When the travel bug bites but you’re so broke you need to take the MRT to Changi Airport the night before to catch your 5am flight, it’s tempting to travel in extreme budget mode.
Some of your extreme budgeting measures might include staying in hostels infested with sweaty, hormonal teenagers, treating convenience stores like restaurants, trying to trick the museum staff into thinking you’re young enough to receive the student discount and going without travel insurance.
All of the above are pretty much harmless except that last option.
The trouble is that, 9 times out of 10, skipping travel insurance seems like the easiest way to save money because, unlike swatting away a cockroach in your 1-star hotel room, you don’t actually feel any difference—until you need it and it’s too late.
Travel insurance doesn’t only cover you when you’re overseas
Most people have no idea what travel insurance actually covers when they book it, which also means they might miss out on making claims they’re actually entitled to.
You’re covered by travel insurance from the minute you book your policy until you arrive at home and have collected all your belongings.
This means that if anything happens to prevent you from going on your trip after you’ve booked the tickets, you might be able to claim compensation.
You are obviously covered as you travel from Singapore to your destination.
But the protection continues in some ways after you land in Singapore at the end of your vacation as well. If your luggage gets lost on the way back, despite the fact that you can very easily just go back home where you have all your clothes and necessities waiting for you, you can still get compensation for the delay if it’s long enough.
What does travel insurance cover?
You don’t have to be permanently disfigured or robbed of your every belonging before you can make a travel insurance claim. Here are some of the types of coverage you’ll be able get from many standard policies.
One of the biggest reasons to buy travel insurance is because it protects you if you need to seek urgent medical help when on holiday. Singaporeans seem to have the habit of getting into road accidents overseas, which is understandable considering so many of us have driver’s licences we never get to use because of COE. Then there’s the risk of getting food poisoning after stuffing your face at one too many hotel breakfast buffets, or walking into a wall and breaking a tooth.
Your medical coverage usually lets you make claims for medical or dental costs incurred, medical evacuation and/or expatriation if you need to be rushed back to Singapore, hospital cash benefits and more.
You are also usually allowed to make claims for medical expenses incurred upon your return to Singapore if they are due to an illness or accident sustained while overseas.
Personal accident coverage
We’re not trying to be pessimistic, but there is always the chance your trip will end in disaster. Travel insurance policies have a personal accident component, which will offer you payouts if you get into an accident and as a result are temporarily or permanently disabled, or die (in which case the money goes to your family or whomever you’ve willed your estate to).
Your policy will indicate a lump sum to be paid out if one of the above catastrophes takes place, and the percentage of this lump sum you’ll receive.
A typical sum in a standard plan might be $150,000. If you die or are totally and permanently disabled, your or your family might receive 100% of the sum, while losing one limb might entitle you to just 50%.
Unless you’re really unlucky, you will not exactly be using our medical or personal accident coverage on every trip. But if you’re a frequent traveller, sooner or later you’re going to have a chance to make a claim for travel-related mishaps and disruptions.
Cancellations, delays or missed connections can allow you to make claims, not only for planes but also for train and bus rides. Obviously, your alarm not going off is not a good enough excuse—you’ll have to demonstrate the disruption was caused by an illness, injury, death in the family or an event like a natural disaster or civil disturbance.
Baggage delays can also entitle you to claim money. How much you get typically depends on how many hours your baggage is delayed by.
In principle, you are also entitled to claim money for lost or damaged items. However, be warned that it can be tricky to actually get your money in such situations, as you are generally required to make a police report at your destination, and in many countries, the police might not be willing to issue reports for something as trivial as a lost iPhone.
In addition, there are pretty tight limits for each category of items. So don’t wear your diamond-encrusted Rolex watch on your trip if your limit for watches is only $200.
Where you should you get your travel insurance?
Everyone in Singapore under 70 years old books their air tickets online now. You would already have noticed that whatever airline’s website you’re booking from always prompts you to buy travel insurance from them before you check out. It might look even cheaper than the standard plans from travel insurers—more cash to spend on booze!
But the truth is that airlines’ travel insurance plans are often abbreviated versions of standard plans. They give you the bare bones, but if you actually bother to read the policy you’ll discover there’s a whole list of situations you won’t be able to make a claim for.
Check out this article elsewhere on MoneySmart to see some situations where you’d kick yourself for buying the airline’s travel insurance instead of a proper plan.
There are numerous companies providing decent travel insurance plans in Singapore. Use MoneySmart’s travel insurance wizard to compare plans without tearing out your hair.
Have you ever made a travel insurance claim? Share your experiences in the comments!