Heading out of town for fun, rest and relaxation? Thinking about renting your space out for vacationers? Don’t forget your sunscreen and make sure you have planned for the unexpected.
DOES MY AUTO INSURANCE POLICY COVER ME ON CAR TRIPS OUTSIDE THE UNITED STATES?
That depends on where you go. If you visit Canada, your stateside auto insurance will offer you the same protection there that it does here. But if you decide to take a trip South of the Border, that’s a different story.
In Mexico, your automobile liability insurance–and generally your collision and other-than-collision (also known as comprehensive) coverage–is not valid. If you’re in an accident, you may wind up in jail until you can prove that you can pay for any damages. So you’ll probably want to purchase a Mexican auto insurance policy that will provide liability coverage and, if necessary, collision and other-than-collision coverages. If you’re traveling to Mexico, ask your insurance company or travel club for information on these policies.
I’M GOING ON A CRUISE. DO I NEED TRIP INTERRUPTION INSURANCE?
Trip interruption insurance reimburses you for losses associated with your trip being cut short (e.g., emergency flight home, unused prepaid expenses). Whether you should purchase trip interruption insurance depends primarily on whether you can afford to absorb those losses yourself. Other factors may come into play, though, such as your health status, the location of your trip, and how comfortable you are with risk.
Trip interruption insurance coverage varies, depending on the type of policy you buy. However, most policies provide coverage if you get sick (although policies often exclude pre-existing conditions) or have some kind of emergency (e.g., death in the family). Some even provide coverage if your trip is interrupted by bad weather (e.g., hurricane). However, most cruise contracts give the cruise company the right to change the ship’s itinerary if there’s severe weather. So don’t expect reimbursement from your trip interruption insurance for missing a scheduled port of call. Be sure to read your trip insurance policy carefully to understand exactly what is and isn’t covered. To get a premium quote, call your property/casualty insurance agent or your travel agent.
SHOULD I BUY TRAVEL INSURANCE?
Travel insurance refers to various types of specialized coverage you can buy to insure yourself against the many risks you face as a traveler. You can purchase this insurance from insurance companies, travel agents, tour operators, cruise lines, rental companies, or travel assistance companies. Coverage, cost, and terms vary widely.
There are many different types of travel insurance:
- Trip cancellation or interruption insurance protects you if your trip is canceled or interrupted because of some unforeseen event, such as the financial failure of the cruise line, airline, or travel agency; bad weather; illness; or death.
- Temporary health policies provide short-term supplemental health insurance coverage. This type of coverage may be helpful when you’re traveling abroad, since some health insurance providers do not cover you while traveling overseas, or they may provide only limited coverage.
- Baggage insurance reimburses you if your personal belongings are permanently or temporarily lost, stolen, or damaged while you are traveling.
- Accidental death and dismemberment (AD&D) insurance compensates you if you lose a limb or an eye, or compensates your beneficiary if you die in an accident. You can purchase this coverage as a separate policy, as a rider to an existing policy, or as part of a travel insurance policy.
You may want to consider purchasing some form of travel insurance if the financial benefit and peace of mind outweigh the premium cost. For instance, if your trip were canceled or the tour operator went out of business, could you afford to lose the money you paid for the trip? If you got sick while vacationing in a foreign country, would your health insurance cover you? If not, could you afford to pay for your medical expenses? If your luggage were lost, could you afford to purchase everything you would need to continue your trip? These are important questions to consider when deciding whether or not to purchase travel insurance
I’M TRAVELING FOR AN EXTENDED PERIOD OF TIME AND WON’T NEED MY CAR. CAN I GET MY AUTO INSURANCE SUSPENDED TO SAVE MONEY?
You may be able to, but it’s not always a good idea. Many bad things can happen to your car, even when it’s not being driven. The other-than-collision (also known as comprehensive) coverage portion of your auto policy insures you against damage to your vehicle caused by fire, flooding, theft, vandalism, and other events. And it’s also important to remember that you may continue to need auto insurance coverage if you drive while on vacation. But if you’re confident there’s little risk that your car will be damaged or stolen while you’re gone, it may be possible to temporarily suspend or reduce your coverage.
Suspending or reducing your coverage may be difficult, though. Your state probably requires that you carry a minimum amount of insurance coverage while your vehicle is registered. So, unless you intend to suspend or cancel your registration, you may not be able to completely suspend your auto insurance. However, depending on the laws in your state, you may be able to suspend parts of your policy–ask your insurer. But if you have a car loan, the lender may require that you keep your car fully insured. Check your loan documentation carefully before you take steps to suspend any portion of your insurance coverage.
But don’t just stop paying your premiums and let your policy lapse while you’re away. If you do, you may have trouble getting affordable auto insurance in the future, because this type of cancellation will be listed in the insurance company records and may even show up on your credit report.
I AM PLANNING ON BEING OUT OF THE COUNTRY FOR SEVERAL MONTHS. DO I NEED SPECIAL HEALTH INSURANCE?
Unless you’re in the military or working for an American company abroad that has a health plan in place, you’ll need to make sure that your health insurance will cover your needs–and don’t wait until you’re already sick or injured to do it.
If you’re planning to travel overseas, be aware that your health insurance plan may not cover you at all. Most managed care plans, such as health maintenance organizations (HMOs) or preferred provider organizations (PPOs), will cover emergency treatment. But HMOs may pay nothing if you see an out-of-network health-care provider for routine care, while PPOs will pay only part of the cost. So before you set foot on foreign soil, check the limitations of your policy and call your insurer’s customer service department if you have any questions.
If you’re going to be away for less than six months, a short-term supplemental health insurance policy may be sufficient for your needs. These policies are available from insurance companies or travel agents, and they offer accident and sickness coverage. However, read the policy carefully because the coverage is often limited.
If you’ll be out of the United States for more than six months, you may want to purchase expatriate health insurance. Underwritten by large insurers such as Lloyd’s of London, these policies offer standard emergency and routine care coverage, and can be customized to meet your specific needs. Be sure to check for pre-existing condition limitations, including pregnancy. Options available include maternity coverage, acupuncture, chiropractic services, language translation and foreign currency exchanges, and even emergency evacuation coverage. The application process for expatriate health insurance can be detailed and extensive; you’ll have to list any health problems you’ve had in the past 10 years. The cost of a plan will depend on several factors, such as your age, state of health, sex, and travel itinerary.
IF I RENT OUT MY HOME, WHAT ARE MY INSURANCE NEEDS?
If you’re renting your home to others rather than living in it yourself, your homeowners policy will no longer offer you all the coverage you’ll need. Although you’ll still need to protect your home and other physical property, you’ll also need liability coverage and protection against the loss of rental income.
Most commercial insurers offer policies specifically designed for rental properties, but variations abound, so you may want to shop around for the best coverage. Here’s what to look for:
- Coverage for the physical structure against a wide variety of possible perils (e.g., fire, flood, storm)
- Coverage for any outbuilding, such as a garage or a shed
- Replacement cost coverage (preferable to coverage based on an actual cash value)
- Coverage for your own property (e.g., appliances, lawnmowers, snowblowers) left on the premises
- Liability protection for injuries to others, or damage to their property, that occur on your property
- Coverage for the medical expenses of others injured on your property
- Reimbursement for lost rental income if the loss is the result of a covered occurrence, such as a fire
Finally, be aware that you’re generally not liable if something happens to your tenants’ personal property (e.g., furniture, jewelry, antiques). Your tenants will need their own renters insurance to protect their property in the event of a fire, theft, or other loss.
At Kuderer Financial we help our clients build clear financial plans so the unknowns can be defined and addressed. Contact us below to get started.
Prepared by Broadridge Investor Communication Solutions, Inc.