While the COVID example highlights the importance of business travel insurance, this type of insurance certainly drives up the cost of each business trip. While this is a drawback, its goal is to protect the company from significant financial loss in the event of unexpected problems.
In this part of our customer education series, Insurance Business discusses the importance of having this form of protection, what this type of policy covers, and how businesses can find the right insurance for their travel needs. We encourage insurance brokers and agents to share this article with their clients to help them decide whether business travel insurance is worth the investment.
Business travel insurance—sometimes called a corporate travel policy—works just like personal travel insurance, protecting policyholders against certain financial risks and losses they may encounter while traveling. The main difference is that corporate travel insurance primarily covers business-related events.
Here are a few basic points to consider:
- Offers policies designed for domestic and overseas travel.
- For companies that require less travel throughout the year, it may be sufficient to purchase one-way travel insurance each time. As the name suggests, this covers events that occur during a business trip.
- For businesses that travel frequently, it may be more cost-effective to purchase multiple trip insurance, also known as annual travel insurance. This type of policy provides coverage for multiple destinations within a year. Maximum trip length limits vary, but are usually between 15 and 90 days.
Policies typically protect against a wide range of losses, from minor mishaps like luggage or flight delays to major events like last-minute trip cancellations and medical emergencies.
With business travel on the rise again, here are the key coverages typically included in the best business travel insurance plans:
Medical Expense Protection
This helps cover emergency medical expenses during travel. Some policies follow a reimbursement-based model and pay up to the plan limit. Coverage varies by insurance company, but typically includes:
- Medical Expenses: Most policies cover all medical and hospital expenses related to illness or injury while traveling.
- Emergency dental expenses: Visits to the dentist and other dental procedures may also be covered, with limitations. Some policies classify these costs as part of overall medical costs.
- Medical Evacuation: Usually the most expensive bill, includes the cost of transporting the patient to a medical facility. However, the evacuation must be ordered by a doctor in order to be covered by insurance.
- Accidental Death or Dismemberment: These policies cover repatriation expenses, which may include funeral expenses.
Trip Cancellation and Interruption Coverage
Trip cancellation and trip interruption coverage are similar types of insurance. The main difference is that cancellation insurance applies before the trip, while interruption insurance comes into play after the traveler has already left the destination.
These policies cover prepaid non-refundable expenses for business travel if the business trip is canceled or interrupted for reasons beyond the traveler’s control, as long as those events are listed in the policy documents. The death of a loved one and extreme weather conditions are examples.
Some policies also allow business travelers to cancel or shorten their trips if they need to deal with issues related to their business operations, such as bankruptcy, product recalls, default proceedings, mergers and acquisitions, or if the company is unable to operate for human reasons. or natural disasters.
But not all business-related events are covered. If a client the company is supposed to meet with cancels, the company will not be able to reimburse travel expenses. For more flexibility, it is recommended that businesses purchase cancellation for any reason (CFAR) insurance, which gives travelers a refund for trips canceled for whatever reason. However, this type of protection can raise premiums by 40% to 60% and has strict eligibility requirements.
Travel Delay Insurance
Travel delay insurance reimburses business travelers for basic purchases, such as meals and lodging, if they are stranded at a transit location due to a delay or cancellation of their connecting flight. Most policies provide for a waiting period before coverage becomes effective, as well as per-person daily and overall benefit limits.
Baggage Coverage
This type of insurance pays for the replacement of delayed or lost luggage and its contents. Policies come with per-person and per-item caps, and often reimburse the depreciated value of items. These also have a specified wait time, usually anywhere from 6 to 12 hours.
Luggage insurance may also cover items not included in your luggage, such as mobile phones. Meanwhile, business equipment is generally not covered, although travelers can purchase additional riders for protection.
The good news for business travelers is that, unlike at the start of the pandemic when there was little coverage for COVID-19, travel insurers have since stepped up their game and started offering protection against coronavirus-related disruptions. These include:
- Emergency medical expenses, including intensive care, medical tests and medication
- Quarantine-related expenses, including meals and accommodation
- ambulance transport costs
- Medical evacuation costs, which may also include dependents and traveling companions
- repatriation costs
Business travel insurance premiums are affected by a number of factors, including:
- Group Size: This refers to the number of employees covered by the travel policy. Some insurers impose minimums, while others offer discounts for groups over a certain size.
- Coverage Locations: Destinations with expensive medical care require higher coverage. This is the same place that is prone to natural disasters.
- Duration of Coverage: Business travel insurance covers the entire duration of the trip. Depending on the policy, coverage may be up to one year. The longer the coverage period, the higher the premium.
- Coverage: Compared to multi-trip or annual travel insurance, single-trip plans offer shorter coverage, making premiums cheaper.
- Added bonus: Optional extras, such as business equipment insurance, may result in an increase in insurance rates.
Depending on these factors, business travel insurance premiums can be around 6% of the total cost of the trip. For example, a business trip worth $3,500 may require approximately $210 in insurance costs.
Just like a personal travel policy, business travel insurance provides financial protection should something go wrong while traveling. Coverage details vary from policy to policy, so it’s important for business travelers to read the fine print carefully before purchasing a plan. Here are some practical tips companies can use to find the best business travel insurance.
- Compare Travel Insurance Quotes: Talk to a variety of insurance providers, some excellent examples can be found in our Insurance of the Year Awards.
- Take out the correct type of cover: While more expensive, business travelers are better off with comprehensive travel insurance, as these generally have higher coverage limits and offer broader protection.
- Buy travel insurance early: Purchasing travel insurance immediately after booking a trip can provide business travelers with longer coverage. Policyholders typically only buy some protections for a period leading up to their trip, including trip cancellation and interruption coverage, as well as pre-existing conditions waivers, so the sooner they enroll, the more benefits they can receive.
- Be honest with the information provided: Insurance companies expect travelers to provide accurate information when purchasing insurance. This includes disclosing any pre-existing conditions and past claims. Failure to do so may result in the claim being denied.
- Watch out for discounts: Travel insurance companies offer discounts to help travelers save hard-earned money. These include group discounts for tour groups with more than a certain number of members.
- Don’t settle for the cheapest policy: Cheaper premiums don’t always mean better coverage. Business travelers should always check the limits of their policy and understand what’s excluded, so they don’t feel underpaid when they file a claim.
Have you arranged a business trip? Do you think business travel insurance is worth considering? Share your thoughts in the comments section below.