Travel insurance is no longer a straightforward, off-the-shelf product your clients can quickly purchase at a travel agency or airport on their way to a foreign destination. Several classes of coverage with various benefit structures now exist, including the flexibility to customize insurance to cover specific risks.

Given the growing complexity of the market, it is important that you advise clients who plan to travel abroad about the various options, so they can obtain the appropriate protection against unanticipated costs that may arise on their trips.

“Travel coverage and cost vary widely,” says Geoff Burman, president of Burlington, Ont.-based Broker Advantage Inc. “You should ensure you get as comprehensive coverage as possible, including protection for special risks, which may be available with customization.”

Travel insurance typically covers two broad areas: basic insurance for expenses related to trip cancellation because of a pre-departure event or a trip interruption caused by a post-departure event; and insurance that covers expenses related to illness, injury or death while travelling.

“Changes to travel insurance resulted largely from provincial governments clamping down on how much they will pay for out-of-country medical expenses,” says Louis Gosselin, president of Toronto-based L.J. Gosselin & Associates, an insurance and reinsurance broker specializing in travel, entertainment and leisure insurance. “Many of these changes are market-driven because more people of all ages are travelling, giving rise to varying risk levels based on different demographics.” This is accompanied by “incredible inflation in medical costs,” leading insurers to vary the “scope of coverage” with different benefit structures.

The evolution of different packages is directly related to demand and the health risk associated with covering different travellers. For instance, Mississauga, Ont.-based Royal Bank Travel Insurance Co. offers five packages — deluxe, gold, silver, bronze and standard — that provide different features. For instance, if your client has a pre-existing medical condition that has been stable 90 days prior to departure, medical insurance is available under the deluxe plan, but the client would be denied medical coverage under the gold package.

Ironically, many Canadians have become so used to the protection they get at home that they forget that their provincial health insurance provides only limited coverage abroad. The Foreign Affairs Canada publication, Bon Voyage, But: Information for the Canadian traveller, 2005-’06, advises that Canadians should not rely on their provincial health plans if they get sick or injured abroad. “At best, your health plan will cover a portion of the bill,” it says, leaving the onus on the individual to “obtain and understand” the terms of supplementary insurance policies.

For instance, the Ontario Health Insurance Plan will pay a maximum of $400 a day for “complex” hospital care, such as coronary or intensive care in a foreign institution, and significantly less for other medical services. Ontario’s Ministry of Health and Long-Term Care states: “OHIP will pay only as much as that service would have cost in Canada.” Incidentally, it costs $1,800-$2,000 a day for hospital care in the U.S. and as much as $10,000 a day for intensive care for complex cases, making travel health insurance a necessity.

Basic travel insurance still covers only expenses related to trip cancellation, missed flights, lost or damaged luggage and, in some cases, accidental death. But travel health insurance coverage, a major area of change, may now include hospitalization costs, doctors’ bills, prescription drugs, X-rays, diagnostic tests, dental treatment, air and ground ambulance, paramedic fees and private nursing.

It may also cover transportation and related costs if your client, spouse or dependent children must return home or be at the bedside of the hospitalized person. It can also provide a daily out-of-pocket allowance for commercial accommodation and meals for the policyholder and other covered parties, if a medical emergency prevents their return to Canada.

Coverage is available for single or multiple trips. A single-trip policy typically insures your client and dependents for one trip that lasts up to 183 days, while a multi-trip policy may cover unlimited travel annually, with each trip lasting for a defined number of days. If the length of the trip stated in the policy is exceeded without prior permission from the insurer or agent, the policy becomes invalid.

Policies vary

Travel health policies vary widely in benefits, coverage and cost. Some specify a maximum amount of benefits, or do not cover certain expenses such as accommodation or medical tests, or may only cover a percentage of costs. Others exclude travel to specified countries.

@page_break@Although a wide range of risks are covered, your clients may not be eligible for certain coverage or may have to pay a steep price for it. Typically, a client has to complete an extensive health-related questionnaire, which determines eligibility. The cost depends on several factors, including your client’s age, health condition, duration of the trip, level of benefits, extent of coverage and deductible amount.

The most significant exclusion is probably protection against pre-existing conditions. Some policies don’t cover — or provide limited coverage — for health problems for which the client was diagnosed or treated before the trip. Even if the problem has been cleared up or is being controlled with medication, conditions may still apply.

Other exclusions and limitations may include high-risk sports, substance abuse and war.

Most insurers have 24/7 toll-free call centres your client must contact prior to seeking medical treatment. The centre is responsible for co-ordinating treatment with an approved network of medical providers, arranging emergency transportation (if necessary) and making billing/payment arrangements. If your client does not contact the call centre or uses the medical services of a provider outside the approved network, he or she may end up paying these expenses, then claiming them from the insurer. In most cases, the benefit would be significantly reduced because of relationships the insurer has with providers on its preferred list.

Exceptions may be made if the medical condition made it impossible to contact the call centre before treatment. Clients should also check for coverage under group insurance plans, professional associations or other groups. And some credit cards offer travel insurance benefits. Such coverage may mean cheaper supplemental insurance. IE