Travel insurance
A travel insurance is an insurance that is intended to cover financial and other losses incurred while travelling, be in within one's country, or internationally.
Travel insurances can usually be arranged at the time of booking of a trip to cover exactly the duration of that trip or a more extensive, continuous insurance can be purchased from (most often) insurance companies or banks, which covers all travelling during the period for which the insurance was obtained.
The most common risks that are covered by travel insurances are:
* Cancellation
* Curtailment
* Delayed departure
* Loss, theft or damage to personal possessions and money (including travel documents)
* Delayed baggage (and emergency replacement of essential items)
* Medical expenses
* Emergency evacuation/repatriation
* Overseas funeral expenses
* Accidental death, injury or disablement benefit
* Legal assistance
Some travel policies will also provide cover for additional costs, although these vary widely between providers.
And in addition, often separate insurances can be purchased for specific costs such as:
* high risk sports (e.g. skiing, scuba-diving)
* travel to high risk countries (e.g. due to war or natural disasters)
Controversies
Insurance insulates too much
By creating a "security blanket" for its insureds, an insurance company may inadvertently find that its insureds may not be as risk-averse as they should be (since the insured assumes the risk belongs to the insurer). This problem is known to the insurance industry as moral hazard. To reduce their own financial exposure, insurance companies have contractual clauses that mitigate their obligation to provide coverage if the insured engages in some kind of behavior that grossly magnifies their risk of loss or liability.
For example, life insurance providers may require higher premiums or deny coverage to people who work hazardous occupations or engage in dangerous sports. Liability insurance providers do not provide coverage for liability arising from intentional torts committed by the insured. Even if a provider was irrational enough to try to provide such coverage, it is against the public policy of most countries to allow such insurance to exist, and thus it is usually illegal.
Complexity of insurance policy contracts
Insurance policies can be complex and some policyholders may not understand all the fees, regulation and coverages included in a policy. As a result, people could buy policies at unfavorable terms. In response to these issues, governments often make detailed regulations that set down minimum standards for policies and govern how they may be advertised and sold.
Many individuals purchase policies through an insurance broker. The broker can counsel the policyholder on which coverage to purchase and limitations of the policy. A broker generally holds contracts with many insurers which allows the broker to "shop" the market for the best rates and coverage possible.
People may also purchase policies through a "producer" (a seller of insurance). Unlike a broker, who represents the policyholder, a producer represents the insurance company from whom the policyholder buys. A producer can represent more than one company. In the United States, these people are known as "resident producers" in the states where they are licensed. In some states (such as Michigan), insurance brokers are not allowed to operate because the cheapest rates may not be in the best interest of the policyholder.
A travel insurance is an insurance that is intended to cover financial and other losses incurred while travelling, be in within one's country, or internationally.
Travel insurances can usually be arranged at the time of booking of a trip to cover exactly the duration of that trip or a more extensive, continuous insurance can be purchased from (most often) insurance companies or banks, which covers all travelling during the period for which the insurance was obtained.
The most common risks that are covered by travel insurances are:
* Cancellation
* Curtailment
* Delayed departure
* Loss, theft or damage to personal possessions and money (including travel documents)
* Delayed baggage (and emergency replacement of essential items)
* Medical expenses
* Emergency evacuation/repatriation
* Overseas funeral expenses
* Accidental death, injury or disablement benefit
* Legal assistance
Some travel policies will also provide cover for additional costs, although these vary widely between providers.
And in addition, often separate insurances can be purchased for specific costs such as:
* high risk sports (e.g. skiing, scuba-diving)
* travel to high risk countries (e.g. due to war or natural disasters)
Controversies
Insurance insulates too much
By creating a "security blanket" for its insureds, an insurance company may inadvertently find that its insureds may not be as risk-averse as they should be (since the insured assumes the risk belongs to the insurer). This problem is known to the insurance industry as moral hazard. To reduce their own financial exposure, insurance companies have contractual clauses that mitigate their obligation to provide coverage if the insured engages in some kind of behavior that grossly magnifies their risk of loss or liability.
For example, life insurance providers may require higher premiums or deny coverage to people who work hazardous occupations or engage in dangerous sports. Liability insurance providers do not provide coverage for liability arising from intentional torts committed by the insured. Even if a provider was irrational enough to try to provide such coverage, it is against the public policy of most countries to allow such insurance to exist, and thus it is usually illegal.
Complexity of insurance policy contracts
Insurance policies can be complex and some policyholders may not understand all the fees, regulation and coverages included in a policy. As a result, people could buy policies at unfavorable terms. In response to these issues, governments often make detailed regulations that set down minimum standards for policies and govern how they may be advertised and sold.
Many individuals purchase policies through an insurance broker. The broker can counsel the policyholder on which coverage to purchase and limitations of the policy. A broker generally holds contracts with many insurers which allows the broker to "shop" the market for the best rates and coverage possible.
People may also purchase policies through a "producer" (a seller of insurance). Unlike a broker, who represents the policyholder, a producer represents the insurance company from whom the policyholder buys. A producer can represent more than one company. In the United States, these people are known as "resident producers" in the states where they are licensed. In some states (such as Michigan), insurance brokers are not allowed to operate because the cheapest rates may not be in the best interest of the policyholder.
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