5 Travel Insurance Mistakes to Avoid

Every purchase has its potential pitfalls. You can buy milk that's about to expire, clothing that gets ruined in a dryer or a car that has a low fuel economy. Travel insurance is no different. You should know exactly what you're getting into before wading into a purchase you'll regret or mishandle.

Here are five common mistakes that people make with regard to travel insurance. All of them are easily avoidable. It's just a matter of understanding the process and staying vigilant.

1. Lying on Your Application

Some people have an incentive to lie on their travel insurance application. Maybe they have a condition that will force them to pay higher rates, or an illness that may cause insurance providers to decline them. But while a person can sometimes get away with the lie, the risk of being caught simply does not justify the reward of getting away with it.

Yes, pretending not to be a smoker or omitting any mention of your epilepsy could save you tens, or even hundreds of dollars on a premium, and that is nothing to scoff at. But if the need to make a claim arises and you're found to be lying, your claim could be denied. Even if you are injured in a scuba diving incident where the circumstances of  injury have nothing to do with your pre-existing conditions, lying about them could void any responsibility the insurer has to cover you for injury-related costs. And if that's what you're risking, then why are you even buying travel insurance in the first place?

The better option is to find yourself a policy that covers your medical condition. You may have to pay a little more, but at least you'll be covered.

2. Waiting Until the Last Minute

The best time to buy travel insurance, especially if your policy includes cancellation insurance, is when you are booking your trip. Even though it can feel like a non-urgent matter in the moment, failing to purchase travel insurance for a newly booked trip can actually come back to haunt you pretty suddenly.

Unlike buying a meal or a toy, putting money down for a trip is not a situation where you can recoup value right away; the value is only realized once the trip takes place. Thus, until that happens, there is always a risk that it won't actually come to fruition.

If your plan includes cancellation insurance, the interim between the time you book your trip and purchase your insurance is a time without protection. Even if it seems unlikely something will shake up your plans, there is no benefit to risking it. And, if nothing else, buying ahead of time allows you to comparison shop for the best price. If you do it last minute, you're more likely to take the first offer you see. 

3. Booking Where There is a Known Travel Advisory

One restrictive factor for a lot of insurance policies is what is known as a travel advisory. This government-determined warning is essentially a gauge of the threat level in a foreign country. Nations are assigned status labels, ranging from "Exercise normal security precautions" to "Avoid all travel." When a country reaches a certain rating benchmark, insurers will stop issuing policies for travel there, or at least severely restrict coverage.

This means that it is up to travelers to be on the lookout for severe travel advisories and avoid booking flights and accommodations to those countries if warnings are in place. It will be very difficult to be compensated for deposits without a trip cancellation premium, and that probably won't be possible when a major advisory hits.

If the advisory is announced after the bookings have been make and the premium has been purchased, that's a different story. You'll be able to cancel and get a refund. But don't make the mistake of booking after the advisory has become publicly known.

4. Not Choosing the Best Option Between Single Trip and Annual Plans

A lot of people don't even realize annual travel insurance plans are an option; but they are, and they should be thoroughly considered by everyone who thinks they'll be traveling with any frequency over the course of a year. It could be the difference between saving hundreds—or even thousands—of dollars. Use an online quote tool to see when the value of getting the annual plan eclipses that of single trip premiums.

5. Misunderstanding the Policy

Taking out a travel insurance policy is only half the battle. If you don't take the time to understand it, you could find yourself making the wrong move at a crucial point.

Policies typically have strict rules around the different aspects of their coverage. Even if something like a hotel burglary is covered, compensation is often dependent upon you through the proper protocol (e.g. providing proof of a police report, notifying the insurer within a certain period of time, etc). Another common point of contention is the conditions around injury circumstances. When an injury results from behaviour that is blatantly dangerous, or drugs or alcohol, it may not be covered.

Don't risk finding out what is and isn't covered the hard way. Take the time to learn about your policy.