, all of these government plans have provisions to pay for that care.
TIP: Check with your healthcare insurance provider before you leave for vacation to understand the travel provisions and restrictions of your specific plan.
What About Traveling Internationally?
If you are insured with Medicaid or Medicare, your coverage outside the U.S. is very limited. [3] You can find details at the U.S. State Department website, [4] including advice on planning in advance for any prescription drugs you may need. These same limitations apply to insurance under the Affordable Care Act.
TIP: You may want to consider travel insurance. Those policies can provide coverage for emergency care and even for evacuation to a U.S. hospital if necessary.
We’re Glad to Answer Your Questions
According to the U.S. Travel Answer Sheet, [5] some 1.6 billion “people-trips” took place in 2012 to visit friends and relatives, to go shopping, to enjoy fine dining or to enjoy the beach. Here at Quoteasy, we’ve worked with countless people to help them with questions about insurance coverage while they’re traveling on vacation. Click or call us at 305-587-2410 if we can be of service. We’re here to help.
Source
1. http://en.wikipedia.org/wiki/Damage_waiver 2. http://www.sanluisobispo.com/2013/11/22/2798564/planes-trains-and-obamacare.html 3. http://www.medicare.gov/Pubs/pdf/11037.pdf 4. http://travel.state.gov/travel/tips/tips_1232.html#insurance 5. http://www.ustravel.org/sites/default/files/page/2009/11/US_Travel_Answer_Sheet_March_2013.pdf
