Watch Out For This Travel Insurance Trap

With the growing popularity of annual multi-trip travel insurance, it’s especially important to know what you’re buying. If not, you could fall into a very expensive trap.

First of all let me make it clear: I think annual multi-trip insurance for people who travel frequently for relatively short periods and don’t always have the time to make laborious travel arrangements is a terrific product. It’s efficient. It’s cheaper than single trip insurance on a per diem basis, and it’s flexible. But understand its limitations. What types of plans are there?

All Canadian travel insurance is based on when you leave your home province, not necessarily when you leave the country. This is so because health care in Canada is a provincial jurisdiction, there are slightly different rules about coverage from province to province, and travel health insurance is a supplement to your provincial plan. This is no big deal for people buying single trip insurance. They usually know exactly when they’re leaving the country, when they’re coming back, and they pay for the number of days they will be out. When they order their insurance, they say “I will be leaving December 13, 2007 and returning April 24, 2008” or some such combination.

But people who buy multi-trip plans buy them for a certain number of days per travel segment, say 7 days or 15 or 30, and they don’t always know the exact dates they will be traveling ahead of time. What that means is that over the course of the year they can travel up to that maximum number of days on as many trips as they wish, the stipulation being that they must return to their home province for at least one day before they start the next segment. Note I said home province, and this is where being out of your home province and being out of the country are not necessarily the same thing.

For example, if you live in Nova Scotia and you stop off to visit family in Ontario for five days before flying to Arizona for a winter vacation, you really only have 25 days of coverage left in the U.S. out of your 30-day policy. And if you get sick in Arizona on the 26th day, you are out of luck and out of coverage. What counts is when you left Nova Scotia, not when you left Canada on the last leg of your trip. And if you think all that’s necessary for you to kick in your next 30-day segment is to go back to Canada, you’re wrong. You have to go back to your home province and stay at least one day there before you leave on your next trip. True, you’re not required to check in or check out with your insurer, when travelling so the insurer may not always be able to tell if you are in your 29th day of coverage or out of cover on your 35th day of travel. But if you do have an emergency, your insurer does have the right to ask you to prove when you left your province so they can verify your coverage. Receipts from motels, gas stations, credit card statements, passport stamps, usually will do.

If you need more days on one of your multi trips, you can call your insurer and ask to be topped up. But that costs extra. And if you have had some medical claim during the initial period of your coverage, that may be considered a pre-existing condition for your top up. So understand this basic principle about travel health insurance: it’s tied to your provincial government insurance. That’s what medicare is all about.

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