Do Business Travelers Need Travel Insurance?

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Travel insurance is popular among families planning vacations, but is extra insurance a smart move if you're a business traveler? As an employee traveling on business, your company likely holds a policy that covers you. If you're self-employed, however, the insurance decision and the consequences of that choice fall squarely on your shoulders.

Travel insurance typically costs 4 to 12 percent of the overall cost of a trip. As with any policy, be sure to read the fine print to see what's covered and what's not. For example, some travel insurance doesn't cover pre-departure cancellation for independent contractors or the self-employed. And, as with most forms of insurance, there are deductibles; typically, in this case, for baggage, medical care, and car rental.

Two well-known providers of travel insurance are Travel Guard and Travelex. The latter offers a plan specifically for business travelers that includes coverage for trip cancellation arising from business-related reasons. Frequent business travelers may want to consider an annual plan, such as Voyage from Travel Insured or the Annual Executive Plan from Allianz, which cover every trip during the year. This arrangement is simpler and potentially cheaper than buying a policy for each travel event.

What Does Travel Insurance Cover?

Travel insurance generally covers the same eventualities regardless whether the trip is for business or pleasure.

  • Trip cancellation coverage reimburses losses if, say, a volcano erupts in Iceland and your flight is cancelled or you broke your leg and can't travel. Most policies only cover specific triggers, but some pricier policies let you cancel for any reason.
  • Trip interruption coverage pays for a return flight (and reimburses the cost of the unused return ticket) if an emergency requires an early end to the trip.
  • Medical coverage is especially important if your health insurance plan doesn't cover care outside the United States. Medical-related travel insurance may cover everything from a hospital visit to an emergency evacuation. It will also help replace lost prescriptions and locate local specialists. Medical coverage varies widely among plans and some companies sell medical insurance policies independent of general travel insurance.
  • Accident coverage pays expenses related to serious injuries, such as the loss of a limb, or for death-related expenses.
  • Baggage coverage reimburses costs related to lost or delayed-arrival luggage.
  • Rental coverage is built into some travel insurance plans and helps cover costs associated with a car accident or theft of a vehicle.
  • Concierge services often are part of travel insurance. A helpful hand is always welcome when you're looking for hotel and restaurant recommendations or planning an excursion. A concierge can also help you deal with less enjoyable tasks, such as replacing a lost or stolen passport.

What Is Already Covered?

Travel insurance may not be necessary for everyone. For example, airlines cover up to $3,300 in damages if bags are lost on a domestic flight and up to $1,131 on international flights. Travel insurance sometimes provides additional coverage for baggage or personal items that are lost, stolen, or damaged, but payouts are usually limited to $500 to $2,500 per person.

Travelers hauling expensive business equipment, such as laptops or demo material for a conference, however, may consider this insufficient. Don't assume your homeowner's or renter's insurance has you covered, either, because these policies often exclude business-related items. Proper protection for equipment may be available through a business owner's insurance plan, or BOP, which often includes coverage for equipment away from the office.

Doesn't My Credit Card Cover This?

Many travelers opt out of travel insurance because they assume their credit card has them covered. Rental-car insurance, for example, is one of the most well-known benefits provided by a credit card. Rick Steve's travel site cautions that the downside of relying on credit card coverage is that you'll have to pay for damages upfront and then deal with the (sometimes lengthy) reimbursement process. Again, read the credit card fine print so you understand your exposure before declining the additional coverage.

Many credit cards offer benefits that are nearly identical to travel insurance plans, but with caveats. Medical or political evacuations are generally not included and trip cancellation or interruption coverage can be very limited compared with travel insurance.

Is Travel Insurance Worth It?

Insurance helps protect investments and offset major one-time expenses. This may be especially important for business travelers, and most of all for sole proprietors whose ongoing business may ride on a single trip.

The standard advice about travel insurance in the leisure space: It's only worthwhile if the trip costs more than X -- some experts peg that at $5,000 and others at $10,000.

Business travelers likewise should consider the investment on the line and how best to protect it. Perhaps the price of the ticket pales in comparison to the lost opportunity of a cancelled trip, in which case the cost of cancellation coverage may seem excessive. But when business continuity depends on the owner's health, medical travel insurance may be a small price to pay given what's at stake.